BOSTON, July 14 — The financial instrument that reshaped how America invests turns 30 this year. The SPDR S&P 500 ETF, ticker SPY, launched on January 29, 1993, by State Street Global Advisors. What this signals is a quiet revolution that took three decades to eclipse a century-old rival.
The mutual fund came first. The Massachusetts Investors Trust, launched on March 21, 1924, by MFS Investment Management in Boston, gave small investors their first real tool to pool money into a diversified portfolio.
By 2023, U.S. mutual fund assets totaled approximately $22 trillion, according to the Investment Company Institute.
The ETF Challenge
Strategically, the calculus behind the ETF was simple: combine the diversification of mutual funds with the intraday trading flexibility of stocks. The SPY did exactly that. As of 2023, global ETF assets exceeded $10 trillion.
The SPY alone held over $400 billion in assets. The broader stakes of this shift are clear in the fee structure.
The rise of low-cost index funds, popularized by Vanguard founder John Bogle, who launched the first index mutual fund in 1976, has driven down fees and made investing accessible to millions. ETFs inherited that cost discipline and added a trading edge.
What This Signals for the Market
The numbers tell the story. A $22 trillion mutual fund industry still dominates, but the $10 trillion in global ETF assets represents a dramatic capture of market share in just three decades. The SPY, a single product, holds more than $400 billion — a concentration of capital that would have been unimaginable to the Boston investors who pooled their money in 1924.
What this signals is a structural shift in how capital moves. Mutual funds price once a day, after markets close.
ETFs trade like stocks, second by second. That flexibility has attracted both retail investors and institutional traders who value liquidity. The geopolitical framing matters here too.
American financial innovation — from Boston in 1924 to State Street in 1993 — set the template that global markets now follow. The SPY remains the largest and most liquid ETF in the world, a position that reflects the depth of U.S. capital markets.
Looking forward, the competition between mutual funds and ETFs will likely intensify. The mutual fund industry’s $22 trillion in assets gives it staying power, but the ETF structure’s advantages in cost and trading flexibility are hard to counter. Investors now have a clear choice: the 1924 model or the 1993 model.
The market is voting with its money.
