The amount a fund or strategy can trade, or the assets it can manage, before trading costs and market impact rise materially.
From this site’s articles: "Liquidity reflects marginal capacity under current conditions."
Quoted passages come from the articles on this site.
Covered in: Active ETFs (book) · Why ETFs Surface Liquidity Constraints Faster Than Mutual Funds
Related terms
Go deeper: books by Will Lee, CFA
For ETF product managers, issuers, capital markets teams, and allocators: capacity, execution costs, and liquidity trade-offs when active strategies run in an ETF.
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This material is provided for informational and educational purposes only and does not constitute investment advice, a recommendation, or an offer to buy or sell any security.
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