The ETF industry is seeing explosive growth in terms of both AUM and launches thanks to the rise in "thematic investing” and craze for “smart beta.” The rapid growth can be traced back to unique strategies, creativity, transparency, diversification benefits, enhanced tax competences, low turnover and most importantly — low cost.
In particular, investors seek to trade in ETFs that can easily be purchased and sold on the market, suggesting that the funds should have enough liquidity. Volume, or the number of shares traded in a particular period, is definitely the most important consideration for determining the liquidity of a particular fund. A higher number of shares provides easy access to move in and out of the product, keeping the bid/ask spreads tight. Further, 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) (see: all the Category ETFs here). Nevertheless, assessing just the number of shares is not a profitable task, as a higher number of cheaper funds can be bought for a given amount of money, leading to increased volumes. As a result, honing in on dollar volume ETFs will reveal the true picture of liquidity. Dollar volume measures the number of shares traded multiplied by share price. That said, we have highlighted the 10 most-heavily traded ETFs that have higher average dollar volume as per xtf.com. SPDR S&P 500 ETF ( SPY Quick Quote SPY - Free Report) This fund tracks the S&P 500 Index and holds 505 well-diversified stocks in its basket with each holding less than 4.3% of the assets. Zacks ETF Rank: #2 (Buy) Average Daily Trade Volume: $20.37 billion AUM: $270.6 billion Expense Ratio: 0.09% Top Sector: Information Technology (21.8%) YTD Returns: 20% Invesco QQQ ( QQQ Quick Quote QQQ - Free Report) This product provides exposure to the 103 largest domestic and international companies, excluding financial stocks, by tracking the Nasdaq-100 Index. It is concentrated on the top three firms that make up for more than 9% of the assets each. Zacks ETF Rank: #1 (Strong Buy) Average Daily Trade Volume: $5.86 billion AUM: $74.9 billion Expense Ratio: 0.20% Top Sector: Information Technology (45.5%) YTD Returns: 22.6% iShares Russell 2000 ETF ( IWM Quick Quote IWM - Free Report) This ETF targets the small-cap segment by tracking the Russell 2000 Index and holds 2009 stocks with each holding less than 0.4% of the assets (read: Why Small Cap ETFs Are Rising). Zacks ETF Rank: #3 (Hold) Average Daily Trade Volume: $3.09 billion AUM: $44.3 billion Expense Ratio: 0.19% Top Sector: Financials (18%) YTD Returns: 14.5% iShares MSCI Emerging Markets ETF ( EEM Quick Quote EEM - Free Report) This fund targets emerging markets and follows the MSCI Emerging Markets Index. It holds 1,058 stocks in its basket, with none accounting for more than 4.6% share. Zacks ETF Rank: #4 (Sell) Average Daily Trade Volume: $2.66 billion AUM: $25.3 billion Expense Ratio: 0.67% Top Sector: Financials (24.6%) YTD Returns: 6.3% iShares iBoxx $ High Yield Corporate Bond ETF ( HYG Quick Quote HYG - Free Report) This ETF offers exposure to a broad range of U.S. high-yield corporate bonds by tracking the Markit iBoxx USD Liquid High Yield Index. Holding 989 securities, effective duration and average maturity come in at 2.84 and 3.42 years, respectively (read: Guide to 25 Most-Liquid ETFs). Zacks ETF Rank: #3 Average Daily Trade Volume: $1.77 billion AUM: $17.8 billion Expense Ratio: 0.49% Top Sector: Communications (23.9%) YTD Returns: 11.5% iShares MSCI EAFE ETF ( EFA Quick Quote EFA - Free Report) This fund provides exposure to stocks in Europe, Australia, Asia and the Far East by tracking the MSCI EAFE Index. It holds 928 securities in its basket, with none holding more than 2.4% of assets. Zacks ETF Rank: #3 Average Daily Trade Volume: $1.63 billion AUM: $59.3 billion Expense Ratio: 0.31% Top Sector: Financials (18.4%) YTD Returns: 13.2% iShares 20+ Year Treasury Bond ETF ( TLT Quick Quote TLT - Free Report) This fund provides exposure to long-term Treasury bonds by tracking the ICE U.S. Treasury 20+ Year Bond Index. It holds 36 securities in its basket with effective duration of 18.18 years and average maturity of 25.43 years (read: Play the Bond Bull Market With These ETFs). Zacks ETF Rank: #3 Average Daily Trade Volume: $1.41 billion AUM: $18.6 billion Expense Ratio: 0.15% Top Sector: N/A YTD Returns: 20.1% Financial Select Sector SPDR ( XLF Quick Quote XLF - Free Report) The fund targets the broad financial segment and follows the Financial Select Sector Index. It holds 68 stocks in its basket, with double-digit allocation to the top two firms. Zacks ETF Rank: #2 Average Daily Trade Volume: $1.35 billion AUM: $22.2 billion Expense Ratio: 0.13% Top Sector: N/A YTD Returns: 18.7% VanEck Vectors Gold Miners ETF ( GDX Quick Quote GDX - Free Report) This product tracks the NYSE Arca Gold Miners Index, which measures the performance of companies involved in the gold-mining industry. Holding 45 stocks, it is guilty of concentration on the top two firms with double-digit allocation each (read: Sector ETFs, Stocks Set to Explode After Another Rate Cut). Zacks ETF Rank: N/A Average Daily Trade Volume: $1.35 billion AUM: $12.4 billion Expense Ratio: 0.52% Top Sector: N/A YTD Returns: 39.8% SPDR Gold Shares ( GLD Quick Quote GLD - Free Report) This fund tracks the price of gold bullion measured in U.S. dollars, and kept in London under the custody of HSBC Bank USA. Zacks ETF Rank: #3 Average Daily Trade Volume: $1.30 billion AUM: $44.4 billion Expense Ratio: 0.40% Top Sector: N/A YTD Returns: 19.2% Want key ETF info delivered straight to your inbox? Zacks’ free Fund Newsletter will brief you on top news and analysis, as well as top-performing ETFs, each week. Get it free >>