Volatility and uncertainty are abounding in financial markets so far this year. Rather than being paralyzed by fear, traders are embracing the big moves. Trading action across exchanges has spiked amid this year's stock market rout.
Volume—a measure of how many shares trade hands on a given day—is averaging 4.8 billion, year-to-date. That compares with an average of 3.7 billion for all of 2015.
This isn't unusual. Volume tends to increase during market downturns as some traders head for the hills while other hunt for bargains.
SPY Leads, UWTI Close Behind
What's true in the aggregate is also true on an individual security basis, with stocks and exchange-traded funds across the board seeing higher-than-normal volume.
(Keep in mind that, regarding ETFs, volume is distinct from fund flows, which are derived from the creation and redemption of shares. Trading of existing shares with no change to an ETF's shares outstanding affects volume but not flows).
In terms of ETFs, the most actively traded fund is no surprise. This year, the SPDR S&P 500 (SPY | A-98) is far and away the volume leader, as it typically is, with an average of 185 million shares traded each day during the past 30 days.
While SPY taking the No. 1 position is no surprise, the No. 2 spot comes as quite a shock. The VelocityShares 3X Long Crude Oil ETN (UWTI) has averaged a whopping 132 million shares traded so far this year.
Clearly, plenty of investors are trying to time the bottom in oil prices, and are using this risky leveraged ETN to do so.
Downtrodden ETFs Heavily Traded
Energy isn't the only depressed area where traders have been active. The iShares MSCI Emerging Markets ETF (EEM | B-100), the iShares China Large-Cap ETF (FXI | B-35) and the Financial Select SPDR ETF (XLF | A-93) have been heavily traded so far in 2016.
Meanwhile, the iShares MSCI Japan ETF (EWJ | B-97) has seen big volume as traders debate whether the Bank of Japan's recent move to cut interest rates into negative territory will be successful in reinvigorating the Japanese economy.
VIX & Gold Miner Products Popular
With volatility on the rise, another group of products that's been popular among traders this year is volatility ETNs. The most noteworthy of the bunch is the iPath S&P 500 VIX Short-Term Futures ETN (VXX | B-47), which trades nearly 97 million shares a day on average.
The VIX tends to rise when stock markets are falling; thus, traders who buy VXX and similar products are effectively betting on continued losses in stocks.
Another asset that's risen as stocks have declined is gold. In turn, the Market Vectors Gold Miners ETF (GDX | C-83) has seen a flurry of activity, with almost 71 million shares trading daily this year.
Dollar Volume Leaders Tell A Different Story
Of course, simply measuring the volume of shares that trade hands for a particular ETF doesn't tell the whole story. All else equal, cheaper-priced funds tend to have more shares traded because investors can simply buy more for a given amount of money.
Dollar volume, which measures the number of shares traded multiplied by the share price, gives a more complete view of how much money is exchanging hands in a security.
Using this measure, once again, SPY leads the pack, with more than $35.2 billion worth of shares trading daily so far this year.
With only $290 million worth of shares traded daily, UWTI doesn't come close to cracking the top 15 dollar-volume leaders. A minimum-daily-dollar volume of about $1.15 billion is necessary to make this list.
In addition to SPY, other notable dollar-volume leaders for 2016 include the PowerShares QQQ (QQQ | A-66), the iShares 20+ Year Treasury Bond ETF (TLT | A-83), the iShares iBoxx $ High Yield Corporate Bond ETF (HYG | B-68), and the SPDR Gold Trust (GLD | A-100).
See the complete list of top 15 volume and dollar-volume leaders below:
Top 15 Volume Leaders
|Ticker||Fund||30-Day Average Volume|
|SPY||SPDR S&P 500||184,759,184|
|UWTI||VelocityShares 3X Long Crude Oil ETN||131,883,512|
|VXX||iPath S&P 500 VIX Short-Term Futures ETN||96,757,432|
|XLF||Financial Select SPDR||76,493,136|
|EEM||iShares MSCI Emerging Markets||75,191,496|
|GDX||Market Vectors Gold Miners||70,642,696|
|EWJ||iShares MSCI Japan||64,869,432|
|USO||United States Oil||61,617,976|
|IWM||iShares Russell 2000||51,946,608|
|TVIX||VelocityShares Daily 2X VIX Short Term ETN||45,328,048|
|XIV||VelocityShares Daily Inverse VIX Short Term ETN||42,148,992|
|FXI||iShares China Large-Cap||36,026,280|
|UGAZ||VelocityShares 3X Long Natural Gas ETN||35,356,952|
|EFA||iShares MSCI EAFE||35,240,496|
Top 15 Dollar-Volume Leaders
|Ticker||Fund||30-Day Average Dollar Volume|
|SPY||SPDR S&P 500||35,260,513,294|
|IWM||iShares Russell 2000||5,268,484,336|
|VXX||iPath S&P 500 VIX Short-Term Futures ETN||2,437,865,479|
|EEM||iShares MSCI Emerging Markets||2,230,528,549|
|EFA||iShares MSCI EAFE||1,920,771,442|
|XLE||Energy Select SPDR||1,798,418,998|
|DIA||SPDR Dow Jones Industrial Average Trust||1,797,045,056|
|XLF||Financial Select SPDR||1,645,928,355|
|UVXY||ProShares Ultra VIX Short-Term Futures||1,496,118,807|
|TLT||iShares 20+ Year Treasury Bond||1,431,859,496|
|HYG||iShares iBoxx $ High Yield Corporate Bond||1,240,897,057|
|IVV||iShares Core S&P 500||1,230,398,588|
|GLD||SPDR Gold Trust||1,184,468,853|
|XLV||Health Care Select SPDR||1,153,299,217|
Contact Sumit Roy at [email protected].