33 Years of the First US ETF: Booms, Crashes, a Lost Decade and a Thirtyfold Gain

SPY, the SPDR S&P 500 ETF Trust, began trading on January 29, 1993, as the first exchange-traded fund in the United States. Including reinvested dividends, it returned about 10.7% a year from its first day to early November 2026, turning $10,000 into roughly $312,700.

That 33-year record covers almost the entire modern history of the stock market. SPY lived through the boom of the 1990s, the dot-com crash, the September 11 attacks, the 2008 financial crisis, the COVID crash, the 2022 bear market and the tariff and oil shocks of 2025 and 2026. It also created an industry that now manages trillions of dollars.

This guide tells that story year by year. It explains how SPY was invented, what happened in every calendar year since launch, how far it fell in each major crash and how long it took to recover, and what more than three decades of owning the S&P 500 actually looks like.

Start Here: Learn With FRC

Financial Regulation Courses (FRC) has no stake in whether you buy SPY or any other fund. FRC sells no investments and earns no commission, so this history focuses on what happened and why, not on what to buy.

FRC’s ETF Investing for Beginners course explains how ETFs like SPY work, followed by ETF Investing Strategies and Advanced ETF Investing, which cover building and managing a portfolio through every kind of market.

FRC’s programs and memberships are open to everyone. FRC’s guide to everything you need to know about ETFs covers the wider history of the ETF industry that SPY started.

SPY at a Glance

All return figures in this guide are total returns, meaning they include dividends reinvested. Past performance does not guarantee future results.

SPY Returns by Year

Over its 32 full calendar years, SPY finished higher in 26 and lower in six: 2000, 2001, 2002, 2008, 2018 and 2022. Three of those losing years came in a row, the only time that has happened in SPY’s history.

The Invention of SPY

The idea behind SPY came from Nathan Most and Steven Bloom, who worked in product development at the American Stock Exchange. They wanted a product that let investors buy and sell the whole S&P 500 in a single trade, at any time of day, like a stock.

Earlier attempts had run into legal and regulatory problems. Most and Bloom assembled a team including State Street Bank, the trading firm Spear, Leeds & Kellogg and the law firm Orrick, Herrington & Sutcliffe, and spent years working with the SEC to gain approval.

Their solution was a unit investment trust that held all the stocks in the S&P 500 and issued shares that traded on an exchange. They called the shares Standard & Poor’s Depositary Receipts, or SPDRs, and the name was soon pronounced “spiders”.

The Launch: January 1993

The trust began operations on January 22, 1993, and its shares first traded on the American Stock Exchange on January 29, under the ticker SPY. Few people at the time expected it to transform investing.

Early trading was slow, and some doubted whether ordinary investors would ever use it. Mutual funds were the established way to own the market, and many professionals saw little need for a fund that traded all day. Over time, its low cost, its intraday trading and its tax efficiency attracted both institutions and individuals.

From its first trading day to the end of 1993, SPY returned about 8.6%. It had become the first US-listed exchange-traded fund, the start of an industry that would eventually hold trillions of dollars.

The Strange Rule That Decides When SPY Ends

As a unit investment trust, SPY must have an end date. It was originally due to terminate in 2018, but its life was extended by tying it to the lives of 11 people who were children when the trust was created.

Under its current terms, SPY will end on January 22, 2118, or 20 years after the death of the last of those 11 people, whichever comes first. Most of the 11 had family connections to employees of the American Stock Exchange.

This unusual rule has no effect on investors today. It is a quirk of the legal structure Most and Bloom chose in the early 1990s, and it is one of the most curious facts in the history of finance.

1994: The Bond Market Shock

In February 1994, the Federal Reserve began raising interest rates for the first time in five years, and it kept raising them through the year. The sudden rise triggered one of the worst bond market sell-offs in modern history.

Stocks struggled too. SPY returned only about 0.4% in 1994, its flattest year for decades.

