In January 1993 the American Stock Exchange listed a new product called Standard & Poor's Depositary Receipts — ticker SPY. It was the first US exchange-traded fund: a single share that gave its owner economic exposure to all 500 companies in the S&P 500 index, traded continuously throughout the day, with annual costs roughly one-tenth of the average actively-managed mutual fund of the era. Three decades later SPY holds more than \$500 billion in assets, the broader US ETF market exceeds \$8 trillion, and the cost of owning the entire S&P 500 has fallen to 0.

03% per year. If you save \$100,000 today and earn the long-run market return for thirty years, the difference between an 0.03% expense ratio and a 1.

0% expense ratio is roughly \$400,000 of terminal wealth. The ETF wrapper is the most important fee-and-tax-efficiency innovation of the last forty years.