Greetings from Boston, Massachusetts.
Boston is one of the oldest and most historic cities in the United States.
It’s also one of the world’s financial cornerstones.
You see, Boston is the center of banking in New England. The region has about 150 banks and 160 credit unions that are headquartered in the city.
Eastern Bank, for instance, is a notable and local retail bank with a major presence in the area.
The city is also home to huge insurance and investment management firms like Fidelity Investments, MassMutual, and Liberty Mutual.
Lastly, Boston is the birthplace of the mutual fund and exchange-traded funds (ETFs).
Today, I’ll go into more details about that history… and offer one way you can profit from how ETFs have transformed the investing patterns of institutions, brokerages, and individuals.
Click on the video below to watch it, or scroll down to read the transcript.
Editor, Inside Wall Street with Nomi Prins
Hi, everyone. Nomi here and greetings from Boston, Massachusetts.
Boston is filled with such rich history stretching back to the earliest settlers of our nation.
And today it’s one of the world’s financial cornerstones. But more on that in just a moment.
You see, directly behind me is the scenic Boston Harbor. It was in that body of water where the Boston Tea Party protests began.
The protests, instigated by figures like Sam Adams and Paul Revere, targeted the East India Company.
As the story goes, the colonists snuck aboard British ships and tossed their tea into the harbor. Those protests destroyed about $1.7 million worth of tea in today’s money.
But at the core of that act was deep economic and financial frustration. People saw the cards being stacked against them by the British monarchy.
You see, Great Britain’s East India Company was getting tax breaks and given an economic advantage on its imports from the colonies. Those 1773 protests are one of many steps that led to the American Revolution in 1776.
And while much has changed since then, we’re still always seeking economic security, financial stability, and political outcomes that better our futures.
Boston, as a historical financial center, is very aware of this.
In fact, State Street Corporation, just a few blocks away, is a global financial services powerhouse and the second-oldest operating bank in the United States.
The firm got its charter back in 1792 from then-Massachusetts-governor and American founding father John Hancock, who was also the first person to sign the Declaration of Independence.
Since then, this historic financial institution has boomed.
When I worked as a senior managing director at Bear Stearns in the 1990s at Canary Wharf in London, State Street had just moved its London offices over there. And for years, we’d talk between ourselves shop about the evolving European markets while grabbing bits of lunch.
Today, it has nearly $3.5 trillion in assets under its management.
State Street is also a financial innovator.
In 1993, it created the very first exchange-traded fund or ETF called the SPDR (spider). And Wall Street still refers to that as the ETF that started it all.
The spider parallels the stocks that comprise the S&P 500 Index, and it remains one of the most widely traded ETFs. (More on that in a moment, too.)
Globally, there are now over 1,700 ETFs which manage an estimated $10 trillion worth of funds. And State Street remains one of the largest global ETF providers.
ETFs have transformed how investors, institutions, brokerages, and individuals interact with, access, and think about financial markets.
ETFs offer you a way to invest in entire sectors… security types of nearly any trend or subsector that you can even imagine without having to buy individual stocks.
Plus, Wall Street closely monitors ETF data to see where flow, or the most trading volume, is going into and out of various ETFs to assess current investment trends. And then, it trades on that flow information.
And on that, one ETF for you to consider investing in today to catch some of that flow for yourself is State Street’s SPDR S&P 500 ETF, or SPY.
The SPY has had more cash flowing into it over the past week than any other ETF. It’s received $6.5 billion of new money or cash inflows compared to the next nearest ETF, with $1.6 billion.
I expect this trend to continue as the Fed pivots to Stage 2, or rate neutrality, of its three-stage pivot by the June FOMC meeting in the ongoing great distortion between the markets and real economy.
Plus, it’s a piece of ETF history baked right here in Boston.
Happy investing, and I’ll talk to you soon.