Even so, the economy kept growing and company profits stayed strong. That set the stage for one of the greatest bull runs in market history.

1995–1999: The Great Bull Market

1995 was SPY’s best calendar year, with a return of about 38.0%. Inflation was low, the Fed had stopped raising rates, and the arrival of the internet was beginning to excite investors.

The gains kept coming: about 22.6% in 1996, 33.5% in 1997, 28.7% in 1998 and 20.4% in 1999. In December 1996, Fed Chairman Alan Greenspan warned of “irrational exuberance” in markets, but stocks kept climbing for more than three more years.

There were sharp scares along the way. In October 1997, the Asian financial crisis triggered the first-ever use of market-wide circuit breakers, and in 1998 Russia’s debt default and the collapse of the hedge fund Long-Term Capital Management sent the S&P 500 down close to 20% before the Fed cut rates and markets recovered.

The Peak of the Bubble

By the end of 1999, an investor’s $10,000 from SPY’s launch had grown to about $38,200. The S&P 500 was valued at levels far above its historical average, driven by enthusiasm for technology and internet companies.

The fear of a Y2K computer failure at the turn of the millennium came and went without disaster. Technology stocks surged into early 2000.

SPY reached its peak in late March 2000. It would not regain that level, including dividends, for more than six years.

2000–2002: Three Losing Years in a Row

The dot-com bubble burst in March 2000, and technology stocks collapsed. SPY lost about 9.7% in 2000, its first losing year.

In 2001, the September 11 attacks closed the stock market for four trading days, and the US fell into recession. SPY lost about 11.8%, and in 2002 a wave of accounting scandals, led by Enron and WorldCom, pushed it down another 21.6%.

From its March 2000 peak to its low on October 9, 2002, SPY fell about 47.5%. An investor who bought at the peak lost almost half their money, and the original $10,000 from launch had fallen from about $38,200 to $23,800.

2003–2007: Recovery and the Housing Boom

The market turned in 2003, and SPY returned about 28.2% as the economy recovered and interest rates fell to 1%. Gains continued at a slower pace: about 10.7% in 2004, 4.8% in 2005 and 15.9% in 2006.

In October 2006, SPY finally regained its March 2000 peak, including dividends, more than six years after the bubble burst. A booming housing market and easy credit were driving the economy.

2007 brought warning signs as problems in subprime mortgages spread. SPY peaked in October 2007 and finished the year up about 5.2%.

2008: The Financial Crisis

2008 was SPY’s worst calendar year. Bear Stearns collapsed in March, Lehman Brothers filed for bankruptcy in September, and credit markets around the world froze. Congress passed a $700 billion bank rescue program in October, and in December the Federal Reserve cut interest rates to near zero for the first time in its history.

SPY lost about 36.8% for the year. From its October 2007 peak to its low on March 9, 2009, it fell about 55%, more than half its value.

The original $10,000 from SPY’s launch fell to about $27,300, close to where it had been in 1998. More than a decade of gains had been wiped out in two crashes.

The Lost Decade

The 2000s became known as the lost decade for US stocks. An investor who bought SPY at the end of 1999 and held until the end of 2009 had less money after 10 years, even after reinvesting dividends.

$38,200 at the end of 1999 had become about $34,500 at the end of 2009, a loss of roughly 10% over a full decade. Many investors gave up on stocks entirely during these years.

Those who stayed invested, or kept buying through the crashes, were rewarded in the following decade. The lost decade remains one of the most important reminders that stocks can deliver poor returns for long periods.

2009–2012: The Long Recovery

The market bottomed in March 2009 and then surged, and SPY returned about 26.4% for the year. Government action to stabilize the banks and aggressive Federal Reserve support helped restore confidence.

SPY added about 15.1% in 2010, despite the Flash Crash of May 6, and about 1.9% in 2011, a year marked by the European debt crisis and the downgrade of the US government’s credit rating. In 2010, the fund was renamed SPDR S&P 500 ETF Trust.

