The 26-Year History of ETFs, in One Infographic
In recent decades, there have been many breakthrough technologies that have re-shaped the nature of entire industries.
In finance, perhaps the most notable disruption has come from the rise of the exchange-traded fund (ETF) — an investment vehicle that has quadrupled in size over the last decade alone. But how did the ETF originate, and how has its use evolved through to today?
Today’s infographic comes to us from iShares by BlackRock, and it shows how the ETF has gone from an obscure index tracking tool to becoming a mainstream investing vehicle that encompasses trillions of dollars of assets around the world.
The Origin and History of ETFs
ETFs emerged out of the index investing phenomenon in the late 1980s and early 1990s, and there are two early examples that can be referenced as a starting point:
- Index Participation Shares – 1989
This initial attempt to create an ETF was set to track the S&P 500, and garnered significant investor interest. However, it was ruled to work like a futures contract according to a federal court in Chicago, so it never made it to the exchange.
- Toronto 35 Index Participation Units – 1990
These were a warehouse, receipt-based instrument that tracked Canada’s major index, the TSE-35. They allowed investors to participate in the performance in the index, without owning individual shares of stocks in the index.
Since these pioneering ETF endeavors, the investment vehicle has caught on in popularity — and it is now clear that ETFs provide a range of important benefits to investors, such as: low costs, liquidity, diversification, tax efficiency, flexibility, accessibility, and transparency.
Key Milestones in U.S. ETF History:
- 1993 – The First ETF launches in the U.S., tracking the S&P 500
- 1998 – Sector ETFs debut, tracking individual S&P 500 sectors
- 2004 – The first U.S.-listed commodity ETF is formed, offering exposure to gold bullion
- 2008 – Actively-managed ETFs get the green light from the SEC
- 2010 – Term-maturity ETFs debut, holding bonds that all mature in same year
- 2015 – First factor-based bond ETFs are launched
- 2019 – U.S.-listed ETFs hit $4 trillion in AUM, and global bond ETF AUM crosses $1 trillion
How ETFs are Used Today
Today, the U.S. ETF industry has $4.04 trillion of assets under management (AUM), covering a wide spectrum of assets including equities, bonds, alternatives, and money markets.
ETFs are now the go-to index vehicle for 78% of institutional investors, according to a study by Greenwich Associates. Here are the 10 most popular applications for ETFs based on the same data:
|Tactical adjustments||72%||Over- or underweight certain styles, regions, or countries on the basis of short term views.|
|Core allocation||68%||Build a long-term strategic holding in a portfolio.|
|Rebalancing||60%||Manage portfolio risk in between rebalancing cycles.|
|Portfolio completion||57%||Fill in gaps in a strategic asset allocation.|
|International diversification||56%||Gain efficient access to foreign markets.|
|Liquidity management||54%||Maintain exposure in a liquid investment vehicle to meet cash flow needs.|
|Transition management||44%||Facilitate manager transitions with ETFs.|
|Risk management||42%||Mitigate undesired portfolio risk and hedge asset allocation decisions.|
|Interim beta||37%||Maintain market exposure while refining a long-term view.|
|Cash equitization||37%||Put long-term cash positions to work with ETFs to minimize cash drag.|
In the 26 years since the introduction of ETFs, they have grown and evolved to cover almost every aspect of the market. The next stage of growth for the ETF will be driven by investors finding even more uses for these versatile tools.
More Than Precious: Silver’s Role in the New Energy Era (Part 3 of 3)
Long known as a precious metal, silver in solar and EV technologies will redefine its role and importance to a greener economy.
Silver’s Role in the New Energy Era (Part 3 of 3)
Silver is one of the first metals that humans discovered and used. Its extensive use throughout history has linked its name to its monetary value. However, as we have advanced technologically, so have our uses for silver. In the future, silver will see a surge in demand from solar and electric vehicle (EV) technologies.
Part 3 of the Silver Series comes to us from Endeavour Silver, and it outlines silver’s role in the new energy era and how it is more than just a precious metal.
A Sterling Reputation: Silver’s History in Technologies
Silver along with gold, copper, lead and iron, was one of the first metals known to humankind. Archaeologists have uncovered silver coins and objects dating from before 4,000 BC in Greece and Turkey. Since then, governments and jewelers embraced its properties to mint currency and craft jewelry.
This historical association between silver and money is recorded across multiple languages. The word silver itself comes from the Anglo-Saxon language, seolfor, which itself comes from ancient Germanic silabar.
Silver’s chemical symbol, “Ag”, is an abbreviation of the Latin word for silver, argentum. The Latin word originates from argunas, a Sanskrit word which means shining. The French use argent as the word for money and silver. Romans bankers and silver traders carried the name argentarius.
While silver’s monetary meanings still stand today, there have been hints of its use beyond money throughout history. For centuries, many cultures used silver containers and wares to store wine, water, and food to prevent spoilage.
During bouts of bubonic plague in Europe, children of wealthy families sucked on silver spoons to preserve their health, which gave birth to the phrase “born with a silver spoon in your mouth.”
Medieval doctors invented silver nitrate used to treat ulcers and burns, a practice that continues to this day. In the 1900s, silver found further application in healthcare. Doctors used to administer eye drops containing silver to newborns in the United States. During World War I, combat medics, doctors, and nurses would apply silver sutures to cover deep wounds.
