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        From Sectors and Smart Beta to Fixed Income, SPDR Exchange Traded Funds (ETFs) give you wide access to diverse investment opportunities. Find out more.

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        Debunking 3 myths about ETF liquidity

        We took a look at three common misconceptions that can contribute to increased costs. Explore each of them to find out how to avoid these costly mistakes.

        2 min read

        Myth: ETFs with the lowest expense ratios have the lowest total costs

        Fact: Look beyond the expense ratio. An ETF's expense ratio and trading costs are not correlated—so a low-fee fund may not have the lowest total cost of ownership (TCO).

        To calculate an ETF's cost, a combination of technical and strategy-specific factors come into play:

        • Bid-ask spreads
        • Rebalance frequency
        • Rebalance size

        Discover how to analyze the true costs of owning an ETF before you make your next trading decision.

        Find out how

        Myth: A single metric is all you need to gauge an ETF’s liquidity

        Fact: Get the complete liquidity picture. Investors often use point-in-time statistics like 30- or 90-day average trading volume to analyze an ETF's liquidity.

        But a fund's liquidity profile can change in different markets. Your ETF due diligence should:

        • Look beyond on-screen liquidity
        • Analyze bid-ask spreads over various time periods, times of day, and market environments
        • Evaluate the fund's profile, from daily trading volume to assets under management

        Navigate the twists and turns of an ETF's liquidity dynamics by identifying the most liquid and cost-effective ETFs.

        Get the roadmap

        Myth: All ETF trade execution is the same

        Fact: Choose the right execution strategy. In fact, ETF investors can choose from a variety of execution strategies to control costs. Because ETFs trade on an exchange with primary and secondary market liquidity, you have the flexibility to choose:

        • Order type, such as market or limit
        • Order execution, with help from institutional trading desks or authorized participants

        Master the mechanics of ETF trading so you can execute your trades with more confidence.

        Get the details

        More on Liquidity

        View All Liquidity Insights

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