Investment strategies

Considerations for ETF trading strategies

December 07, 2023

Two graphics compare assets under management (AUM) and net cash flows for mutual funds and ETFs. A bubble chart shows that mutual funds had $17.8 trillion in total AUM compared with $7.4 trillion for ETFs as of August 31, 2023. And a bar chart shows net inflows into ETFs of $4.4 trillion and net outflows of $692 billion for mutual funds for the 10 years ended August 31, 2023.
A decision tree shows considerations for planning an ETF trade. If the trade is greater than 5% of the ETF’s ADV and is larger than the quoted size, the investor is advised to consider using a high-touch order through their custodian’s block trading desk, and not to consider using a limit order or marketable limit order. If the ETF trade is not larger than the quoted size, the investor is advised to consider using a limit order to prevent price impact, and not to consider using a low-touch order such as a limit order or marketable limit order.

Contributors

David Sharp
Patrick Hooper

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