"Insane" Moves In ETFs As Single-Stock Liquidity Disappears

Three week ago we wrote that "crazy things are happening with ETFs." Since then, "things" have gotten far crazier.

As Goldman ETF trader Chris Lucas writes, it’s been quite the month for those using ETFs to navigate a tricky tape, which according to the data would be pretty much everyone. What follows is a quick checklist on some of the main things Goldman desk has been seeing in the past few weeks.

Volumes: ETFs are currently experiencing their most outsized month of trading volumes, averaging 37% of the overall tape. Monday marked the 3rd-busiest session in terms of ETF share of the tape, at 42%, with Tuesday's session just above 40% (as a reminder, ETFs are largely used to hedge long exposure via single stocks by institutions/hedge funds). Short exposure in macro products has lingered near 5-year highs in the Goldman Prime Brokerage book, so it’s no surprise that the desk saw a handful of hedges pared back after Monday's sharp spike. The Goldman ETF desk has been especially busy in pockets that have seen extreme price action as of late: miners, Korea/Taiwan, financials vs. technology. 

When observing prior instances where ETF volumes have surpassed 40% of the tape, most notably Feb 2020 and April 2025, the current episode has certainly been one of the busiest: 

Velocity of price action: Intraday trading bands continue to be outsized, and Goldman's tech specialist Peter Callahan described this best in his Monday note: ”the NDX finished up ~120 bps.. but that was also ~115 bps below the intra-day high." With the insane magnitude of these moves, clients are adapting by spreading their orders rather than executing their full size on the wire - yes, even ETFs are starting to run out of liquidity. The advantages of this approach include spreading market risk, utilizing liquidity of the underlying ETF components, and preserving anonymity as the underlying basket allows for seamless execution without signaling an outsized buyer or seller in an ETF. 

Liquidity: Meanwhile, as top of book liquidity in futures reduces, and has absolutely disappeared in single-stocks where the smallest orders result in significant moves, ETFs are leaned on even more as a way to both add and reduce macro risk. However, Lucas warns, when transacting in block form, lower top of book liquidity (coupled with higher vol) can lead to wider risk markets -- an important dynamic to keep on the radar. 

A few additional observations:

Emerging markets: EM equity ETFs were off to a record start in 2026, but there has been some aggressive selling rolling through, triggered by price action and USD strength. EEM registered its largest daily outflow yesterday since 2019 (-$1bn) and EWY faced its first redemption last week since August 2025. 

Equal weight: Goldman flags some of the strength seen across the equal weight complex. There has been a strong rotation into RSP (equal-weighted S&P ETF) as software and private credit angst reverberate through the market… Since the start of Feb, over $5 billion has flowed into RSP, and the fund has held on to the majority of these assets (i.e., air quality hasn’t improved to trigger an outflow). 

Flow response: A handful of macro products have seen inflows in response to geopolitical tensions (XLE/Energy, USO/Oil, UUP/US Dollar), while gold ETFs have seen a large reduction in positioning. 

More in the full Goldman note available to pro subs.