Myth or Fact? A single metric is all you need to gauge an ETF's liquidity.
Myth or Fact? A single metric is all you need to gauge an ETF's liquidity.
Myth: A fund’s liquidity profile can change in different markets. To get the complete liquidity picture, your ETF due diligence should look beyond on-screen liquidity, analyze bid-ask spreads, and evaluate the fund’s profile, from daily trading volume to assets under management.
We launched the first US-listed exchange traded fund in 1993. Today, our suite of innovative and cost-effective ETFs represents 35.8% of the ETF industry’s annual trading volume ($17.3 Trillion) – $133 billion more than Vanguard and BlackRock combined – making State Street SPDR ETFs the secondary market leader. 2
1 Source: ThinkAdvisor survey sponsored by State Street Global Advisors, “The Role of Liquidity in Client Portfolios,” September 2021
2 Bloomberg Finance, L.P., as of 06/30/2021, calculations per SPDR Americas Research.
Bid-Ask Spread, or Spread The difference between the highest price a buyer is willing to pay for an asset and the lowest price the seller will accept to sell. Bid-ask spreads are a key measure of the liquidity of an asset or security.
Liquidity The ability to quickly buy or sell an investment in the market without impacting its price. Trading volume is a primary determinant of liquidity.
Total Cost of Ownership The purchase price of an asset plus the costs of operation.
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