FYI: Many investors think of exchange-traded funds (ETFs) as “mutual funds that trade like stocks.” While this characterization is accurate as far as it goes, it is incomplete: ETFs trade on exchanges throughout the day like stocks; however, there are important differences between the dynamics of stock transactions and those of ETF transactions.
With stocks, volume generally signifies liquidity. For ETFs, this is not the case: Volume is only a reflection of what has traded, not what could have traded.
This article will discuss the layers of ETF liquidity. It is because of these layers that the ETF volume that is shown is not a true reflection of what could have been traded. As part of this discussion, the article will provide an overview of the ETF creation and redemption process.
Regards,
Ted
https://www.etf.com/sections/etf-industry-perspective/american-century-tools-etf-trade
