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The ETF industry is seeing explosive growth, piling up record assets in 2024 amid the stock market surge. This resulted in enough liquidity in the ETF world, with most funds trading at extremely high volumes. Volume can be determined by the number of shares traded in a particular period. High trading volume indicates high liquidity, which is a key characteristic of ETFs.Here’s why volume is relevant:Liquidity: High-volume ETFs are more liquid, meaning they can be bought or sold easily without causing a significant price change. This is important for investors as it allows them to enter or exit positions without impacting the price too much.Bid-Ask Spread: High-volume ETFs typically have narrower bid-ask spreads. The bid-ask spread is the difference between the highest price that a buyer is willing to pay for an asset and the lowest price that a seller is willing to accept. A narrower spread means lower transaction costs for investors.Price Discovery: High trading volumes can lead to better price discovery, which means the market price of the ETF more accurately reflects its underlying value. This is because, with more trades, there’s a higher likelihood that the ETF price will reflect the collective knowledge and sentiment of a larger pool of investors.Market Impact: If an ETF has a low trading volume, large trades can significantly impact its price. This is less of a concern with high-volume ETFs.Lower Tracking Error: High trading volumes might help in better tracking of the underlying index, leading to a lower tracking error, especially for index ETFs. This is because the arbitrage mechanism works efficiently when the ETF is actively traded.Indication of Interest: High trading volume can also be an indication of high interest in a particular market or sector. For example, if an ETF that tracks a specific industry has a high trading volume, it could indicate that many investors are interested in that industry.Volatility: ETFs with low trading volumes can sometimes be more volatile than those with high volumes. This is because a small number of trades can have a larger impact on the price of the ETF.That said, we have highlighted 10 ETFs that have seen higher average volumes over the past three months and are thus the top 10 funds in terms of trading volume, per etfdb.com.Direxion Daily Semiconductor Bull 3x Shares (SOXL – Free Report) ) – Average Daily Volume: 75.5 million sharesDirexion Daily Semiconductor Bull 3x Shares targets the semiconductor corner of the technology sector with three times leveraged exposure to the NYSE Semiconductor Index. Direxion Daily Semiconductor Bull 3x Shares has amassed about $10.7 billion in its asset base while charging 72 bps in fees per year.Direxion Daily TSLA Bull 2X Shares (TSLL – Free Report) ) – Average Daily Volume: 73.4 million sharesWith AUM of $2.1 billion, Direxion Daily TSLA Bull 2X Shares is by far the largest U.S.-listed single-stock ETF on the market. It offers two times (200%) the daily percentage change of the common stock of Tesla, charging 86 bps in annual fees.T-REX 2X Long MSTR Daily Target ETF (MSTU – Free Report) ) – Average Daily Volume: 63.8 million sharesT-REX 2X Long MSTR Daily Target ETF seeks to magnify two times the return on the publicly traded common stock of MicroStrategy (MSTR). It has expense ratio of 1.05% and has AUM of $936.8 million.iShares China Large-Cap ETF (FXI – Free Report) ) – Average Daily Volume: 55.5 million sharesiShares China Large-Cap ETF offers exposure to large companies in China by tracking the FTSE China 50 Index. It holds 50 stocks in its basket, with key holdings in the consumer discretionary sector at 34% share, while financials (30.1%) and communication (17.1%) round off the next two spots. iShares China Large-Cap ETF has AUM of $7 billion and an expense ratio of 0.74%. It has a Zacks ETF Rank #5 (Strong Sell) with a Medium risk outlook.Direxion Daily S&P 500 Bear 3x Shares (SPXS – Free Report) ) – Average Daily Volume: 52.1 million sharesDirexion Daily S&P 500 Bear 3x Shares provides three times inverse exposure to the S&P 500 Index and charges 93 bps in annual fees. It has AUM of $347.1 million.iShares Bitcoin Trust (IBIT – Free Report) ) – Average Daily Volume: 49.9 million sharesiShares Bitcoin Trust seeks to reflect the performance of the price of Bitcoin. It enables investors to access Bitcoin within a traditional brokerage account. The fund charges 25 bps in annual fees from investors. IBIT has AUM of $56.5 billion.SPDR S&P 500 ETF (SPY – Free Report) ) – Average Daily Volume: 45.9 million sharesSPDR S&P 500 ETF tracks the S&P 500 Index and holds 503 stocks in its basket, with information technology, financials, consumer discretionary and healthcare accounting for double-digit allocation each. SPDR S&P 500 ETF charges investors 9 bps in annual fees and has AUM of $632.2 billion. It has a Zacks ETF Rank #2 (Buy) with a Medium risk outlook.ProShares UltraPro QQQ (TQQQ – Free Report) ) – Average Daily Volume: 42.9 million sharesProShares UltraPro QQQ seeks to deliver three times the return of the daily performance of the NASDAQ-100 Index, charging investors 0.84% in expense ratio. The index measures the performance of the 100 largest domestic and international non-financial companies listed on Nasdaq based on market capitalization. ProShares UltraPro QQQ is the most popular and liquid ETF in the leveraged space, with AUM of $25.3 billion.Direxion Daily Semiconductor Bear 3x Shares (SOXS – Free Report) ) – Average Daily Volume: 41.7 million sharesDirexion Daily Semiconductor Bear 3x Shares targets the semiconductor corner of the technology sector with three times inverse leveraged exposure to the NYSE Semiconductor Index. It has amassed about $800.9 million in its asset base while charging 88 bps in fees per year.Financial Select Sector SPDR Fund (XLF – Free Report) ) – Average Daily Volume: 40.3 million sharesFinancial Select Sector SPDR Fund seeks exposure to 73 companies in the financial services, insurance, banks, capital markets, mortgage real estate investment trusts, consumer finance, and thrifts and mortgage finance industries. Financial Select Sector SPDR Fund is an ultra-popular financial ETF with AUM of $47.9 billion. It charges 9 bps in annual fees and has a Zacks ETF Rank #1 (Strong Buy) with a Medium risk outlook.More By This Author:5 Top-Ranked ETFs To Buy Cheap
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