The first-ever US exchange-traded fund (ETF) recently celebrated its 20th anniversary. Launched in January 1993 by State Street Global Advisors with just $6.5 million in assets, the SPDR S&P 500 ETF (SPY; S27, cross-listing of SPY in Singapore) is today the world’s largest, with assets in excess of $120 billion. It is also the most actively traded security on the planet.

Back in the early 1990s, SPY—known as “Spider” among traders—was seen as a ground-breaking innovation that improved access to the market for investors. And yet, at the time very few could have imagined that ETFs would transform the way in which investors, advisers and institutions build and maintain portfolios.

The ETF was initially conceived to serve a fairly narrow purpose, namely to have a transparent asset-backed vehicle able to trade in real time as close as possible to fair value in all market conditions. The earliest adopters of the product were institutional investors looking to equitise cash, access diversified and broad equity market exposure, and hedge risk and volatility.