A panel of experts gathered in New York recently to debate whether the great rotation back to equities from fixed income has finally arrived. After all, in the first quarter of 2013, the stock market reached new highs as a record $19 billion flowed back into equities. While panelist and equity analyst Rich Repetto, a principal at Sandler O’Neill, agreed we could be seeing the beginnings of a rotation into equities, he qualified his observation: This time passive equities might comprise the lion’s share of equity assets. That’s because growth in exchange-traded funds, or ETFs, is far surpassing growth in active management, Repetto observed.

The timing for an equity resurgence into ETFs could not be better. This year marks the 20th anniversary of the Standard & Poor’s Depository Receipts or SPDRs, the first ETF, approved by the Securities and Exchange Commission in 1993. The proliferation of these vehicles, which now number around 1,450 funds, would not surprise Nathan Most, whose idea for the unique ETF structure arose from his long experience in commodities trading. Before his death in 2004, Most predicted the new product would grow far beyond its early start as an equity index vehicle.

As fund providers continue to develop new types of ETFs and seek a way to crack the 401k market, it is time to honor Most, who, like many early rock stars, never received a penny in royalties from his successful creation. In 2004, just a few months before his death at age 90, Senior Writer Frances Denmark spoke with Most about how he came up with the idea for these funds and his vision for their future development.

Most’s concept for the ETF was based on having spent most of his career as what he termed “a commodities man.” The stage was set in 1976 when he left the Commodities Futures Trading Commission in Washington, D.C. and headed to New York to create new financial products for the American Stock Exchange that included a couple of commodity exchanges.

Most’s creativity was triggered by a confluence of events: decreasing profits at the Amex and a changing financial landscape. As head of new product development in the option and derivative section, Most spent his days developing new types of indexes for different parts of the market and applying them to options. But the equity side of the exchange was in trouble with only two million shares traded each day. “I thought there had to be a better way than entertaining company executives only to see them list on Nasdaq anyway,” Most confided.