Are Index funds liquid?

The_Professor_

Are index funds classed as a liquid asset? I understand I might not get what I have put in but I would still class as a liquid asset, am I wrong?

Linton

Index funds assuming they are mainstream and not something exotic are liquid.  They can be readily sold on the stock market or back to the provider depending on the nature of the fund.

eskbanker

Yes, they'd be regarded as liquid in the sense that they could be sold at short notice and the proceeds accessed, if that's what you're getting at - if access to money is likely to be needed at short notice then investing it is a poor idea, but such funds would be more liquid than, say, a property if that was significant to your thinking....

ColdIron

The degree of liquidity rather depends upon the index

MX5huggy

Depends on the index the Bolivian Abstract Art index is probably not that liquid. The mainstream index’s and the funds based on them are liquid. 

ColdIron

I raise your Bolivian Abstract Art index by the Venezuelan Beaver Cheese index

DullGreyGuy

ColdIron said:

I raise your Bolivian Abstract Art index by the Venezuelan Beaver Cheese index

Given how well its done in recent years you'd be mad to be exiting it anyway!

NedS

You can usually judge the liquidity by the spread (difference between the bid and offer prices). The larger the spread, the more illiquid the fund. It also may be useful to keep an eye on the daily traded volumes which will also give an idea of liquidity. Large daily traded volumes will indicate you should have no problems selling and there are plenty of buyers out there. Low daily traded volumes may be indicative of an illiquid fund.

dunstonh

Are index funds classed as a liquid asset? 

Some are.  Some are not.   The fact it is classed a passive fund rather than managed doesn't itself make it any more liquid or illiquid.

wmb194

The thing is, 'liquidity' is a moving feast. If you're talking a few thousand pounds then even the smallest ETFs should be easy to trade. If we're talking hundreds of thousands in a single trade then you might have more difficulty, and it'll also depend on how the market's feeling that day. It'll be better on big green days than big red days when the market's panicked about something.

Millyonare

Liquidity depends on the fund or ETF itself + the platform one trades on. It needs a liquid fund / ETF + a liquid platform. Both parts must be liquid, not just the fund or ETF.