ETFs
Top 10 Most Traded ETFs in Q2
The ETF industry experienced explosive growth in the second quarter, accumulating huge assets amid a strong rally in equity markets. This translated into ample liquidity in the ETF world, with most funds trading at extremely high volumes. Volume can be determined by the number of stocks traded in a given period. High trading volume indicates high liquidity, which is a key characteristic of ETFs.
Here’s why volume is relevant:
Liquidity: High volume ETFs are more liquid, meaning they can be bought or sold easily without causing a significant price change. This is important for investors because it allows them to enter or exit positions without affecting the price too much.
Bid-ask spread: High-volume ETFs typically have narrower bid-ask spreads. The bid-ask spread is the difference between the highest price a buyer is willing to pay for an asset and the lowest price a seller is willing to accept. A narrower spread means lower transaction costs for investors.
Price discovery: High trading volumes can lead to better price discovery, meaning that the ETF’s market price more accurately reflects its underlying value. This is because with more trading, there is a greater likelihood that the ETF’s price reflects the collective knowledge and sentiment of a larger number of investors.
Market impact: If an ETF has low trading volume, large trades can have a significant impact on its price. This problem is less of a concern with high-volume ETFs.
Lower tracking error: High trading volumes can contribute to better tracking of the underlying index, resulting in lower tracking error, especially for index ETFs. This is because the arbitrage mechanism works effectively when the ETF is actively traded.
Indication of interest: High trading volume can also be a sign of strong interest in a particular market or sector. For example, if an ETF that tracks a specific sector has high trading volume, it could indicate that many investors are interested in that sector.
Volatility: ETFs with low trading volume can sometimes be more volatile than those with high trading volume. This is because a small number of trades can have a larger impact on the price of the ETF.
That said, we have highlighted 10 ETFs that saw higher average volumes in the second quarter and are therefore the top 10 funds in terms of trading volume, according to etfdb.com (see: all category ETFs here).
ProShares UltraPro Short QQQ Actions (SQQQ) – Average daily volume: 130.2 million shares
ProShares UltraPro Short QQQ provides three times inverse exposure to the daily performance of the Nasdaq-100 Index, with an annual fee of 95 bps. The index measures the performance of the 100 largest domestic and international non-financial companies listed on the Nasdaq by market capitalization. ProShares UltraPro Short QQQ has $2.7 billion in assets under management.
SPDR S&P 500 Exchange Traded Fund (TO SPY) – Average daily volume: 58.3 million shares
The SPDR S&P 500 ETF tracks the S&P 500 Index and holds 503 stocks in its basket, with information technology, financials, healthcare, and consumer discretionary each representing a double-digit allocation. The SPDR S&P 500 ETF charges investors 9 bps in annual fees and has $543 billion in AUM. It is ranked #2 (Buy) by Zacks with a medium risk outlook (read: Large-Cap ETF (SPY) Hits New 52-Week High).
Actions Direxion Daily Semiconductor Bull 3x (SOXL) – Average daily volume: 57.2 million shares
Direxion Daily Semiconductor Bull 3x Shares targets the semiconductor segment of the technology sector with three times leveraged exposure to the NYSE Semiconductor Index. Direxion Daily Semiconductor Bull 3x Shares has accumulated approximately $10.5 billion in its asset base while charging 72 bps in fees per year.
ProShares UltraPro QQQ (TQQQ) – Average daily volume: 56.7 million shares
ProShares UltraPro QQQ seeks to deliver three times the daily performance of the NASDAQ-100 Index, charging investors an expense ratio of 0.88%. The index measures the performance of the 100 largest domestic and international non-financial companies listed on the Nasdaq by market capitalization. ProShares UltraPro QQQ is the most popular and liquid ETF in the leveraged space, with $23.7 billion in assets under management (read: Nasdaq ETFs Poised for Continued Growth in 2024).
Select Financial Sector SPDR Fund (XLF) – Average daily volume: 41 million shares
The Financial Select Sector SPDR Fund seeks exposure to 71 companies in the financial services, insurance, banks, capital markets, mortgage real estate investment trusts, consumer finance, and savings and mortgage finance sectors. The Financial Select Sector SPDR Fund is an ultra-popular financial ETF with $38.6 billion in assets under management. It charges 9 bps in annual fees and is ranked #1 by Zacks ETF (Strong Buy) with a medium risk outlook.
iShares 20-Year and Higher Treasury Bond ETF (TLT) – Average daily volume: 38.7 million shares
The iShares 20+ Year Treasury Bond ETF provides exposure to long-term Treasury bonds by tracking the ICE US Treasury 20+ Years Bond Index. The iShares 20+ Year Treasury Bond ETF holds 44 securities in its basket and charges 15 bps in annual fees. TLT is one of the most popular and liquid ETFs in the bond sector, with $54 billion in AUM and a Zacks ETF Rank #4 (Sell).
iShares China Large Cap ETF (FXI) – Average daily volume: 37.5 million shares
The iShares China Large-Cap ETF provides exposure to large Chinese companies by tracking the FTSE China 50 Index. It holds 50 stocks in its basket. The iShares China Large-Cap ETF has key holdings in the Consumer Discretionary sector with 31.2% of shares, while the Financials (30.7%) and Communication (17.9%) sectors round out the next two spots. The iShares China Large-Cap ETF has $4.5 billion in AUM and an expense ratio of 0.74%. It is ranked #5 on Zacks ETF (Strong Sell) with a medium risk outlook (Read: Top 5 Domestic ETFs of Q2).
iShares iBoxx High Yield Corporate Bond ETF $ (HYG) – Average daily volume: 37.3 million shares
The iShares iBoxx $ High Yield Corporate Bond ETF is the largest and most liquid fund in the high yield bond space with $17 billion in assets under management and an expense ratio of 0.49%. It provides exposure to a broad range of high yield U.S. corporate bonds. The iShares iBoxx $ High Yield Corporate Bond ETF tracks the Markit iBoxx USD Liquid High Yield Index and holds 1,256 stocks in the basket. It is ranked #5 on Zacks ETF with a High Risk Outlook.
Invesco QQQ (QQQ) – Average daily volume: 37.3 million shares
Invesco QQQ provides exposure to the 102 largest domestic and international companies, excluding financials, by tracking the Nasdaq-100 Index. It has $288.2 billion in assets under management and annual fees of 20 bps. Invesco QQQ is ranked #2 (Buy) by Zacks ETF with a medium risk outlook.
iShares Silver Trust (SLV) – Average daily volume: 31.4 million shares
iShares Silver Trust provides exposure to the daily price fluctuations of silver bullion. It is an ultra-popular silver ETF with $12.6 billion in assets under management that charges investors 50bps in fees per year.
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iShares 20+ Year Treasury Bond ETF (TLT): ETF Research Reports
Invesco QQQ (QQQ): ETF Research Reports
SPDR S&P 500 ETF (SPY): ETF Research Reports
iShares iBoxx $ High Yield Corporate Bond ETF (HYG): ETF Research Reports
ETF SPDR Financial Select Sector (XLF): ETF Research Reports
iShares China Large-Cap ETF (FXI): ETF Research Reports
iShares Silver Trust (SLV): ETF Research Reports
ProShares UltraPro QQQ (TQQQ): ETF Research Reports
Direxion Daily Semiconductor Bull 3X (SOXL) Stocks: ETF Research Reports
ProShares UltraPro Short QQQ (SQQQ) : ETF Research Reports