Silver’s shimmer also made an important material in photography up until the 1970s. Silver’s reflectivity of light made it popular in mirror and building windows.
Now, a new era is rediscovering silver’s properties for the next generation of technology, making the metal more than precious.
Silver in the New Energy Era: Solar and EVs
Silver’s shimmering qualities foreshadowed its use in renewable technologies. Among all metals, silver has the highest electrical conductivity, making it an ideal metal for use in solar cells and the electronic components of electric vehicles.
Silver in Solar Photovoltaics
Conductive layers of silver paste within the cells of a solar photovoltaic (PV) cell help to conduct the electricity within the cell. When light strikes a PV, the conductors absorb the energy and electrons are set free.
Silver’s conductivity carries and stores the free electrons efficiently, maximizing the energy output of a solar cell. According to one study from the University of Kent, a typical solar panel can contain as much as 20 grams of silver.
As the world adopts solar photovoltaics, silver could see dramatic demand coming from this form of renewable energy.
Silver in Electric Vehicles
Silver’s conductivity and corrosion resistance makes its use in electronics critical, and electric vehicles are no exception. Virtually every electrical connection in a vehicle uses silver.
Silver is a critical material in the automotive sector, which uses over 55 million ounces of the metal annually. Auto manufacturers apply silver to the electrical contacts in powered seats and windows and other automotive electronics to improve conductivity.
A Silver Intensive Future
A green future will require metals and will redefine the role for many of them. Silver is no exception. Long known as a precious metal, silver also has industrial applications metal for an eco-friendly future.
Visualizing All the Known Copper in the World
Are we running out of copper? This graphic from Trilogy Metals paints a clear picture of all the copper in the world, above and underground.
Visualizing All the Known Copper in the World
Copper has many important applications in the modern economy. From smartphones and cars, to homes and hospitals, we use the metal almost everywhere, especially with renewable energy.
Often, consumers take for granted the accessibility to modern technology without the thought of where the materials come from or their impact on the environment. The world and its resources are finite and confined by both geography and the technology used to extract resources.
As governments and economies struggle to achieve a sustainable balance between humanity’s material impact and the health of the planet, knowing the availability of resources will become a critical pivot for achieving and maintaining that balance.
Copper is one such resource—and today’s graphic from Trilogy Metals outlines all the copper ever mined and what known resources still exist on Earth.
Are we running out of copper?
Above Ground Copper Resources
The production of mined copper has increased dramatically over the last two decades, From 9.8 million metric tons in 1995 to 20 million metric tons in 2019, a 104% rise over 25 years.
A total of 700 million metric tons of copper have been mined throughout history. Based on the 2019 average price of $6,042/metric ton, that’s worth $4.2 trillion—more than the value of Apple and Amazon combined.
Chile has been the source of the majority of the world’s copper and the biggest copper mining nation. Together, Chile, Peru, and China account for 48% of current global copper production.
|Ranking||Country||Mine Production 2019 (Ktons)||Country||Reserves 2019 (Ktons)|
|Other Countries||3,800||Other Countries||220,000|
|World Total||20,000||World Total||870,000|
As we enter the era of renewable energy, electric vehicles, and see more global economic growth, the demand for copper will continue to rise. In fact, the Copper Alliance projects an increase of 50% in just the next 20 years.
Are We Running Out of Copper? Not So Soon
Although a large chunk of the Earth’s copper is already above ground, there’s still more to mine.
According to the USGS, identified copper resources amount to 2.1 billion metric tons, with a further 3.5 billion metric tons in undiscovered resources.
At current production rates, it would take about 105 years for us to use all of it and this does not even account for recycling or new discoveries. Copper is 100% recyclable, and nearly all of the 700 million metric tons of mined copper is still in circulation. With this in mind, it’s safe to say that we won’t be running out of copper anytime soon.
Despite copper’s apparent abundance, the red metal is expensive to actually get out of the ground. As a result, the supply of copper has often fallen short in meeting its rising demand. This, in addition to falling resource grades in Chile, the largest producer of copper, emphasizes the need for new discoveries and mines.
While there are known reserves of copper above the ground, the Earth remains largely unexplored because of the inability to explore for minerals in the depths of the oceans and other planets. As the readily available supply of copper becomes scarce, the incentive to mine currently uneconomic copper increases.
A Mineral Intense Future
Most consumers take the immediate availability of materials such as copper and other metals for granted, with little thought about whether there is enough.
But it’s important to remember that these materials are as finite as the dimensions of the Earth. In this material world, understanding what is and what is not available is critical for a sustainable future here on Earth.
Healthcare1 month ago
Tracking COVID-19 Vaccines Around the World
Markets1 month ago
The Year in Review: 2020 in 20 Visualizations
Markets3 weeks ago
Prediction Consensus: What the Experts See Coming in 2021
Technology1 month ago
Switch to Success: 20 Years of Nintendo Console Sales
Misc2 months ago
Chart: A Global Look at How People Spend Their Time
Misc4 weeks ago
Visualizing the U.S. Population by Race
Precious Metals4 weeks ago
How Every Asset Class, Currency, and S&P 500 Sector Performed in 2020
Technology4 weeks ago
Mapped: The Top Surveillance Cities Worldwide