thirty years ago this week state street global advisors launched the standard  poors depositary receipt spy the first usbased exchange traded fund etf which tracked the sp 500 today its known as the spdr sp 500 etf trust  or just spdr pronounced spider it is the largest etf in the world with over 370 billion in assets under management and is also the most actively traded routinely trading over 80 million shares daily with a dollar volume north of 32 billion every day for a product that would end up changing the investment world etfs started off poorly vanguard founder jack bogle had launched the first index fund the vanguard 500 index fund 17 years before in 1976 the spdr encountered a similar problem wall street was not in love with a lowcost index fund there was tremendous resistance to change bob tull who was developing new products for morgan stanley at the time and was a key figure in the development of etfs told me the reason was mutual funds and brokerdealers quickly realized there was little money in the product there was a small asset management fee but the street hated it because there was no annual shareholder servicing fee tull told me the only thing they could charge was a commission there was also no minimum amount so they could have got a 5000 ticket or a 50 ticket it was retail investors who began buying through discount brokers that helped the product break out but success took a long time by 1996 as the dotcom era started etfs as a whole had only 24 billion in assets under management in 1997 there were a measly 19 etfs in existence by 2000 there were still only 80 the right product at the right time while it started off slowly the etf business came along at the right moment its growth was aided by a confluence of two events 1 the growing awareness that indexing was a superior way of owning the market over stock picking and 2 the explosion of the internet and dotcom phenomenon which helped the sp 500 rocket up an average of 28 a year between 1995 and 1999 by 2000 etfs had 65 billion in assets by 2005 300 billion and by 2010 991 billion the dotcom bust slowed down the entire financial industry but within a few years the number of funds began to increase again the etf business soon expanded beyond equities into bonds and then commodities on november 18 2004 the streettracks gold shares now called spdr gold shares  symbol gld went public it represented a quantum leap in making gold more widely available the gold was held in vaults by a custodian it tracked gold prices well though as with all etfs there was a fee currently 04 it could be bought and sold in a brokerage account and even traded intraday staying in lowcost welldiversified funds with low turnover and tax advantages etfs gained even more adherents after the great financial crisis in 20082009 which convinced more investors that trying to beat the markets was almost impossible and that highcost funds ate away at any marketbeating returns most funds could claim to make etfs poised to take over from mutual funds