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There are a number of misconceptions when it comes to ETF liquidity. Many investors believe that if a product doesn’t trade enough shares it will be impossible to invest in it.
That simply is not true for the majority of funds because authorized participants have the ability to step in and create new baskets of an ETF in order to meet demand and keep prices close to underlying NAVs. This ability to create new shares, along with the built-in arbitrage mechanism, ensures that most ETFs trade very close to their underlying values and that big traders can generally get into most ETFs with ease.
However, while the importance of volume may be somewhat overstated, it is still an important consideration in the investment process, especially for traders who get in and out of a particular security very frequently. For these traders, high volume levels can help keep bid-ask spreads low and thus reduce the total cost of trading.
For example, many of the top, most-liquid ETFs on the market today have a spread between the bid and the ask of just a few pennies while a number have a spread that is just one penny wide. This means that sellers/buyers can often get in or out of a particular fund at the current price — something that is not always possible in less-liquid products.
While a couple of pennies a share isn’t a big deal over decades to long-term, buy-and-hold investors, it can really add up to short-term traders or those who have a large position in a particular fund. For these traders, below we briefly highlight 25 of the most-liquid ETFs currently on the market. The list has been made with the help of data from etfdb.com:
SPDR S&P 500 ETF (NYSE:SPY) (SPY) – Average volume 69.04 million
Initiated in January 1993, SPY is the ETF with the highest traded volume. It has been designed to track the performance of the . The most-popular fund among investors has about 500 stocks in its basket. This inexpensive fund charges a premium of just 0.09%.
VanEck Vectors Gold Miners ETF (NYSE:GDX) ( (TSXV:GDX) ) – Average volume 61.60 million
The underlying NYSE Arca Gold Miners Index tracks the overall performance of companies involved in the gold mining industry. Canada takes half of the fund. The $11.3-billion fund charges 52 bps in fees (read: 5 Gold Mining ETFs & Stocks Shining in August).
iShares MSCI Emerging Markets ETF (NYSE:EEM) EEM – Average volume 61.51 million
The fund follows the MSCI Emerging Markets Index, which measures the equity market performance in the global emerging markets. The $25.2-billion fund is heavy on China (32.4%), followed by South Korea (11.8%) and Taiwan (11.1%). The fund charges 67 bps in fees.
Financial Select Sector SPDR Fund XLF – Average volume 49.28 million
The underlying Financial Select Sector Index seeks to provide an effective representation of the financial sector of the S&P 500 Index. The $22.2-billion fund charges 13 bps in fees (read: Bank ETFs Benefit From Steepening Yield Curve, But How Long?).
iPath Series B Short-Term Futures ETN VXX– Average volume 30.96 million
The S&P 500 VIX Short-Term Futures Index Total Return offers exposure to a daily rolling long position in the first and second month VIX futures contracts and reflects views of the future direction of the VIX index at the time of expiration of the VIX futures contracts comprising the Index. The $819.5-million fund charges 89 bps in fees.
VelocityShares Daily 2x VIX Short Term ETN TVIX – Average Volume 30.36 million
The VelocityShares Daily 2x VIX Short-Term ETN is linked to 2x the daily performance of the S&P 500 VIX Short-Term Futures Index less the investor fee. The product’s expense ratio is 1.65% (read: Top and Flop Leveraged ETFs of Last Week).
Invesco QQQ (QQQ) – Average volume 29.51 million
The underlying Nasdaq-100 Index includes 100 of the largest domestic and international nonfinancial companies listed on the Nasdaq Stock Market based on market capitalization. The $75.5-billion fund charges 20 bps in fees.
United States Oil Fund (NYSE:USO) (USO) – Average volume 29.51 million
The underlying West Texas Intermediate Light Sweet Crude Oil Index looks to reflect the daily changes of the spot price of light, sweet crude oil delivered to Cushing, OK. The $1.35-billion fund charges 73 bps in fees (read: ETFs to Win as Saudi's New Minister May Seek Same Oil Policy).
iShares MSCI Brazil ETF EWZ – Average volume 26.16 million
The underlying MSCI Brazil 25/50 Index consists of stocks traded primarily on the BM&FBOVESPA. The $8.39-billion fund charges 59 bps in fees.
SPDR S&P Oil & Gas Exploration & Production (NYSE:XOP) ETF (CSE:XOP) – Average volume 25.71 million
The underlying S&P Oil & Gas Exploration & Production Select Industry Index represents the oil and gas exploration and production sub-industry portion of the S&P Total Markets Index. The $1.78-billion-fund charges 35 bps in fees.
iShares MSCI EAFE ETF (EFA) – Average volume 24.27 million
The underlying MSCI EAFE Index is an equity index that captures large and mid-cap stocks across Developed Markets countries around the world, excluding the United States and Canada. Japan (24.2%), United Kingdom (16.1%) and France (11.3%) are the top three geographical segments of the fund. The $58.8 billion fund charges 31 bps in fees.
iShares China Large-Cap ETF (TE:FXI) – Average volume 23.51 million
The underlying FTSE China 50 Index tracks the performance of the largest companies in the Chinese equity market that are available to international investors. The $4.33-billion fund charges 74 bps in fees (read: ETFs in Focus as Trade War Takes a Toll on Chinese Exports).
