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In a booming stock market, the ETF industry is seeing explosive growth, piling up huge assets in recent years. This has resulted in enough liquidity in the ETF world with most of the funds trading at extremely higher volumes.
Volume can be determined by the number of shares traded in a particular period. A higher number of shares provides easy access to move in and out of a product, keeping the bid/ask spreads tight.
In fact, greater volume ensures easy creation and redemption of shares in the fund basket, which is a regular and vital mechanism in ETFs. This is especially true as authorized participants (AP) have the ability to create new baskets of ETF shares for underlying securities or redeem them when required. This phenomenon allows ETFs to trade in line with their net asset value (NAV).
That said, we have highlighted 10 ETFs that have seen higher average volumes over the past three months and are thus the top 10 funds by trading volume, per etfdb.com (see: all the Category ETFs here).
ProShares UltraPro Short QQQ (SQQQ - Free Report) – Average Daily Volume: 84.9 million shares
This ETF provides three times (300% or 3X) inverse exposure to the daily performance of the Nasdaq-100 Index, charging 95 bps in annual fees. It has AUM of $1.7 billion.
SPDR S&P 500 ETF (SPY - Free Report) – Average Daily Volume: 65.6 million shares
With AUM of $400.3 billion, this fund tracks the S&P 500 Index and holds 505 stocks in its basket with information technology, healthcare, consumer discretionary, communication services and financials being the top five, with a double-digit allocation each. The ETF charges investors 9 bps in annual fees and has a Zacks ETF Rank #2 (Buy) with a Medium risk outlook.
Financial Select Sector SPDR Fund (XLF - Free Report) – Average Daily Volume: 48.2 million shares
This is the ultra-popular financial ETF with AUM of $41 billion. It seeks to provide exposure to 65 companies in the diversified financial services, insurance, banks, capital markets, mortgage real estate investment trusts, consumer finance, and thrifts and mortgage finance industries. The product charges 12 bps in annual fees and has a Zacks ETF Rank #1 (Strong Buy) with a Medium risk outlook (read: ETFs to Bet On as Fed Turns Hawkish, Signals Tapering).
Invesco QQQ (QQQ - Free Report) – Average Daily Volume: 35.9 million shares
This product provides exposure to the 102 largest domestic and international companies, excluding financial stocks, by tracking the Nasdaq-100 Index. It has AUM of $192 billion and charges 20 bps in annual fees. Information technology takes the largest share at 49% while communication services and consumer discretionary round off the next two spots. The fund has a Zacks ETF Rank #2 with a Medium risk outlook.
iShares MSCI Emerging Markets ETF (EEM - Free Report) – Average Daily Volume: 35.4 million shares
This fund offers exposure to large and mid-sized companies in emerging markets. It follows the MSCI Emerging Markets Index and holds 1,244 securities. Among the emerging countries, China takes the top spot at 33% while Taiwan and South Korea round off the next two spots with a double-digit exposure each. The fund has AUM of $30.3 billion and charges 70 bps in annual fees. It has a Zacks ETF Rank #4 (Sell) with a Medium risk outlook.
ProShares Ultra VIX Short-Term Futures ETF (UVXY - Free Report) – Average Daily Volume: 32 million shares
This fund offers exposure to one and one-half times (1.5X) the daily performance of the S&P 500 VIX Short-Term Futures Index. It has accumulated $944.1 million and charges 95 bps in annual fees.
iPath Series B S&P 500 VIX Short-Term Futures ETN (VXX - Free Report) - Average Daily Volume: 29.8 million shares
This is a popular option providing exposure to volatility. The note has amassed $993.2 million in AUM and charges 89 bps in fees per year. The ETN focuses on the S&P 500 VIX Short-Term Futures Index, which reflects implied volatility in the S&P 500 Index at various points along the volatility forward curve. It provides investors with exposure to a daily rolling long position in the first and second months of VIX futures contracts.
ProShares UltraPro QQQ (TQQQ - Free Report) – Average Daily Volume: 28.3 million shares
This is the most-popular ETF in the leveraged space with AUM of $15.5 billion and expense ratio of 0.95%. The fund seeks to deliver three times the return of the daily performance of the NASDAQ-100 Index.
iShares Russell 2000 ETF (IWM - Free Report) – Average Daily Volume: 27.6 million shares
It is one of the largest and the most-popular ETFs in the small-cap space with AUM of $69.5 billion. It tracks the Russell 2000 Index and holds 2,036 stocks in its basket with key holdings in healthcare, financials, information technology, industrials and consumer discretionary. The fund charges 19 bps in annual fees and has a Zacks ETF Rank #3 (Hold) with a Medium risk outlook (read: 5 ETFs That Sizzled Last Week Amid Market Rout).
Energy Select Sector SPDR (XLE - Free Report) – Average Daily Volume: 27.1 million shares
This is the largest and most-popular ETF in the energy space with AUM of $23.7 billion and expense ratio of 0.12%. The fund follows the Energy Select Sector Index and holds 21 securities in its basket. It has a Zacks ETF Rank #3 with a High risk outlook (read: Play the Rising Energy Sector With These Leveraged ETFs).
