The Birth Story of ETFs🎉

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Intro

‘ETF’ stands for Exchange Traded Fund. It refers to a product with a modified issuance, distribution, and redemption structure so that an index-linked fund that follows the rate of return of the market index is constructed and listed on the exchange in real time like a spot. Trading is like spot, but performance is like a fund(A fund is a financial product in which an asset management company or an exchange manages funds collected for a specific purpose on behalf of investors.).

The Birth Story of ETFs🎉

An ETF is a fund that can be traded like a spot on an crypto exchange. Why do so many people trade ETFs? If we know the history of ETFs, we can understand why.

The first ETF was an index fund listed on an exchange. So, to know the first of these ETFs, we need to know when the first index fund was launched. In August 1976, The Vanguard Chairman John Bogle, known as the founder of index funds, developed an index fund that tracks the US leading index, the S&P 500. In 1993, State Street Global Advisors introduced the SPDR S&P 500(The S&P 500 is a Standard & Poor's 500 Stock Index that includes stocks of 500 large companies. It is owned and managed by Standard & Poor's, a McGraw-Hill affiliate.). That was the first ETF.

Who is John Bogle?

As the founder of Vanguard Group, he introduced index funds for individual investors, not institutional investors, to the market and is called the “father of index funds.” John Bogle was born in 1929 in Montclair, New Jersey, USA and graduated from Princeton University with a degree in economics. He later retired from Wellington Management, founded Vanguard in 1974, and developed index funds in 1975. He served as Vanguard's CEO until 1996, growing Vanguard, and after his retirement he published 13 books on investment advice. In particular, the phrase “don’t look for needles in a haystack, buy a haystack” is famous.

John Bogle passed away on January 16, 2019 from esophageal cancer. During his lifetime, he emphasized the buy & hold strategy of investing from a long-term perspective and advised not to pursue quick results. Regarding John Bogle's work, Nobel Prize-winning economist Professor Paul Samuelson said - "Bogle's development of an index fund is as valuable as the invention of the wheel and the alphabet.", Berkshire Hathaway Chairman Warren Buffett said - "If I had to put up a statue of the most accomplished person for American investors, it would be John Bogle.".

YB(Gate.io Marketing Agent)'s comment

In addition to index funds, there are also have Various Types of ETFs. Will introduce it in the next article.

Gate.io offers various types of ETFs such as Leverage, Combine, and Inverse.