In August 2012, SPY finally regained its October 2007 peak, including dividends, almost five years later. It returned about 16.0% for 2012.

2013–2017: A New Bull Market

2013 was one of SPY’s strongest years, with a return of about 32.3%. It added about 13.5% in 2014, 1.2% in 2015 as oil prices collapsed, and 12.0% in 2016.

2017 was one of the calmest years in market history, and SPY returned about 21.7%. By the end of 2017, the original $10,000 from launch had grown to about $97,200.

During these years, competition from cheaper S&P 500 funds such as VOO and IVV grew rapidly. SPY remained the most heavily traded, but long-term investors increasingly chose lower-cost alternatives.

2018–2021: Shocks and Records

In late 2018, rising interest rates and trade tensions with China drove SPY down about 19.4% from September to Christmas Eve. It finished the year down about 4.6% and recovered by April 2019.

SPY returned about 31.2% in 2019. In 2020, the COVID-19 pandemic triggered a fall of about 33.7% from February 20 to March 23, but massive government and Fed support sparked a recovery by August, and SPY finished the year up about 18.3%.

2021 brought a return of about 28.7%. The original $10,000 from launch passed $185,000.

2022: The Inflation Bear Market

In 2022, inflation hit its highest level in about 40 years, and the Federal Reserve raised its federal funds rate at the fastest pace in decades. From January 4 to October 12, SPY fell about 24.5%.

It finished the year down about 18.2%. The recovery took until December 2023, almost two years after the decline began.

2023–2025: Milestones and a Changing of the Guard

SPY returned about 26.2% in 2023 and 24.9% in 2024, as artificial intelligence drove huge gains in the largest technology companies. In February 2024, it became the first ETF to reach $500 billion in assets, and in October 2024 the first to pass $600 billion.

In February 2025, VOO overtook SPY to become the largest ETF in the world, ending SPY’s 32-year reign. Weeks later, sweeping US tariff announcements triggered a sharp sell-off that took the S&P 500 down close to 19% before it recovered by June.

SPY returned about 17.7% in 2025. In January 2026, it was renamed the State Street SPDR S&P 500 ETF Trust.

2026 So Far

War between the United States and Iran broke out at the start of March 2026, and the effective closure of the Strait of Hormuz sent oil prices above $100 a barrel. By late March, the S&P 500 was about 9% below the record high it had set in January.

The market stopped short of a full 10% correction and recovered as the year went on. By early November, SPY was up about 11.2% for 2026.

That took the original $10,000 from SPY’s launch to about $312,700. Full-year 2026 figures will be added to this guide once the year is complete.

Every Major Fall at a Glance

Figures are total returns including dividends. In every case so far, SPY eventually recovered and went on to new highs, although the wait ranged from a few months to more than six years.

What $10,000 Went Through

An investor who put $10,000 into SPY at launch and never sold would have about $312,700 by early November 2026. That is more than thirtyfold, an example of compound interest working over three decades.

The path included two periods when half the money disappeared. The investment fell from about $38,200 to $23,800 between 1999 and 2002, and from about $43,200 to $27,300 in 2008.

Investors who sold in those crashes and waited to feel safe often missed the recoveries that followed. Investors who added money regularly, an approach known as dollar-cost averaging, bought shares at low prices and benefited the most, as FRC’s guide to dollar-cost averaging vs lump sum explains.

What 33 Years of SPY Teach Investors

The first lesson is that sharp falls are a regular part of owning stocks. SPY has fallen by roughly 20% or more at least six times in its history, about once every five years.

The second is that recoveries can take far longer than expected. After the dot-com crash, it took more than six years to recover, and after the financial crisis almost five years.

The third is that the long run has still rewarded patience. Despite every crash, SPY turned $10,000 into more than $300,000, and its worst decade, the 2000s, was followed by one of its best.

