How can I tell if an ETF is sufficiently liquid? How much should it have in assets? How much should the minimum average daily volume be?
Lower levels of liquidity lead to greater bid-ask spreads.
Liquidity is affected by:
- ETF composition
- The trading volume of the components
- And to some degree, the trading volume of the ETF
- The sector that the ETF emulates
- The risk of the components (narrow versus broad based)