Key insights
- The post discusses potential liquidity issues when investing a large sum ($1M) into a relatively small ETF (XLKS.L, $2B AUM). While the ETF holds highly liquid stocks like NVDA, AAPL, and MSFT, the size of the order relative to the ETF's AUM could cause price fluctuations and impact order execution. This could lead to a slight negative impact on US equities, as large trades in smaller ETFs can create temporary distortions.
Hypothetically if I were to dump say $1mill into XLKS.L, which was founded in 2009 and has an AUM of just 2 billion, should I be concerned about the liquidity of the fund, or rather the immediacy in which my buy (or sell) order goes through? The fund's 3 top components are Nvidia, Apple and Microsoft, and those are highly traded, so I figured I shouldn't encounter any issues, but I thought I'd ask the more experienced people here for insights.
You can read about XLKS.L here: https://www.invesco.com/be/en/financial-products/etfs/invesco-technology-sp-us-select-sector-ucits-etf-acc.html#Trading-%26-Security