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.
Why Telcos Must Get in the Game for the Rise of Esports
Telcos failed to capitalize on the ‘Netflix’ opportunity — however, the birth of a new multi-billion dollar industry (esports) could change the game.
Why Telcos Must Get in the Game for the Rise of Esports
Over the last century, the world’s telecommunications companies have built out the complex infrastructure that makes the information age possible.
Hundreds of billions of dollars has been invested into phone lines, submarine cables, wireless towers, and fiber optics to connect the world. And with 5G innovations in the pipeline, the world has never been able to communicate faster and more effectively.
Despite this impressive accomplishment, telcos find themselves in an awkward situation: their revenue growth is stagnating and margins continue to shrink, all while companies like Netflix are monetizing internet bandwidth around the world.
Today’s infographic is from Swarmio Media, and it highlights challenges faced by telcos — and how they can potentially capitalize on the emergence of esports and a massive gaming market.
A Missed Opportunity
Habits around content consumption can change abruptly, and fast-moving technology companies have been able to capitalize on these changes.
That’s why, in recent years, there’s been a boom in over-the-top (OTT) media services (Netflix, Amazon Prime, Skype, etc.) that have found effective ways to operate on top of the telco infrastructure, streaming content or providing VoIP services to end consumers.
|Television||Voice & Messaging||Audio|
|Example OTT services||- Netflix|
- Amazon Prime
- Apple Music
- Internet Radio
|Global market size (2018)||$68.7 billion||$26.7 billion||$8.9 billion|
|Growth rate (2017-2018):||28%||15%||33%|
Although telcos arguably missed the boat on video streaming, voice, and messaging, there is now an emerging segment that could help fill the gap.
The rising popularity of esports could be the multi-billion dollar industry that provides telcos a much-needed growth area to better monetize their infrastructure.
The Esports Boom
In recent years, the growth in professional gaming has been explosive.
Already worth over $1 billion, the market is projected by experts to triple by 2025. Esports is regularly packing stadiums with avid fans, spawning new professional teams, and selling massive sponsorship deals.
This boom in esports – and in online multiplayer gaming in general — has created a commercial audience of digital natives that is both young and affluent. It’s a growing segment that sees gaming as a lifestyle, and they see professional esports gamers and personalities as their heroes.
The Need For Speed
Any multiplayer gamer will tell you that there is one surefire way to ruin the gaming experience: high latencies (or as they call it, “lag”). This is an area telecoms are uniquely positioned to help with, especially with the advent of edge computing technology and 5G.
When it comes to online gaming, a sophisticated edge computing system will be able to detect where each player is located, while creating a server in an optimal location that provides all the players with the same high bandwidth, low latency, and experience.
By leveraging technology that enables edge computing at scale, forward-looking telcos can take gamers to where they want to go – and with plenty of value-adds.
Living on the Edge
To compete against growing outside threats like Netflix and Google, telcos must make bold investments in enabling technologies that bring edge computing to their customers at scale.
Beyond acting as the gatekeeper to lightning fast connections, telcos can take advantage of esports and gaming by building internal online communities, delivering tailored esports content, and enabling and promoting esports tournaments.
If done right, this can help telcos engage with digital natives, create meaningful experiences, win lifelong customers and advocates, and maximize average revenue per user (ARPU).
For many of the 2.5 billion gamers globally, there is little reason to be loyal to a telco – until now.
Brace for Impact: Industries on the Verge of CBD Disruption
Brace for Impact: Industries on the Verge of CBD Disruption
It seems as though cannabis is on everyone’s lips these days.
More specifically, the conversation centers around a major chemical compound found inside the plant—cannabidiol, or more widely known as CBD.
CBD’s far-reaching therapeutic benefits are propelling the global CBD market, which could hit $20 billion by 2024. However, industries like alcohol and pharmaceuticals are being directly threatened by this rapid rise.
Today’s infographic from CannaInsider explores how CBD is disrupting these industries, and the latter’s strategies to curb this effect.
Who will emerge unscathed?
CBD Market Spreading like Wildfire
A growing stream of robust research highlights CBD’s benefits in combating certain health conditions, such as:
- Chronic pain
- CBD for fitness: Incorporating CBD into a workout routine can boost performance, endurance, and recovery. Product types include pre-workout coffee, supplements, and post-workout smoothies.
- CBD for pets: Proven benefits such as anti-inflammatory properties are driving sales of CBD treatments for pet health. By 2022, this market could be worth over $1 billion.
- DNA-specific strains: Companies are testing people’s saliva to recommend specific strains that are tailored to their specific needs.
- Odorless cannabis: More pure, less harsh odorless cannabis will soon be available, allowing consumers to smoke in stealth mode.
- Grow your own: Cannabis consumers can cultivate their own plants at home, and even control the process from their smartphone.
Nearly every product segment, from pet health to beverages, is experiencing a CBD infusion to take advantage of these therapeutic effects.
This surge in popularity presents significant opportunities to create an entirely new consumer base. Emerging consumers seek CBD products for various applications, such as self-care, socializing, and fitness.
Going Head to Head with Big Players
The alcohol, tobacco, and pharmaceutical industries are bracing for impact, as the new variety in CBD products and formats threaten their market share.
The percentage of alcohol consumers has dropped by 4.6% since 2000, with changing tastes at the center of this cultural shift.
New research that tracked behavioural change from 2018 to 2019 found similar results. The percentage of alcohol consumers consuming cannabis has increased from 36% to 45%, while the percentage of cannabis consumers who consume alcohol has decreased from 72% to 65%.
These behavioural shifts have influenced a significant number of alcohol industry titans to partner with cannabis companies. For example, Molson Coors is entering the cannabis space with HEXO Corp to launch CBD-infused beverages.
Similarly, declining smoking rates continue to negatively impact tobacco sales. As many tobacco giants pivot to reduced-risk-products (RRPs) such as vapes, cannabis is also catching their eye.
Most notably, Altria invested $1.8 billion for a 45% stake in global cannabis company Cronos, potentially signalling the start of many partnerships between the two industries.
The pharma industry is particularly interested in CBD’s therapeutic properties. Medical cannabis sales for 2019 will reach $5.9 billion—poaching $4 billion from Big Pharma’s bottom line.
This is triggering multinational companies to collaborate with cannabis companies at a furious pace. Partnerships—such as Novartis and Tilray—could unlock more international distribution of medical cannabis, and new pharmaceutical growth opportunities.
Continuous CBD innovations will not only impact these industries—they could enhance human capabilities and unleash our full potential.
A tsunami is unlocking new CBD sub-segments all over the world, with many offering solutions for mood and performance enhancement for both people and animals.
The Unknown Potential
Applications that will allow a personalized cannabis experience are also on the horizon:
As CBD consumption grows, many industries will need to decide to disrupt, or be disrupted.
Several other cannabinoids have also been discovered, but they have yet to be researched in depth—which means the investment potential of CBD could be just the beginning.
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