How liquid are ETFs?

Written by
Gergely K.
Fact checked by
Adam N.
Apr 2022

In general, you can trade ETFs throughout the day and prices change continuously. But not all ETFs are equally liquid; for example, there are differences between how liquid US or EU ETFs are.

Why does ETF liquidity matter?

If a given ETF is not liquid enough, it makes buying and selling it harder, as there are fewer actors on the market willing to trade the ETF in question. This can widen bid-ask spreads, making it a bit more difficult to trade on movement gains. For buy-and-hold investors, this is less of a concern, though.

Usually you won't have any problems with a big name, like the Vanguard Total Stock Market ETF or Invesco's QQQ. However, a smaller niche ETF like a South-American Green Energy Small Cap ETF can have very low, if any liquidity.

Liquidity of US vs EU ETFs

Generally speaking, ETFs domiciled in the EU tend to be less liquid than their US counterparts. Therefore, you will likely encounter higher spreads when trading some EU ETFs (save for the bigger ones). This should be perfectly fine with buy-and-hold investors, but those trading these vehicles in the short term should take notice.

What else do you need to know about ETFs?

Want to learn more before deciding which is the best ETF for you? Check out these articles to deepen your knowledge:

How can I buy ETFs? 

For more info, click here to learn how to buy ETFs online.

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Author of this article

Gergely Korpos

Co-Founder, CPO | Equities • Community Trading • Financial Markets

With over a decade of experience in financial markets, I've executed thousands of trades as both a commodity trader and an equity portfolio manager. I have hands-on experience in opening accounts with the brokers that are listed on BrokerChooser. As the co-founder and Chief Product Officer (CPO) of BrokerChooser, my mission is to demystify personal investing for all.

Everything you find on BrokerChooser is based on reliable data and unbiased information. We combine our 10+ years finance experience with readers feedback. Read more about our methodology.

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