Morningstar - Q2 2023 - 6

Dispatches
How a Spider Changed
Financial Markets
After 30 years, SPY's
web of influence is vast.
Phillips Curve
8
Return-Free Risk
Ivory Towers
10
All-Weather Stock Funds Do Exist
Policy
12
Insights From the 2023 Retirement Plan
Landscape Report
Sustainability Matters
14 Women Make Inroads on Corporate Boards
Global Briefs
17
19
Americas
Greater Europe
22 Australia & New Zealand
25
Asia
LETTER FROM THE BOARD
Bryan Armour
With SPDR S&P 500 ETF Trust SPY celebrating
its 30th
birthday earlier this year, it's a good
time to reflect on the impact it has had as the very
first exchange-traded fund listed in the United
States. But-record scratch-it wasn't the
world's first ETF. That title belongs to the TIPs 35
Fund, which planted the ETF flag in the Great
White North in 1990.
SPY's launch also aligned with the growing
popularity of index funds. Indeed, during a speech
that took place a year before SPY's inception,
Jack Bogle proclaimed that Vanguard 500 Index
VFINX would surpass Fidelity Magellan FMAGX
as the world's largest mutual fund. That prediction
came true in 2000, demonstrating that the
wheels were already in motion for index funds.
SPY wasn't a new strategy, but it was a new
way to invest. ETFs provided traders a way
to manage market risk within a single instrument
that traded intraday on stock exchanges. It
plugged the hole between stocks and equity index
futures, according to Steven Bloom, one of
SPY's architects. And its start as a trading tool has
embedded it in the fabric of financial markets
to this day.
The Spark That Ignited the ETF Market
What started with a single " spider " has grown
into nearly 5,000 U.S. ETFs and over $6 trillion in
assets under management.
The birth of SPY also precipitated the boom in
passive investing. Passive funds took the
lead in inflows from active funds in 2011 and never
looked back. The popularity of index-tracking
ETFs hit a fever pitch in 2022, when the spread
between passive and active fund net flows
hit $1.5 trillion ( EXHIBIT 1 ).
Despite a slow start, cumulative net flows
into ETFs since SPY's launch surpassed mutual
funds starting in 2021. That gap widened
significantly in favor of ETFs last year ( EXHIBIT 2 ).
SPY's Performance Edge
SPY's success was critical to investors' growing
acceptance of ETFs. Since its inception,
SPY outperformed 71% of U.S. equity funds
EXHIBIT 1
Indexing Takes Off SPY helped trigger the passive investing takeover of active.
Net Flows Into Active and Passive Funds
$1.50T
Actively
Managed
0.75
Passive
-0.75
-1.50
1993
1999
Source: Morningstar Direct. Data as of Dec. 31, 2022.
2005
2011
2017
2022
6
Morningstar Q2 2023
$6.0T

https://www.morningstar.com/etfs/arcx/spy/quote https://www.morningstar.com/funds/xnas/vfinx/quote https://www.morningstar.com/funds/xnas/fmagx/quote https://www.morningstar.com/funds/xnas/vfinx/quote

