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.
Take the precipitous drop in the U.S. stock market during the second half of 2018—down 20% at one point. And then the equally impressive rebound so far in 2019—up 13% year-to-date. Those are the types of moves that traders dream of.
It’s not a surprise then that as the market has swung around excitedly in the past several months, traders have swung into action.
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 7.2 billion shares per day across the major U.S. exchanges, over the past year. That compares with an average of 6.7 billion shares in the year prior.
Much of that volume is showing up in ETFs. The most actively traded securities on U.S. exchanges are often ETFs, 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 74.9 million shares per day on average during the last 30 days. For comparison, General Electric—the most actively traded stock within the S&P 500—traded an average of 107 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 Invesco QQQ Trust (QQQ) and the iShares Russell 2000 ETF (IWM) are a few heavyweights that routinely trade more than 20 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 are several cases where ETFs that are small in terms of assets have huge amounts of volume. For instance, the iPath Series B S&P 500 VIX Short-Term Futures ETN (VXXB) only has $620 million in AUM, but it trades a whopping 23 million shares per day, making it the tenth-most-traded ETF on the market.
Top 15 Volume Leaders
|Ticker||Fund||30-Day Avg Volume|
|SPY||SPDR S&P 500 ETF Trust||74,871,984|
|EEM||iShares MSCI Emerging Markets ETF||71,596,048|
|XLF||Financial Select Sector SPDR Fund||47,027,444|
|GDX||VanEck Vectors Gold Miners ETF||46,239,404|
|QQQ||Invesco QQQ Trust||30,084,172|
|FXI||iShares China Large-Cap ETF||29,091,036|
|EWZ||iShares MSCI Brazil ETF||27,403,532|
|SQQQ||ProShares UltraPro Short QQQ||27,289,482|
|EFA||iShares MSCI EAFE ETF||23,929,592|
|VXXB||iPath Series B S&P 500 VIX Short-Term Futures ETN||23,022,948|
|USO||United States Oil Fund LP||20,856,726|
|IWM||iShares Russell 2000 ETF||19,639,092|
|HYG||iShares iBoxx $ High Yield Corporate Bond ETF||19,237,354|
|XOP||SPDR S&P Oil & Gas Exploration & Production ETF||17,921,012|
|TQQQ||ProShares UltraPro QQQ||17,063,434|
Likewise, the ProShares UltraPro QQQ (TQQQ) and the ProShares UltraPro Short QQQ (SQQQ) only have a few billion dollars in assets between them, but they each trade more than 17 million shares per day.
Those aren’t the only ones punching above their weight. The VanEck Vectors Gold Miners ETF (GDX), the iShares China Large-Cap ETF (FXI), the United States Oil Fund LP (USO) and the SPDR S&P Oil & Gas Exploration & Production ETF (XOP) all have outsized volumes compared with 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 top dog, with $20.8 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, FXI also makes the cut for this list, with almost $1.3 billion worth of shares trading each day despite only having $6.3 billion in assets.
The iShares MSCI Brazil ETF (EWZ) and the VanEck Vectors Gold Miners ETF (GDX), with dollar volumes of more than $1 billion each, are also punching far above their weight, thanks to strong popularity with traders.
Top 15 Dollar-Volume Leaders
|Ticker||Fund||30-Day Avg Dollar Volume|
|SPY||SPDR S&P 500 ETF Trust||20,706,721,382|
|QQQ||Invesco QQQ Trust||5,188,346,343|
|EEM||iShares MSCI Emerging Markets ETF||3,049,347,252|
|IWM||iShares Russell 2000 ETF||3,029,539,409|
|HYG||iShares iBoxx $ High Yield Corporate Bond ETF||1,641,843,996|
|EFA||iShares MSCI EAFE ETF||1,523,756,644|
|FXI||iShares China Large-Cap ETF||1,266,633,389|
|XLF||Financial Select Sector SPDR Fund||1,236,069,357|
|EWZ||iShares MSCI Brazil ETF||1,190,254,156|
|IVV||iShares Core S&P 500 ETF||1,120,904,372|
|GDX||VanEck Vectors Gold Miners ETF||1,034,360,072|
|LQD||iShares iBoxx $ Investment Grade Corporate Bond ETF||975,545,502|
|GLD||SPDR Gold Trust||964,040,193|
|XLI||Industrial Select Sector SPDR Fund||929,890,771|
|DIA||SPDR Dow Jones Industrial Average ETF Trust||928,141,695|