Execution basics

Welcome to our ETF education video series. In this fifth video, we’ll use the information we’ve discussed throughout this series to provide helpful tips on what to consider when you’re ready to trade. If you missed our earlier videos, be sure to catch them on our website, ThriventETFs.com.

The actual trading of ETFs is one of the most important places where all of the information that we’ve discussed so far comes together, and quality execution of ETF trades can benefit clients.

While each trade can have particular characteristics or circumstances, there are some generally held tips for approaching an ETF trade:

Tip number 1 is evaluate an ETF’s bid/ask spreads, premium/discount levels, and market depth to get a sense of how efficiently it trades in the secondary market.

Tip number 2 is to consider the size of your order relative to secondary market activity. Smaller orders might be efficiently executed on an exchange. For larger orders, it may be worth considering utilizing your broker’s block desk for execution. Block ETF trades can be traded in ways that efficiently tap into the underlying sources of liquidity to deliver best execution.

Tip number 3. If trading on exchange, consider order type and timing. Generally, it is recommended to use limit orders. This provides price protection by preventing a trade from running up the order book and potentially getting filled at unexpected average prices. It’s also generally recommended to avoid trading around the open and close of the trading session. This is typically where bid/ask spreads are at their widest during the day

Finally, tip number 4: Utilize resources. If you have questions, you have resources available to you. ETF issuers will likely have an ETF capital markets desk that can help provide guidance related their ETFs. Your broker likely also has resources – such as a block desk – who can assist in developing an execution strategy for your ETF trades.

In summary: When it comes time to trade, considering how active the ETF secondary markets are, how liquid its holdings are, and the size of the trade relative to those two things can help guide trade strategy. Once you have a strategy, considering the type and timing of your trade, and the resources available to you can help to guide best execution.

Tune into the next video in this series to learn about why you should consider ETFs at Thrivent Asset Management. And if you are interested in learning more about our lineup of ETFs, connect with a dedicated Thrivent consultant serving regional and national accounts at thriventETFs.com/contactus.