Since State Street launched the first exchange traded fund (ETF) in the United States in 1993, ETFs have become an increasingly popular investment vehicle. Today, the more than 2,000 ETFs listed on US exchanges1 provide all investors efficient, cost-effective and transparent access to markets.
ETFs’ exponential growth has sparked the proliferation of more structurally complex exchange traded products (ETPs), including exchange traded notes (ETNs) and levered and inverse ETPs. Yet, while these products pose very different risks to investors than do traditional index or basket-tracking ETFs, many ETPs have been categorized—by investors, the press and exchanges—as ETFs.
On May 13, 2020, State Street Global Advisors was proud to join BlackRock, Charles Schwab Investment Management, Fidelity Investments, Invesco, and Vanguard in asking the exchanges to implement a classification system that categorizes different types of ETPs in a way that more accurately reflects their inherent complexities, structural features and risks.2