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10 Most Heavily Traded ETFs of Third Quarter
In a booming stock market, the ETF industry is seeing explosive growth, piling up huge assets in recent years. This has resulted in enough liquidity in the ETF world with most of the funds trading at extremely higher volumes.
Volume can be determined by the number of shares traded in a particular period. A higher number of shares provides easy access to move in and out of a product, keeping the bid/ask spreads tight.
In fact, greater volume ensures easy creation and redemption of shares in the fund basket, which is a regular and vital mechanism in ETFs. This is especially true as authorized participants (AP) have the ability to create new baskets of ETF shares for underlying securities or redeem them when required. This phenomenon allows ETFs to trade in line with their net asset value (NAV).
That said, we have highlighted 10 ETFs that have seen higher average volumes over the past three months and are thus the top 10 funds by trading volume, per etfdb.com (see: all the Category ETFs here).
ProShares UltraPro Short QQQ (SQQQ - Free Report) – Average Daily Volume: 84.9 million shares
This ETF provides three times (300% or 3X) inverse exposure to the daily performance of the Nasdaq-100 Index, charging 95 bps in annual fees. It has AUM of $1.7 billion.
SPDR S&P 500 ETF (SPY - Free Report) – Average Daily Volume: 65.6 million shares
With AUM of $400.3 billion, this fund tracks the S&P 500 Index and holds 505 stocks in its basket with information technology, healthcare, consumer discretionary, communication services and financials being the top five, with a double-digit allocation each. The ETF charges investors 9 bps in annual fees and has a Zacks ETF Rank #2 (Buy) with a Medium risk outlook.
Financial Select Sector SPDR Fund (XLF - Free Report) – Average Daily Volume: 48.2 million shares
This is the ultra-popular financial ETF with AUM of $41 billion. It seeks to provide exposure to 65 companies in the diversified financial services, insurance, banks, capital markets, mortgage real estate investment trusts, consumer finance, and thrifts and mortgage finance industries. The product charges 12 bps in annual fees and has a Zacks ETF Rank #1 (Strong Buy) with a Medium risk outlook (read: ETFs to Bet On as Fed Turns Hawkish, Signals Tapering).
Invesco QQQ (QQQ - Free Report) – Average Daily Volume: 35.9 million shares
This product provides exposure to the 102 largest domestic and international companies, excluding financial stocks, by tracking the Nasdaq-100 Index. It has AUM of $192 billion and charges 20 bps in annual fees. Information technology takes the largest share at 49% while communication services and consumer discretionary round off the next two spots. The fund has a Zacks ETF Rank #2 with a Medium risk outlook.
iShares MSCI Emerging Markets ETF (EEM - Free Report) – Average Daily Volume: 35.4 million shares
This fund offers exposure to large and mid-sized companies in emerging markets. It follows the MSCI Emerging Markets Index and holds 1,244 securities. Among the emerging countries, China takes the top spot at 33% while Taiwan and South Korea round off the next two spots with a double-digit exposure each. The fund has AUM of $30.3 billion and charges 70 bps in annual fees. It has a Zacks ETF Rank #4 (Sell) with a Medium risk outlook.
ProShares Ultra VIX Short-Term Futures ETF (UVXY - Free Report) – Average Daily Volume: 32 million shares
This fund offers exposure to one and one-half times (1.5X) the daily performance of the S&P 500 VIX Short-Term Futures Index. It has accumulated $944.1 million and charges 95 bps in annual fees.
iPath Series B S&P 500 VIX Short-Term Futures ETN (VXX - Free Report) - Average Daily Volume: 29.8 million shares
This is a popular option providing exposure to volatility. The note has amassed $993.2 million in AUM and charges 89 bps in fees per year. The ETN focuses on the S&P 500 VIX Short-Term Futures Index, which reflects implied volatility in the S&P 500 Index at various points along the volatility forward curve. It provides investors with exposure to a daily rolling long position in the first and second months of VIX futures contracts.
ProShares UltraPro QQQ (TQQQ - Free Report) – Average Daily Volume: 28.3 million shares
This is the most-popular ETF in the leveraged space with AUM of $15.5 billion and expense ratio of 0.95%. The fund seeks to deliver three times the return of the daily performance of the NASDAQ-100 Index.
iShares Russell 2000 ETF (IWM - Free Report) – Average Daily Volume: 27.6 million shares
It is one of the largest and the most-popular ETFs in the small-cap space with AUM of $69.5 billion. It tracks the Russell 2000 Index and holds 2,036 stocks in its basket with key holdings in healthcare, financials, information technology, industrials and consumer discretionary. The fund charges 19 bps in annual fees and has a Zacks ETF Rank #3 (Hold) with a Medium risk outlook (read: 5 ETFs That Sizzled Last Week Amid Market Rout).
Energy Select Sector SPDR (XLE - Free Report) – Average Daily Volume: 27.1 million shares
This is the largest and most-popular ETF in the energy space with AUM of $23.7 billion and expense ratio of 0.12%. The fund follows the Energy Select Sector Index and holds 21 securities in its basket. It has a Zacks ETF Rank #3 with a High risk outlook (read: Play the Rising Energy Sector With These Leveraged ETFs).