About Pricing & Liquidity
When buying or selling a stock, its liquidity — the ready availability of both buyers and sellers — is often a concern. It’s important for investors to remember that an ETF’s true (or “implied”) liquidity is measured by the liquidity of its underlying portfolio, not the trading volume of the ETF itself.
Did you know that market makers provide “on demand” liquidity for ETFs?
The market makers for Hamilton ETFs are National Bank Financial and BMO, which can create/redeem units at their discretion. This ‘service’ is reflected in an ETF’s bid/ask prices, resulting in a modestly higher spread (typically a few cents) vs the ETFs underlying net asset value (NAV). Importantly, the greater liquidity of the underlying portfolio, the tighter the spread of the ETF market price.
Did you know that an ETF’s “true” liquidity is not its daily trading volume but the liquidity of the underlying portfolio?
The global financial services sector has a combined market capitalization of more than US$13 trillion, making it several times larger than that of the entire Canadian equity markets.
Do actively managed ETFs rebalance daily?
No. As the manager of Hamilton ETFs, we can invest subscriptions at our discretion. There is no requirement to invest right away, or to rebalance daily to a specified index. Nonetheless, because of the large size of the global financials universe, we could allocate significant subscriptions without impacting the prices of the underlying portfolio.
Is NAV pricing efficient?
Yes. The substantial liquidity of the underlying portfolio and the global financials universe means there is, over time, no material difference between the NAV and the trading price of the fund, unlike closed end funds.
Hamilton ETFs liquidity
When buying or selling a stock, its liquidity — the ready availability of both buyers and sellers — is often a concern. It’s important for investors to remember that an ETF’s true — or “implied” — liquidity is measured by the liquidity of its underlying portfolio, not the trading volume of the ETF itself.
- HFG’s global financial services universe has a total market cap of around US$17.3 trillion
- HUM’s U.S. small- and mid‐cap financial services universe has a total market cap of over US$1.7 trillion
- HFT’s global financial services and innovation universe has a total market cap of approximatelly US$19.5 trillion
- HCA’s Canadian banks universe has a total market cap of US$307 billion
- HBA’s Australian banks universe has a total market cap of US$153 billion
Trading Hamilton ETFs
- Use limit orders instead of market orders
- Avoid trading in the first and last 10 minutes of market hours when the prices of the underlying securities are volatile
Large orders & In-kind transfers
For orders of more than 25,000 units of any of our ETFs (1 PNU, or Prescribed Number of Units, is equal to 25,000 units), please ask your investment advisor to contact our trading department (details below). Alternatively, if you have an account with either of our market makers — National Bank or BMO — they can also help facilitate large orders.
We are also able to accept in-kind transfers of some securities in exchange for shares of Hamilton ETFs, subject to conditions. If you would like to learn more, please have your investment advisor contact our trading department.
You can reach our trading department at (416) 941-9888.