Thirty years ago, in January 1993, the first exchange traded funds (ETFs) were launched in the United States. Today, with more than USD $6.5 trillion in assets, ETFs have become the go-to, low-cost, mainstream investment vehicle.
The early years
My passion for ETFs began in 2005 when I worked at Vanguard. They are a global asset manager and now the largest issuer of ETFs in Australia.
However back in the early 2000s ETFs were relatively new in Australia. The new acronym often (mistakenly) referred to as “EFTs” in those days had just started to catch the attention of some early adopter investors and advisers.
With the support of a great leader at Vanguard Australia, I moved into a newly-created role as a Product Manager shortly after. Responsible for developing and managing investment products, I had the privilege to work alongside the team that was instrumental in launching ETFs in Australia.
“ETFs have come a long way in the past 30 years and have transformed the investment landscape for the better.
Navigating the GFC
During the Global Financial Crisis in 2008, the team rapidly grew. Our mission was to launch a suite of ETFs during an extremely difficult period.
In addition to the tough financial markets, launching a new investment vehicle had other challenges. We had to navigate the existing regulation (such as the ASX operating rules known as AQUA Rules). Tackling these complex tasks was crucial to ensure a smooth implementation.
The first Australian ETF
The first Australian Vanguard ETF, ASX VAS (Vanguard Australian Shares Index ETF), was launched in May 2009, despite formidable obstacles.
This was just the beginning of an industry that now boasts almost $140 billion in assets in Australia. VAS is the largest ETF with $12 billion in assets. It continues to play an important role in investment portfolios from regular retail investors, to advisers and institutions.
Why Stockspot uses VAS
Stockspot uses VAS in our investment portfolios. We do this to give our clients exposure to the top 300 Australian companies on the ASX. Stockspot chose VAS for their portfolios in 2013, well before it became the largest Australian shares ETF in Australia.
ETFs have been a game changer in the wealth management industry and have made investing easy for everyday Australians. ETFs have lowered the barriers to entry, such as costs and minimum investments. This is especially true compared to other traditional investment vehicles, like managed funds.
ETFs have come a long way in the past 30 years and have transformed the investment landscape for the better.
I am excited to see what the future holds for this innovative investment vehicle, given my involvement in its growth and success.