The COVID-19 pandemic has brought unprecedented challenges to markets across the globe, impacting liquidity across nearly all investment vehicles and asset classes. Despite these challenges, ETFs have performed well, providing market participants with liquidity and price discovery when they need it most.
The State Street Global Advisors SPDR Capital Markets team analyzed data from across the globe to better understand the performance of ETFs during the pandemic. Learn more about the report below.
Born out of the US stock market crash of 1987, ETFs have been tested by numerous market crises. During the COVID-19 crisis, surging ETF trading volume highlights that ETFs continue to function as originally intended — as buffers and sources of liquidity in stressed markets.
Even as bid-ask spreads widen and ETFs trade at wider-than-normal premiums and discounts, investors turn to ETFs to assess the valuation and liquidity of the overall market.
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Throughout the pandemic, ETFs have provided investors with liquidity when they need it most. Continuous enhancements from both exchanges and regulators are also instrumental in promoting resilient markets during the crisis.
What does this mean for the future? If trading volume is any indication, expect to see ETF adoption continue to rise.
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