Measuring and Quantifying ETF Liquidity

Liquidity is something most investors say they want, but they often aren’t sure how to quantify or measure it.

    David Mann

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    Megan RustETF Capital Markets Analyst, Franklin Templeton

    Liquidity is something most investors say they want, but they often aren’t exactly sure how to quantify or measure it. Our David Mann and Megan Rust address the subject when it comes to exchange-traded funds (ETFs).

    Here are some highlights from Dave and Megan’s discussion in the video below.

    • When thinking about liquidity of an ETF, it’s important to consider the liquidity of its underlying basket of securities.
    • As ETFs have become more popular, the trading of them has also become more efficient.
    • There’s a lot of commentary available on the best time to trade, but we think it’s just as important to understand the typical spreads of the specific ETF of interest and then trade when you see those spreads.

    Want to learn more? Check out David’s previous articles with more on the subject: ”ETF Liquidity Revisited” and “Leaping Over ETF AUM Hurdles.”