S&P’s SPY ETF, born from 1987 crash, hits monster status
SPY has seen assets swell to $355 billion since its inception
Ramji: Investors turn to ETFs in volatile times
BlackRock's global head of ETFs and index investments Salim Ramji discusses the popularity of ETFs after 2022 became the second-best year for the investment vehicle on "The Claman Countdown."
Thirty years ago, the first exchange-traded fund (ETF) made its debut tracking the S&P 500, the broadest measure of the U.S. stock market.
The investing product, developed to handle market stress after the stock market crash of 1987, caters to institutional investors as well as the mom-and-pop crowd.
| Ticker | Security | Last | Change | Change % |
|---|---|---|---|---|
| SPY | SPDR S&P 500 ETF | 503.44 | -1.97 | -0.39% |
"SPY came out of the '87 crash as a way to get greater liquidity into the market for both individual investors and institutions. It was designed as an easy, inexpensive and tax-efficient way to access the S&P 500 (the market) for both buyers and sellers" said Tom Lydon, vice chairman of VettaFi.
The SPY earned even more stripes by navigating the COVID-19 pandemic-driven market volatility, which fueled the Federal Reserve’s unprecedented rate-cutting actions.
Jerome Powell, chair of the Federal Reserve (File)
"State Street’s S&P 500 ETF, SPY, is the benchmark ETF used for core allocations in portfolio, but more importantly, the hedging tool in times of market-wide stress. The ETF has world-wide recognition. In times of [heightened] risk in global markets, SPY is the go-to ETF for various reason" said Reggie Browne, principal of GTS Securities/Mischler Financial Group, told FOX Business.
BED BATH & BEYOND DROPS NEW BOMBSHELL
SPDR SPY
On Feb. 28, 2020, as the global pandemic exploded and roiled financial markets, the ETF traded more than $100 billion in a single day.
SPY’s assets have swelled to $355 billion from a mere $6.5 million at its inception. Average daily trading volume has exploded to $39 billion from a puny $8 million, as tracked by State Street.
Its impact has also helped launch an entire ETF industry, which has grown to $6.5 trillion in assets across 8,000 ETFs.
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"SPY disrupted the asset management industry and benefited investors in ways that exceeded even the most ambitious expectations," said Sue Thompson, head of SPDR Americas Distribution at State Street Global Advisors.