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How liquid are ETFs?

ETFs liquid
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How liquid are ETFs?

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The liquidity of an ETF is mainly affected by the liquidity of the underlying stocks or bonds in its index – not the trading volume of the fund itself. The reason is because it’s less complicated for authorized participants or market makers to assemble creation units for liquid stocks or bonds. (Creation units are baskets of underlying stocks or bonds within an ETF that can be exchanged for ETF shares.) It’s possible for ETFs with low trading volume to still be liquid.

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