ETF Talk: State Street Started It All
Past ETF Talks have discussed various individual exchange-traded funds (ETFs), but we have never taken in in-depth look at the specific companies that establish and manage them. What company pioneered the concept of trading a bundle of stocks in the form of a fund, as easily as buying a single stock? Well, the first institution to begin trading an ETF was State Street. This company is known for its many SPDR, commonly pronounced “spider,” ETFs.
SPDR stands for Standard & Poor’s depositary receipt. In fact, State Street’s inaugural ETF, and the first for the market overall, falls under this designation. This fund, SPDR S&P 500 (SPY), introduced ETFs to the world in an easily understandable manner: SPY tracks the performance of the S&P 500. Thus, the precedent of using an ETF to track a certain segment of the market and allowing investors the convenience of buying one fund to do so was established.
SPY began trading at the end of January 1993 and it has mirrored the performance of the S&P 500 ever since, ebbing and flowing with the broader market.
Read more about State Street’s first exchange-traded funds at Eagle Daily Investor.