ETFs and fund volume: Big is beautiful

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The bigger the better: we explain why you can profit from the high fund volume of an ETF

ETFs and fund volume: Big is beautiful
 
  • Level: For beginners
  • Reading duration: 3 minutes
What to expect in this article

ETF volume: Why it matters

Small ETFs with low fund volumes are less profitable for ETF providers than large ones. The reason: whether they manage many customer funds or only a few – the effort is almost the same.
When an ETF is new on the market, most ETF providers therefore give it a trial period of about one year. If it fails to deliver on its promises during this time, especially to bring in a lot of money, the likelihood of it being closed again or liquidated increases.
And that can have unpleasant consequences for your investment, as described in the section below.
Of course, ETFs with a small fund volume can also be interesting for a provider and exist on the market in the long term. In this case, further strategic considerations regarding the product range, the expense ratio and the trading volume play a decisive role.
justETF Tip: Find out in our article The right ETF selection: Tips and tricks which ETFs fit your investment structure and how you can prioritise the individual criteria.

Large ETFs benefit from economies of scale

Size makes the difference – this is especially true for ETFs on the common indices. Because then economies of scale take full effect through the distribution of fixed costs. This usually manifests itself in scope for cost reductions.
Especially in recent years, ETF providers have reduced costs in several rounds because of the high competition, from which you as an ETF fan automatically benefit. With increasing size, the number of shares in circulation of an ETF also increases.
This simultaneously ensures lower buying and selling margins. The creation-redemption process which keeps the transaction costs within an ETF as low as possible, also contributes to this.

The 10 largest ETFs (by volume)

Fondsname ISIN
WKN
4 weeks
chart
Fund size
in EUR million
Costs(TER) Yield
1 year
iShares Core S&P 500 UCITS ETF (Acc) IE00B5BMR087
A0YEDG
4 Wochen Entwicklung des iShares Core S&P 500 UCITS ETF (Acc) 74,121 0.07% p.a. 24.83%
iShares Core MSCI World UCITS ETF USD (Acc) IE00B4L5Y983
A0RPWH
4 Wochen Entwicklung des iShares Core MSCI World UCITS ETF USD (Acc) 65,200 0.20% p.a. 20.34%
Vanguard S&P 500 UCITS ETF IE00B3XXRP09
A1JX53
4 Wochen Entwicklung des Vanguard S&P 500 UCITS ETF 36,777 0.07% p.a. 24.82%
Invesco S&P 500 UCITS ETF IE00B3YCGJ38
A1CYW7
4 Wochen Entwicklung des Invesco S&P 500 UCITS ETF 18,683 0.05% p.a. 25.31%
iShares Core MSCI Emerging Markets IMI UCITS ETF (Acc) IE00BKM4GZ66
A111X9
4 Wochen Entwicklung des iShares Core MSCI Emerging Markets IMI UCITS ETF (Acc) 17,214 0.18% p.a. 8.81%
iShares Core S&P 500 UCITS ETF USD (Dist) IE0031442068
622391
4 Wochen Entwicklung des iShares Core S&P 500 UCITS ETF USD (Dist) 15,047 0.07% p.a. 24.81%
iShares Core FTSE 100 UCITS ETF (Dist) IE0005042456
552752
4 Wochen Entwicklung des iShares Core FTSE 100 UCITS ETF (Dist) 13,467 0.07% p.a. 6.75%
Invesco Physical Gold A IE00B579F325
A1AA5X
4 Wochen Entwicklung des Invesco Physical Gold A 13,298 0.12% p.a. 23.12%
Vanguard FTSE All-World UCITS ETF Distributing IE00B3RBWM25
A1JX52
4 Wochen Entwicklung des Vanguard FTSE All-World UCITS ETF Distributing 12,658 0.22% p.a. 18.73%
iShares Physical Gold ETC IE00B4ND3602
A1KWPQ
4 Wochen Entwicklung des iShares Physical Gold ETC 12,347 0.12% p.a. 23.13%
Source: justETF Research; Status: 21.04.24

What happens when an ETF is liquidated

If an ETF is closed, this has unpleasant consequences for your investment. Once the worst case scenario has occurred, you have two options for action:
  1. Either you sell your shares on the stock exchange before the ETF is liquidated and transfer them to a comparable ETF if necessary.
  2. Or: You simply wait. In this case, the fund automatically sells all the units it contains and you participate in equal measure in the sales proceeds.
In both scenarios, gains or losses are realized and have a tax effect. This is particularly annoying if you actually intended to postpone taxation as far into the future as possible, as with an accumulating ETF. Apart from taxes, there are of course also fees for the purchase of a new ETF.
Instead of a liquidation, there may also be a fund merger, in which one ETF is merged into another ETF. The same tax effects can occur here.
To avoid getting into such a situation in the first place, remember: Big is beautiful.
justETF Tip: With a minimum volume of around 100 million euros, an ETF can be managed cost-efficiently. The larger the fund volume, the less likely it is to be closed.
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