SPY is an essential part of the ETF industry

Advisors and issuers celebrate the recent 30e anniversary of the SPDR S&P 500 ETF (SPY) this week To Exchange: an ETF experience.

The launch of SPY in January 1993 propelled the growth of the ETF industry globally. Since its inception, SPY has recorded a total transaction volume of $110 trillion; trading more than its seven major index constituents combined, which include Apple, Amazon and Microsoft. Since then, it has been part of the basis of many ETFs, including leveraged and inverse funds, as well as for hedging purposes.

“SPY is a critical part of our ETF business,” Tim Urbanowicz, CFA, head of research and investment strategy at Innovator ETFs, told Exchange on Monday during a panel moderated by Hilary Corman Kirsch, head of US institutions at State Street Global Advisors.

Colin Ireland, head of business strategy at State Street Global Advisors, said the company built on SPY’s success and demand by launching the SPDR S&P 500 ETF Portfolio (SPLG) in 2005 to meet buy and hold advisors.

With $389 billion in assets under management, SPY can facilitate trades of nearly any size on the secondary exchange, anonymously, Ireland said. Even when markets are volatile, taking 2020 as an example, SPY was the only S&P 500 ETF that offered consistent trading savings relative to the underlying basket.

Scott Chronert, US equity, ETF and SMID strategy at Citigroup, said SPY is a truly unique product as the most liquid stock in the world. This is a key solution in the institutional market, as liquidity remains a constant concern.

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