Exchange-traded funds have become extremely popular over the past two decades, as investors have sought easier ways to invest across new markets and asset classes. With over a billion shares per day traded last year, ETFs account for nearly one-third of all dollar volume traded on U.S. exchanges. In this article, we’ll take a look at the role that liquidity plays and some things investors should consider [see How to Pick The Right ETF Every Time]. Why Does Liquidity Matter? Liquidity is the degree to which a security can be purchased or sold on the market without affecting its market price. Since an investor can quickly exit in the event of a problem, liquid securities with high trading volumes are preferable over illiquid securities with little trading volume. The risks associated with liquidity are known as liquidity risks and can be quantified by looking at metrics like the average daily dollar [...] Click here to read the original article on ETFdb.com. Related Posts: FirstTrust Value Line Dividend Index Fund (FVD) Beating SPY’s 10-Year Return ETFdb Weekly Watchlist: EWA, EWU, SPY Hinge On Australian Data, Bank of England, And U.S. GDP 5 ETF Underdogs Beating The Market The Complete History Of The S&P 500 Index ETF Winners and Losers During the Shutdown
Exchange-traded funds have become extremely popular over the past two decades, as investors have sought easier ways to invest across new markets and asset classes. With over a billion shares per day traded last year, ETFs account for nearly one-third of all dollar volume traded on U.S. exchanges. In this article, we’ll take a look at the role that liquidity plays and some things investors should consider [see How to Pick The Right ETF Every Time]. Why Does Liquidity Matter? Liquidity is the degree to which a security can be purchased or sold on the market without affecting its market price. Since an investor can quickly exit in the event of a problem, liquid securities with high trading volumes are preferable over illiquid securities with little trading volume. The risks associated with liquidity are known as liquidity risks and can be quantified by looking at metrics like the average daily dollar [...]
Click here to read the original article on ETFdb.com.
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