The 22nd of January, 2018 marks the 25th birthday of the first - and most popular - ETF in the United States*, the State Street managed S&P 500 Index ETF, which trades on the AMEX as $SPY. ETFs are typically designed to track the returns of an index. For SPY, the index it tracks is the S&P 500. At its debut in January 1993, $SPY traded at $43.97 per share; yesterday, it closed at $280.41 - allowing investors to participate in the +638% return of the S&P 500 over that time period.
From a single fund in 1993 to over 5,000 ETFs worldwide today, SPY helped to pave the way for a revolution in the financial services industry. For smaller investors, ETFs offer low-cost diversification, while larger investors can use them to construct sophisticated portfolios that blend active and passive investment strategies.
Vanguard and iShares both provide competitors of SPY-- VOO and IVV, which also track the S&P 500. The differences in structure and fees is worth considering when evaluating which to choose.
* $SPY is often described as the first ETF, but it was preceded in 1990 by the Toronto Stock Exchange's Toronto 35 Index Participation Units (TIPs 35). It was $SPY, however, that popularized ETFs and made them mainstream investment vehicles.