It is not just low volume equity-based ETFs that are
delivering solid and, in some cases, spectacular returns for
investors. Some lightly traded bond ETFs are getting in on the
act as well. A list of the 10 best equity ETFs in terms of
compiled by Index Universe
indicates that only half, or five, of the funds on that list have
what many investors would deem "decent" average daily
Simply put, fixating on an ETF's average daily volume can mean
missing out on some great returns with equity
. Importantly, that theme is not limited to the universe of
The same can be said of bond ETFs. Traders and investors
surely know about heavily traded bond funds such as the iShares
iBoxx $ Invest Grade Corporate Bond ETF (NYSE:
), the SPDR Barclays Capital High Yield Bond (NYSE:
) and the PIMCO Total Return ETF (NYSE:
), just to name a few.
Those are fine ETFs in their own right, but there are
opportunities to be had with thinly traded bond funds just as
there opportunities to be had with light volume equity ETFs.
Take the example of the WisdomTree Emerging Markets Corporate
Bond Fund (NASDAQ:
). The WisdomTree Emerging Markets Corporate Bond Fund has been
one of the best new bond ETFs to come to market this year in
terms of attracting assets (after BOND, of course). Following its
March debut, EMCB now has almost $71 million in AUM, but its
daily volume is not inspiring at less than 17,700 shares.
Focusing on the volume metric alone means investors have
missed out on a gain of 5.2 percent, a current 30-day SEC yield
of almost four percent and
six dividend payments because EMCB pays a monthly
WisdomTree sponsors another ETF that belongs in this
conversation, the WisdomTree Asia Local Debt Fund (NYSE:
). Before everyone and his sister was thrilled to bits that the
PIMCO Total Return ETF was the alleged savior of the actively
managed ETF space, a couple of actively managed bond ETFs were
thriving. They still are and ALD is one of them.
ALD offers exposure to the sovereign debt of South Korea,
Malaysia, Indonesia, Philippines, Thailand, India, China, Hong
Kong, Singapore, Taiwan, Australia and New Zealand denominated in
the local currencies of those nations. The fund has over $430
million in assets, but has ADV of just 34,500 shares. That has
not prevened ALD from gainin almost four percent this year.
Staying with the emerigng markets theme, the Market Vectors
LatAm Aggregate Bond ETF (NYSE:
) is diminutive both in terms of AUM ($7.7 million) and ADV
(3,800 shares). Still, BONO has gained almost 7.7 percent this
year, features a 30-day SEC yield of 5.35 percent and offers an
excellent way of getting exposure to the
improving credit quality of some Latin American
Taking a look at a more domestically-focused fund, the SPDR
Nuveen S&P High Yield Municipal Bond ETF (NYSE:
) is a great example of a low volume ETF with a decent AUM total.
The 18-month-old ETF has almost $144 million in AUM despite
despite ADV of less than 35,700 shares.
Neither light volume nor an allocation in excess of 10 percent
to California bonds has stood in the way of HYMB gaining almost
nine percent this year. HYMB is up nearly 15 percent since its
For more on low volume ETFs with sound returns, click
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