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ETF trading rises to record as bullish and tug-of-war plays out

(Bloomberg) — The dramatic turn of the stock market is fueling record trading in ETFs, the highly liquid investment vehicle that traders are using to keep pace with rising volatility.

As the Nasdaq Composite Index fell as much as 4.9% on Monday, then back into gains of late, four of the five largest exchange-traded ETFs — which go by tickers IVV, VTI, VOO and QQQ — hit a record price. View traded shares. The largest ETF by market cap — the SPDR S&P 500 ETF Trust (SPY) — saw its second highest.

A surge in activity pushed the dollar value of stocks across the U.S. ETF market — often referred to as dollar trading — to a record Monday with more than $478 billion in turnover, according to data compiled by Bloomberg Intelligence. higher level. This surpassed the previous record of $404 billion in February. 28, 2020.

High volume persisted on Tuesday, with more than $100 billion of ETFs trading in New York as of 11 a.m., according to Bloomberg Intelligence.

ETFs are an easy way for large institutional traders to adjust their portfolios on days when markets tend to change wildly, said Eric Balchunas, Bloomberg Intelligence ETF analyst.

“When the going gets tough, so do the ETFs,” he said. “They are the first thing that a lot of large institutions trade specifically to change the position of their portfolios.”

The high level of turnover is also partly a result of the record amount of cash poured into the fund during last year’s rally, some of which is now being pulled back as stock prices plummet.

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