iShares Gold Trust (IAU) – Average volume 23.45 million
This ETF is designed to track the spot price of gold bullion. The $15.9-billion fund charges 25 bps in fees (read: 5 Reasons to Buy Gold ETFs as Price May Touch $2000).
iShares Silver Trust (NYSE:SLV) (SLV) – Average volume 21.20 million
This ETF is designed to track the spot price of silver bullion. The $6.83-billion fund charges 50 bps in fees.
iShares iBoxx $ High Yield Corporate Bond ETF ( (TSX:HYG) ) – Average volume 20.14 million
The Markit iBoxx USD Liquid High Yield Index is a rules-based index consisting of liquid U.S. dollar denominated, high-yield corporate bonds for sale in the United States. The $16.9-billion fund charges 49 bps in fees.
iShares Russell 2000 ETF (IWM) – Average volume 19.75 million
The underlying Russell 2000 Index measures the performance of the small capitalization sector of the U.S. equity market. The $43.5-billion fund charges 19 bps in fees (read: Small-Cap Value ETFs Rallying Hard: Here's Why).
VanEck Vectors Junior Gold Miners ETF ( (TSXV:GDX) ) – Average volume 18.08 million
The underlying MVIS Global Junior Gold Miners Index tracks the overall performance of the gold mining industry, which may include micro and small-capitalization companies. Canada (48.48%), Australia (21.95%) and South Africa (10.25%) are the top three holdings of the fund. The $4.11-billion fund charges 53 bps in fees.
ProShares UltraPro QQQ (TQQQ) – Average volume 18.03 million
The ProShares UltraPro QQQ seeks daily investment results that correspond to triple the daily performance of the NASDAQ-100 Index. The $ 3.60-billion fund charges 95 bps in fees (read: 9 Best-Performing Leveraged ETFs of 1H19).
VelocityShares 3x Inverse Crude Oil ETN (DWT) – Average volume 17.47 million
The VelocityShares 3x Inverse Crude Oil ETN are designed for investors who seek leveraged inverse exposure to the daily performance of the S&P GSCI Crude Oil Index ER.The underlying S&P GSCI Crude Oil Index ER tracks a hypothetical position in the nearest-to-expiration NYMEX light sweet crude oil futures contract, which is rolled each month into the futures contract expiring in the next month. The expense ratio of the $236.9-million fund is 1.50%.
Utilities Select Sector SPDR Fund XLU – Average volume 16.79 million
The underlying Utilities Select Sector Index seeks to provide an effective representation of the Utilities sector of the S&P 500 Index. The $10.96-billion fund charges 13 bps in fees (read: Top Performing Utility ETFs This Year).
ProShares UltraPro Short QQQ SQQQ – Average volume 15.64 million
The ProShares UltraPro Short QQQ seeks daily investment results, before fees and expenses, that correspond to triple the inverse of the daily performance of the NASDAQ-100 Index. The $1.17-billion fund charges 95 bps in fees.
iShares Core MSCI Emerging Markets ETF IEMG – Average volume 15.24 million
The fund seeks to track the investment results of the MSCI Emerging Markets Investable Market Index. The $54.27-billion fund charges 14 bps in fees. China takes the top-most position in the fund with about 30% exposure followed by South Korea (12.1%) and Taiwan (12.0%).
Consumer Staples Select Sector SPDR Fund XLP – Average volume 13.95 million
The underlying Consumer Staples Select Sector Index seeks to provide an effective representation of the consumer staples sector of the S&P 500 Index. The $13.4-billion-fund charges 13 bps in fees (read: 4 Sector ETFs in Focus as US Economy Appears in Late Cycle).
Energy Select Sector SPDR Fund XLE (NYSE:XLE) – Average volume 13.93 million
The underlying Energy Select Sector Index includes companies from the following industries: oil, gas & consumable fuels, and energy equipment & services. The $10.6-billion fund charges 13 bps in fees.
Alerian MLP ETF (F:AMLP) – Average volume 13.63 million
The underlying Alerian MLP Infrastructure Index is a capped, float-adjusted, capitalization-weighted composite of energy infrastructure Master Limited Partnerships that earn the majority of their cash flow from the transportation, storage, and processing of energy commodities. The $8.32-billion fund’s gross expense ratio is quite high at 4.85%.
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ProShares UltraPro QQQ (TQQQ): ETF Research Reports
iShares iBoxx $ High Yield Corporate Bond ETF (HYG): ETF Research Reports
iShares Silver Trust (SLV): ETF Research Reports
iShares MSCI EAFE ETF (EFA): ETF Research Reports
Financial Select Sector SPDR Fund (XLF): ETF Research Reports
Consumer Staples Select Sector SPDR Fund (XLP): ETF Research Reports
Alerian MLP ETF (AMLP): ETF Research Reports
Energy Select Sector SPDR Fund (XLE): ETF Research Reports
VanEck Vectors Gold Miners ETF (GDX): ETF Research Reports
iShares China Large-Cap ETF (FXI): ETF Research Reports
United States Oil Fund, LP (USO): ETF Research Reports
Utilities Select Sector SPDR Fund (XLU): ETF Research Reports
iShares Russell 2000 ETF (IWM): ETF Research Reports
SPDR S&P Oil & Gas Exploration & Production ETF (XOP): ETF Research Reports
iShares MSCI Emerging Markets ETF (EEM): ETF Research Reports
