Citywire printed articles sponsored by:
View the article online at http://citywire.co.uk/wealth-manager/article/a711400
SPDR boss Ross: my beef with smart beta
by David Campbell on Oct 28, 2013 at 11:06
‘There has been a natural shift in fund pricing in both absolute and relative terms [on both sides of the Atlantic] but ETFs remain price-competitive. [The] Schwab [deal] goes two ways – they are a very big retail platform, we are a big custodian who have traditionally not marketed directly to retail.
‘That is a continuing shift in the dynamic and distributors will continue to have more [pricing] power. But [in the long run] these things tend to balance out and it is natural in any business.
‘It’s no different from traditional [physical] manufacturing where sometimes the price power lies in the distribution chain and sometimes with the manufacturer.’
Ross admits the company had little inkling of what they were on to in 1993 as it put together the technical underpinnings of the first exchange traded product, based on the S&P 500.
‘We thought there might be potential demand out there for four of these things, tops. We launched in 1993 and people often don’t realise that during 1994 we had net outflows, so it is not like it immediately took off.’
The industry has from those beginnings expanded to a total $1.9 trillion under management in January this year, according to the International Organization of Securities Commissions.
SPDR, which manages the S&P 500-replicating SPY, the world’s most heavily traded ETF, as well as SPDR Gold, which rivals all but the largest central banks in terms of gold bullion holdings, runs $335 billion across 180 ETFs globally.
‘The 1990s were a period of slow development. The first take-up [excluding institutions] was really among traders, who liked the idea of being able to buy 500 stocks on a single exchange.’
Rise of the mega-ETF
More on ETFs:
More about this article:
What others are saying
- zero-cost fund trading platform
- SPDR Gold