Morningstar - Q2 2023

Table of Contents for the Digital Edition of Morningstar - Q2 2023

Contents
Morningstar - Q2 2023 - Cover1
Morningstar - Q2 2023 - Cover2
Morningstar - Q2 2023 - Contents
Morningstar - Q2 2023 - 2
Morningstar - Q2 2023 - 3
Morningstar - Q2 2023 - 4
Morningstar - Q2 2023 - 5
Morningstar - Q2 2023 - 6
Morningstar - Q2 2023 - 7
Morningstar - Q2 2023 - 8
Morningstar - Q2 2023 - 9
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Morningstar - Q2 2023 - 79
Morningstar - Q2 2023 - 80
Morningstar - Q2 2023 - Cover3
Morningstar - Q2 2023 - Cover4
https://www.nxtbook.com/nxtbooks/morningstar/magazine_2024q2
https://www.nxtbook.com/nxtbooks/morningstar/magazine_2024q1
https://www.nxtbook.com/nxtbooks/morningstar/magazine_2023q4
https://www.nxtbook.com/nxtbooks/morningstar/magazine_2023q3
https://www.nxtbook.com/nxtbooks/morningstar/magazine_2023q2
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https://www.nxtbook.com/nxtbooks/morningstar/magazine_20161201
https://www.nxtbook.com/nxtbooks/morningstar/magazine_20151011
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https://www.nxtbook.com/nxtbooks/morningstar/magazine_20150607
https://www.nxtbook.com/nxtbooks/morningstar/magazine_20150405
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https://www.nxtbook.com/nxtbooks/morningstar/magazine_20151201
https://www.nxtbook.com/nxtbooks/morningstar/magazine_20141011
https://www.nxtbook.com/nxtbooks/morningstar/magazine_20140809
https://www.nxtbook.com/nxtbooks/morningstar/magazine_20140607
https://www.nxtbook.com/nxtbooks/morningstar/magazine_20140405
https://www.nxtbook.com/nxtbooks/morningstar/magazine_20140203
https://www.nxtbook.com/nxtbooks/morningstar/advisor_20141201
https://www.nxtbook.com/nxtbooks/morningstar/advisor_20131011
https://www.nxtbook.com/nxtbooks/morningstar/advisor_20130809
https://www.nxtbook.com/nxtbooks/morningstar/advisor_20130607
https://www.nxtbook.com/nxtbooks/morningstar/advisor_20130405
https://www.nxtbook.com/nxtbooks/morningstar/advisor_20130203
https://www.nxtbook.com/nxtbooks/morningstar/advisor_20131201
https://www.nxtbook.com/nxtbooks/morningstar/advisor_20121011
https://www.nxtbook.com/nxtbooks/morningstar/advisor_20120809
https://www.nxtbook.com/nxtbooks/morningstar/advisor_20120607
https://www.nxtbook.com/nxtbooks/morningstar/advisor_20120405
https://www.nxtbook.com/nxtbooks/morningstar/investorconference2012
https://www.nxtbook.com/nxtbooks/morningstar/advisor_20120203
https://www.nxtbook.com/nxtbooks/morningstar/advisor_20121201
https://www.nxtbook.com/nxtbooks/morningstar/advisor_20111011
https://www.nxtbook.com/nxtbooks/morningstar/advisor_20110809
https://www.nxtbook.com/nxtbooks/morningstar/advisor_20110607
https://www.nxtbook.com/nxtbooks/morningstar/advisor_20110405
https://www.nxtbook.com/nxtbooks/morningstar/advisor_20110203
https://www.nxtbook.com/nxtbooks/morningstar/advisor_20111201
https://www.nxtbook.com/nxtbooks/morningstar/advisor_20101011
https://www.nxtbook.com/nxtbooks/morningstar/advisor_20100809_lincoln
https://www.nxtbook.com/nxtbooks/morningstar/advisor_20100809
https://www.nxtbook.com/nxtbooks/morningstar/advisor_20100607_lincoln
https://www.nxtbook.com/nxtbooks/morningstar/advisor_20100607
https://www.nxtbook.com/nxtbooks/morningstar/advisor_20100405_lincoln
https://www.nxtbook.com/nxtbooks/morningstar/advisor_20100405
https://www.nxtbook.com/nxtbooks/morningstar/advisor_20100203
https://www.nxtbook.com/nxtbooks/morningstar/advisor_20101201
https://www.nxtbook.com/nxtbooks/morningstar/advisor_20091011
https://www.nxtbook.com/nxtbooks/morningstar/advisor_20090809
https://www.nxtbook.com/nxtbooks/morningstar/advisor_20090607
https://www.nxtbook.com/nxtbooks/morningstar/advisor_20090405
https://www.nxtbook.com/nxtbooks/morningstar/advisor_20090203
https://www.nxtbook.com/nxtbooks/morningstar/advisor_2008fall
https://www.nxtbook.com/nxtbooks/morningstar/advisor_2008summer
https://www.nxtbook.com/nxtbooks/morningstar/advisor_2007spring
https://www.nxtbook.com/nxtbooks/morningstar/advisor_2007fall
https://www.nxtbook.com/nxtbooks/morningstar/advisor_2007summer
https://www.nxtbook.com/nxtbooks/morningstar/advisor_2008spring
https://www.nxtbook.com/nxtbooks/morningstar/advisor_2008catalog
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