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Last few weeks have been highly volatile for the stock market. The Wall Street saw a bloodbath last week due to rise in the number of coronavirus cases across the globe that pushed the major indices into a correction territory. Notably, the S&P 500 saw the fastest correction in history with six consecutive days of decline after hitting new record highs on Feb 19.
However, the stocks showed a strong comeback on signs of monetary and fiscal stimulus. The central banks across the globe are likely to enact financial stimulus to prop up the virus-infected economy. The Federal Reserve’s emergency rate cut of 50 basis points failed to reassure markets as the news was perhaps a sign that the Fed is concerned about the economy (read: Emergency Fed Cut Less Effective: ETFs That Should Survive).
Amid such scenario, several ETFs are trading in heavy volumes, suggesting that the funds have enough liquidity. Volume can be determined by the number of shares traded in a particular period. Higher number of shares provides easy access to move in and out of the 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).
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. Hence, 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 (see: all the Category ETFs here).
That said, we have profiled 10 ETFs that have seen massive trading volumes over the past 20 days, per barchart.com.
This fund tracks the S&P 500 Index and holds 505 well-diversified stocks in its basket with each holding less than 5.1% of the assets (read: 3 Safe ETFs for Volatile Markets).
This fund targets emerging markets and follows the MSCI Emerging Markets Index. It holds 1,228 stocks in its basket, with none accounting for more than 6.2% share.
This 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 contract (read: ETFs to Invest in as Coronavirus Fears Accelerate).
The fund targets the broad financial segment and follows the Financial Select Sector Index. It holds 66 stocks in its basket, with double-digit allocation to the top two firms (read: 5 Top-Ranked Sector ETFs to Buy at Bargain Price).
This product tracks the NYSE Arca Gold Miners Index, which measures the performance of companies involved in the gold-mining industry. Holding 47 stocks, it is concentrated on the top two firms with double-digit allocation each (read: Yields at Record Lows: 4 Sector ETFs to Buy).
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 two firms that collectively make up for 11% of the assets each.
SPDR S&P Oil & Gas Exploration & Production ETF (XOP - Free Report)
This ETF provides exposure the oil and gas exploration and production segment by tracking the S&P Oil & Gas Exploration & Production Select Industry Index. It holds 57 stocks with each holding less than 4.3% of the assets.
This fund provides exposure to stocks in Europe, Australia, Asia and the Far East by tracking the MSCI EAFE Index. It holds 921 securities in its basket, with none holding more than 2.4% of assets.
iShares iBoxx $ High Yield Corporate Bond ETF (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 1,024 securities, effective duration and average maturity come in at 3.15 and 3.74 years, respectively (read: Last Week Saw 1st ETF Outflow in 2020: Winners & Losers).
Image: Bigstock
Most Actively Traded ETFs Over the Past 20 Days
Last few weeks have been highly volatile for the stock market. The Wall Street saw a bloodbath last week due to rise in the number of coronavirus cases across the globe that pushed the major indices into a correction territory. Notably, the S&P 500 saw the fastest correction in history with six consecutive days of decline after hitting new record highs on Feb 19.
However, the stocks showed a strong comeback on signs of monetary and fiscal stimulus. The central banks across the globe are likely to enact financial stimulus to prop up the virus-infected economy. The Federal Reserve’s emergency rate cut of 50 basis points failed to reassure markets as the news was perhaps a sign that the Fed is concerned about the economy (read: Emergency Fed Cut Less Effective: ETFs That Should Survive).
Amid such scenario, several ETFs are trading in heavy volumes, suggesting that the funds have enough liquidity. Volume can be determined by the number of shares traded in a particular period. Higher number of shares provides easy access to move in and out of the 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).
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. Hence, 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 (see: all the Category ETFs here).
That said, we have profiled 10 ETFs that have seen massive trading volumes over the past 20 days, per barchart.com.
SPDR S&P 500 ETF (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 5.1% of the assets (read: 3 Safe ETFs for Volatile Markets).