How SPY Changed Investing

SPY’s success opened the door to an entire industry. Within a few years, the American Stock Exchange and others had launched ETFs tracking mid-sized companies in 1995, foreign markets in 1996, individual sectors of the S&P 500 in 1998 and the Nasdaq-100 in 1999.

iShares arrived in 2000, Vanguard launched its first ETF in 2001, and by the mid-2000s there were ETFs holding bonds and gold. Each built on the basic design that Most and Bloom had created for SPY.

Today, ETFs hold trillions of dollars and are used by everyone from first-time investors to the largest pension funds. Millions of people who have never heard of Nathan Most own investments that exist because of the product he helped bring to market in 1993.

SPY and Its Lower-Cost Rivals

SPY charges an expense ratio of 0.0945%, about three times the 0.03% charged by VOO and IVV. Its unit investment trust structure also means it cannot reinvest dividends between payouts or lend its securities.

Those differences have caused SPY to lag its cheaper rivals by a small amount each year. Over long periods, the gap adds up, which is why VOO and IVV have attracted much of the money from long-term investors.

SPY’s advantage is its trading activity. It remains one of the most heavily traded securities in the world, with the deepest options market of any ETF. FRC’s comparison of SPY vs VOO explains the trade-offs, and FRC’s VOO performance history tells its rival’s story.

How SPY Compares With Other Popular Funds

The broad US market fund VTI, launched in 2001, has tracked SPY closely, with small differences from its holdings of smaller companies. FRC’s VTI performance history covers its 25-year record.

QQQ, which tracks the Nasdaq-100, has swung far more widely than SPY, falling about 83% in the dot-com crash before becoming one of the strongest funds of the 2010s. FRC’s QQQ performance history tells that story.

Dividend funds such as SCHD have often held up better than SPY in downturns. FRC’s SCHD performance history shows how it fared in 2022, when SPY fell about 18%.

Dividends and Taxes Through the Years

SPY pays dividends quarterly, passing on the dividends of the S&P 500 companies. Because it is a unit investment trust, it holds dividends in cash until each quarterly payout rather than reinvesting them, a small drag in rising markets.

SPY has been highly tax-efficient through its history, rarely distributing capital gains thanks to the in-kind creation and redemption process. Most of its dividends have been qualified dividends taxed at lower rates.

FRC’s guides to tax-efficient ETFs for a taxable brokerage account and how to minimize capital gains tax explain how investors keep tax bills low.

Is Your Money Safe in SPY?

SPY is a registered unit investment trust overseen by the SEC, with its holdings kept by its trustee, State Street, and held for the benefit of its shareholders. The trust’s assets are separate from State Street’s own.

When you hold SPY at a SIPC member brokerage, your account is protected up to $500,000, including $250,000 in cash, if the brokerage fails and assets are missing. FRC’s guide to whether your money is safe in a brokerage account explains how that protection works.

This protection does not cover market losses, such as SPY’s 55% fall in the financial crisis. Its safeguards protect the safekeeping of your investment, not its value.

Keep Learning

SPY’s 33-year history is the closest thing investors have to a complete record of what owning the US stock market feels like. It includes a historic boom, a lost decade, two crashes of around 50% and one of the longest bull markets ever.

The FRC dictionary is more than a dictionary. It is a library of explainer videos, written explanations and on-page quizzes, so you can open any term, such as bull market, and go deeper whenever something is unclear.

FRC’s programs and memberships are open to everyone. FRC’s guide to how to invest in the S&P 500 and its Investing for Beginners guide are natural next steps.

Your Next Step

Since January 1993, SPY has returned about 10.7% a year and turned $10,000 into about $312,700. Along the way it lost almost half its value from 2000 to 2002, more than half from 2007 to 2009, and about a third in 2020, and it recovered every time.

Use that history to set realistic expectations: expect sharp falls and long periods of poor returns, plan for them in advance and focus on investing consistently over decades.