25 Most Liquid ETF’s (non-leveraged)

ETF’s have become all the rage in recent years, with an absolute explosion of new products hitting the market. There are now more than 1800 of them!

First a quick detour…

Many of those products are leveraged ETF’s, meaning you’re supposed to get some multiple of your capital exposure in the performance of the security (ex: QLD is intended to be 2x the QQQ). Others are inverse ETF’s, meaning they are intended to perform the opposite of the instrument or index they are tracking (ex: SH is intended to be inverse of SPY performance).

Notice the heavy use of the word intended. That’s because leveraged and inverse ETF’s are mathematically broken. So, if you were to buy, for example, a triple bull and a triple bear ETF for the same underlying index, over time it should be a wash, right? Wrong. You end up losing a lot of money due to the decay, drift, or erosion that takes place over time. The longer you hold, the more erosion takes place, and the more you lose!

This list excludes leveraged and inverse ETF’s. To be clear, a couple of them do contain some futures exposure (VXX, USO), which invites some erosion, but it’s greatly reduced due to the lack of leverage.

That said, here are the top 25 most liquid ETF’s in the market today. This list is sorted by 1-month average daily volume.

SPY
EEM
GDX
VXX
XLF
EWJ
USO
QQQ
IWM
EWZ
EFA
FXI
XLE
GDXJ
RSX
XLU
VWO
IYR
XLP
XLV
XLK
XOP
XLI
EWT
TLT

It’s of course subject to change, but it’s a good start in building an ETF watchlist because it includes some index exposure, country-specific ETF’s, and sectors. Copy and paste them into a list and name it “Liquid ETF’s.”

If you dare venture into leveraged or inverse ETF’s, keep it extremely short-term. If you want some temporary added exposure or a hedge, they can provide that. Just don’t stick around very long – there’s a reason they keep doing reverse splits.

Jeff