10 Most-Heavily Traded ETFs Of 2018

Thanks to the rise in "thematic investing” and craze for “smart beta”, the ETF industry is seeing explosive growth in terms of both AUM and launches. 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 ETF 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).

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 10 ETFs that have seen higher dollar volume this year and are thus the top 10 volume leaders of 2018 as per xtf.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 3.7% of the assets.

Zacks ETF Rank: #2 (Buy)
Aggregate YTD Volume: $6,441.6 billion
AUM: $230.1 billion
Expense Ratio: 0.09%
Top Sector: Information Technology (20%)
YTD Returns: -11.00%

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