Zacks ETF Rank #2 (Buy)
Aggregate 20-Day Volume: $126.1 billion
AUM: $264 billion
Expense Ratio: 0.09%
Top Sector: Information Technology (24.4%)
YTD Returns: -6.7%
iShares MSCI Emerging Markets ETF (EEM - Free Report)
This fund targets emerging markets and follows the MSCI Emerging Markets Index. It holds 1,228 stocks in its basket, with none accounting for more than 6.2% share.
Zacks ETF Rank #4 (Sell)
Aggregate 20-Day Volume: $84.6 billion
AUM: $25.9 billion
Expense Ratio: 0.68%
Top Sector: Financials (23.1%)
YTD Returns: -8.4%
iPath S&P 500 VIX Short-Term Futures ETN (VXX - Free Report)
This 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 contract (read: ETFs to Invest in as Coronavirus Fears Accelerate).
Zacks ETF Rank: N/A
Aggregate 20-Day Volume: $78.6 billion
AUM: $1 billion
Expense Ratio: 0.89%
Top Sector: N/A
YTD Returns: 61.7%
Financial Select Sector SPDR (XLF - Free Report)
The fund targets the broad financial segment and follows the Financial Select Sector Index. It holds 66 stocks in its basket, with double-digit allocation to the top two firms (read: 5 Top-Ranked Sector ETFs to Buy at Bargain Price).
Zacks ETF Rank #2
Aggregate 20-Day Volume: $69.8 billion
AUM: $19.9 billion
Expense Ratio: 0.13%
Top Sector: N/A
YTD Returns: -12.6%
VanEck Vectors Gold Miners ETF (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 47 stocks, it is concentrated on the top two firms with double-digit allocation each (read: Yields at Record Lows: 4 Sector ETFs to Buy).
Zacks ETF Rank: N/A
Aggregate 20-Day Volume: $61.9 billion
AUM: $12.7 billion
Expense Ratio: 0.52%
Top Sector: N/A
YTD Returns: -2%
Invesco QQQ (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 two firms that collectively make up for 11% of the assets each.
Zacks ETF Rank #1 (Strong Buy)
Aggregate 20-Day Volume: $57.3 billion
AUM: $84.9 billion
Expense Ratio: 0.20%
Top Sector: Information Technology (47.1%)
YTD Returns: -1.5%
SPDR S&P Oil & Gas Exploration & Production ETF (XOP - Free Report)
This ETF provides exposure the oil and gas exploration and production segment by tracking the S&P Oil & Gas Exploration & Production Select Industry Index. It holds 57 stocks with each holding less than 4.3% of the assets.
Zacks ETF Rank #5 (Strong Sell)
Aggregate 20-Day Volume: $40.2 billion
AUM: $2.4 billion
Expense Ratio: 0.35%
Top Sector: N/A
YTD Returns: -37.3%
iShares MSCI EAFE ETF (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 921 securities in its basket, with none holding more than 2.4% of assets.
Zacks ETF Rank #3
Aggregate 20-Day Volume: $38.9 billion
AUM: $58.7 billion
Expense Ratio: 0.32%
Top Sector: Financials (18%)
YTD Returns: -9.9%
iShares iBoxx $ High Yield Corporate Bond ETF (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 1,024 securities, effective duration and average maturity come in at 3.15 and 3.74 years, respectively (read: Last Week Saw 1st ETF Outflow in 2020: Winners & Losers).
Zacks ETF Rank #3
Aggregate 20-Day Volume: $37.4 billion
AUM: $15.8 billion
Expense Ratio: 0.49%
Top Sector: Communications (24.8%)
YTD Returns: -1.4%
iShares China Large-Cap ETF (FXI - Free Report)
This fund provides exposure to a basket of 50 Chinese large cap stocks by tracking the FTSE China 50 Index. It is concentrated on its top five holdings (read: Will China ETFs Suffer as Coronavirus Dents Factory Output?).
Zacks ETF Rank: #3
Aggregate 20-Day Volume: $34.6 billion
AUM: $4.5 billion
Expense Ratio: 0.74%
Top Sector: Financials (45.4%)
YTD Returns: -6.4%
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