The turnaround on the stock markets is generating good demand for equity ETFs today. