Liquidity is one of the most important characteristics of exchange-traded funds (ETFs), especially if you’re looking for the best ETFs to buy now based on relative volumes. It reflects how easily investors can buy or sell ETF shares without significantly impacting their market price. In simpler terms, a liquid ETF allows for quick transactions at prices that closely match the true value of its underlying assets.
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A key factor influencing liquidity is trading volume. Generally, higher trading volumes indicate a greater number of buyers and sellers in the market, which facilitates the ease of completing transactions. As a result, ETFs with substantial trading activity tend to show narrower bid-ask spreads, reducing the cost of trading. The bid-ask spread is the difference between the highest price a buyer is willing to pay for an ETF (the bid) and the lowest price a seller is willing to accept (the ask).
Considering this scenario, let us look at three top ETFs that are trading at relatively higher volumes compared to their average volumes over the past three months, using the TipRanks ETF Screener.
MSTZ ETF Draws Interest Amid MSTR’s Rise
The T-Rex 2X Inverse MSTR Daily Target ETF (MSTZ) provides inverse exposure to the daily price movement of MicroStrategy stock (MSTR) and was launched earlier this year. This ETF is trading at more than 10 times its average trading volumes over the past three months, indicating heightened investor activity.
The ETF could be attracting interest from investors looking to bet against MSTR, which has surged by more than 75% in the past month due to its growing crypto holdings. Additionally, Bitcoin’s price has jumped by over 40% during the same period. Despite this, the MSTZ ETF has plummeted by more than 90% over the past three months.
Betting Against Tesla with TSLZ and TSLQ
The other two ETFs that have seen a surge in relative volumes are, once again, both inverse ETFs betting against Tesla (TSLA) stock. These ETFs include the T-Rex 2X Inverse Tesla Daily Target ETF (TSLZ) and the Tradr 2X Short TSLA Daily ETF (TSLQ).
Both ETFs are trading at more than twice their average volumes over the past three months. This rise in investor interest could be due to Tesla being perceived as largely benefiting from the results of the U.S. elections, with Musk firmly backing President-elect Trump. Year-to-date, TSLZ and TSLQ have declined by more than 80% and 70%, respectively.
