Use Caution When Trading These Three Illiquid ETFs

By
Devon Layne
May 25, 2012
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There are many ETFs available to investors, but those looking to stay clear of illiquid funds may want to keep an eye on funds with wide bid/ask spreads and poor volume in their underlying securities, according to an article on Zacks.

The following funds, highlighted in the Zacks article, may be in danger of becoming illiquid, causing trading costs to begin piling up:

  • GS Connect S&P GSCI Enhanced Commodity ETN (NYSEArca: GSC): Though the fund has over $70 million in AUM and trades close to 16,000 shares daily, GSC scares buyers away with its 1.17 percent bid/ask spread ratio along with a high 1.25 expense ratio.
  • ETF Securities Physical Asian Gold Shares (NYSEArca: AGOL): Even with its large AUM, AGOL only moves an average of 790 shares daily and has a bid/ask spread of 0.8 percent.
  • iShares MSCI Kokusai Index Fund (NYSEArca: TOK): The fund holds over half a billion in AUM, but only has 10,000 shares changing hands each day, with a bid/ask ratio of over 0.8 percent.

 

For the full breakdown on the funds mentioned, visit Zacks.com.

ETF DAILY DATA

The consumer discretionary fund 'XLY' garnered a $1 billion-plus blast of creation on Tuesday, March 3. Still, a falling market offset net inflows and pulled total U.S.-listed ETF assets down to $2.092 trillion.

'VCR,' the consumer discretionary fund, paced Vanguard's issuer-leading inflows on Tuesday, March 3, as total U.S.-listed ETF assets ended the day at $2.092 trillion.

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