"Almost any investment process you can deliver in an ETF is going to improve on the return to investors when compared to legacy investment and fund structures," Mr. Bond said.
Deborah Fuhr, managing partner and founder of research firm ETFGI in London, said she smiles when she thinks about the number of people globally who told her that they saw no use for ETFs or had no interest in them. "Years later, they turn around and launch firms to create ETFs, use ETFs, and then go shout about it," Ms. Fuhr said.
Of course, in the early days of ETFs, they were seen as niche products just for indexers, Mr. Ross said. But interest accelerated coming out of 2001 and 2008, when stock market drops highlighted the underperformance of active management. That same phenomenon occurred after the 2020 sell-off as well.
Over the last three years, U.S. investors have directed $2 trillion into ETFs, including a record $942 billion in 2021, according to FactSet. By comparison, traditional mutual funds experienced $1.6 trillion in net outflows that year, according to the Investment Company Institute.
"ETFs were designed as institutional products, yet the real growth has come from financial advisors and retail investors," said David Nadig, Lenox, Mass.-based financial futurist at VettaFi LLC. "These investors made ETFs a success, not the other way around. They're much, much smarter than they get credit for."
And ETF assets are no longer solely going into indexed products. Actively managed ETFs now account for a third of the U.S. market by products and $351 billion (5%) in assets, according to ETF.com.
Mr. Browne of GTS, who earned the nickname "The Godfather of ETFs" for his trading support and encouragement of new products over the years, credits one of those active managers – Cathie Wood, chief executive officer and chief investment officer of Ark Investment Management LLC—for bringing new investors not just in to ETFs, but into financial markets generally.
"When she first walked into my office in 2013, after leaving AllianceBernstein, I would never have predicted she would have gained the following that she has," Mr. Browne said.
In one telling, the ETF market has been about suspending disbelief from the very beginning.
Mr. Nadig recalled discussions at then-Wells Fargo Nikko Investment Advisors in 1994 prior to the launch of the World Equity Benchmark Series (now iShares country ETFs from BlackRock Inc.). These were the first ETFs to bring exchange-trading of diversified international exposures to the U.S. during market hours.
"Why is anyone going to want to trade Japan when Japan is closed?" he recalled asking.
"Because there will be liquidity," was the reply. Such liquidity would be supplied by market makers, serving as authorized participants able to create or redeem shares of the fund with securities acquired in Japan.
"It took me a solid year or two before I was able to believe that the collective group of actors required to get those first ETFs off the ground were actually willing to put capital behind this seemingly intractable chicken-and-egg problem," Mr. Nadig said. "But they were absolutely right, and I've been trying to catch up ever since."
As for Jan. 29? Let's call it Spdrday.