If there’s one thing traders love, it’s volatility. Large price swings create opportunities for nimble traders to time the market by buying low and selling high.
That’s something that was nearly impossible to do in last year’s environment of steady gains. Investors who sat tight with a buy-and-hold strategy were rewarded handsomely in 2017, while traders counting on volatility to outperform were left frustrated. So far in 2018, the situation has been flipped on its head.
This year, investors are the ones frustrated by a market that’s swung around a lot, but ultimately hasn’t gone anywhere despite strong earnings and economic fundamentals. On the other hand, traders are gleefully trading in and out of the market as stocks whipsaw violently.
The increased trading activity is reflected in the market’s volume levels. Volume—a measure of how many shares trade hands on a given day—is averaging 7.3 billion shares per day across the major U.S. exchanges, year-to-date. That compares with 6.5 billion for all of 2017.
Much of that volume is showing up in ETFs. The most actively traded securities on U.S. exchanges are usually exchange-traded funds, with tens of millions of shares exchanging hands each day in some popular names.
Take the SPDR S&P 500 ETF Trust (SPY). It traded an average of 105.1 million shares per day on average during the last 30 days. For comparison, Bank of America—the most actively traded stock within the S&P 500—traded an average of 73 million shares in that same time frame.
SPY isn’t the only ETF traders love. The iShares MSCI Emerging Markets ETF (EEM), the Financial Select Sector SPDR Fund (XLF) the PowerShares QQQ Trust (QQQ) and the iShares Russell 2000 ETF (IWM) are a few heavyweights that routinely trade over 50 million shares per day.
In many cases, these heavily traded funds aren’t the cheapest ETFs in their category, nor do they have the most assets under management. Instead, they’re often old, established funds with liquid options markets underlying them—characteristics that appeal to traders.
Indeed, there’s several cases where ETFs that are small in terms of assets have huge amounts of volume. For instance, the VelocityShares Daily 2x VIX Short-Term ETN (TVIX) only has $439 million in AUM, but it trades a whopping 51.5 million shares per day, making it the sixth-most-traded ETF on the market.
Likewise, the iPath S&P 500 VIX Short-Term Futures ETN (VXX) and the ProShares Ultra VIX Short-Term Futures ETF (UVXY) only have a few billion dollars in assets between them, but they each trade more than 36 million share per day.
Volatility ETFs aren’t the only ones punching above their weight. The VanEck Vectors Gold Miners ETF (GDX), the iShares China Large-Cap ETF (FXI), the Alerian MLP ETF (AMLP), the United States Oil Fund LP (USO) and the SPDR S&P Oil & Gas Exploration & Production ETF (XOP) all have outsized volumes compared to assets.
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.
At the top of the list, the picture doesn’t change with this new measure. SPY is still the top dog, with $28 billion worth of shares trading hands each day. QQQ, IWM, EEM are also close to the top, with more than $3 billion worth of shares traded daily.
Impressively, VXX also makes the cut for this list, with almost $1.7 billion worth of shares trading each day—more than the ETP’s entire AUM.
The ProShares UltraPro QQQ (TQQQ), with assets of $3.6 billion and dollar volume of $1.1 billion, is another one punching far above its weight, thanks to strong popularity with traders.
See the complete list of top 15 volume and dollar-volume leaders in the tables below:
Top 15 Volume Leaders
|Ticker||Fund||30-Day Avg Volume|
|SPY||SPDR S&P 500 ETF Trust||105,099,104|
|EEM||iShares MSCI Emerging Markets ETF||67,329,824|
|XLF||Financial Select Sector SPDR Fund||62,840,356|
|TVIX||VelocityShares Daily 2x VIX Short-Term ETN||51,536,440|
|QQQ||PowerShares QQQ Trust||50,665,232|
|GDX||VanEck Vectors Gold Miners ETF||38,838,640|
|VXX||iPath S&P 500 VIX Short-Term Futures ETN||36,700,288|
|UVXY||ProShares Ultra VIX Short-Term Futures ETF||36,266,556|
|FXI||iShares China Large-Cap ETF||25,401,404|
|EFA||iShares MSCI EAFE ETF||24,597,226|
|AMLP||Alerian MLP ETF||22,686,324|
|IWM||iShares Russell 2000 ETF||22,464,092|
|SQQQ||ProShares UltraPro Short QQQ||19,782,016|
|USO||United States Oil Fund LP||18,665,894|
|XOP||SPDR S&P Oil & Gas Exploration & Production ETF||17,025,436|
Top 15 Dollar-Volume Leaders
|Ticker||Fund||30-Day Avg Dollar Volume|
|SPY||SPDR S&P 500 ETF Trust||28,026,952,673|
|QQQ||PowerShares QQQ Trust||8,276,486,789|
|IWM||iShares Russell 2000 ETF||3,464,577,170|
|EEM||iShares MSCI Emerging Markets ETF||3,240,023,299|
|XLF||Financial Select Sector SPDR Fund||1,752,722,247|
|EFA||iShares MSCI EAFE ETF||1,723,445,610|
|VXX||iPath S&P 500 VIX Short-Term Futures ETN||1,660,076,370|
|DIA||SPDR Dow Jones Industrial Average ETF Trust||1,353,944,492|
|FXI||iShares China Large-Cap ETF||1,206,829,188|
|IVV||iShares Core S&P 500 ETF||1,197,531,524|
|HYG||iShares iBoxx $ High Yield Corporate Bond ETF||1,172,039,452|
|XLK||Technology Select Sector SPDR Fund||1,080,527,142|
|TQQQ||ProShares UltraPro QQQ||1,068,264,749|
|XLE||Energy Select Sector SPDR Fund||1,045,274,297|
|XLI||Industrial Select Sector SPDR Fund||1,018,712,181|
Contact Sumit Roy at [email protected]