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JKE

5 Equity ETFs In Steady Uptrends

by on August 6, 2012 | Updated August 27, 2012

Unresolved eurozone debt drama and mixed economic data releases on the homefront continue to drive markets, showcasing how investors’ confidence has yet to fully be restored. Amidst the back-and-forth trading across equity markets, investors and traders alike have been hard-pressed to find lucrative opportunities without taking on significant risks. Scouring the globe for favorably positioned asset classes against the uncertain economic backdrop has proved to be a formidable challenge for even the most seasoned of veterans [see also Roubini Warns Low Commodity Prices Signal Economic Disease].

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As the ETF industry has exploded on to the scene in recent years, sponsors have aggressively launched funds in an attempt to gain market share. While many of these new ETFs have attracted sufficient investor funds to justify continued operation, some have failed to garner a level of investment necessary to support an active, liquid market and been shuttered. And then there are those that remain in business but are cited as having “insufficient liquidity.” Although there are certain rules of thumb – assets under management (AUM) of $25 million and daily volume of 25,000 are often cited as “liquidity thresholds” – there is no hard evidence to support these guidelines. In an effort to determine where illiquidity ends and an active market begins, I analyzed the impact of size and daily volume on the liquidity of various ETFs. [click to continue…]

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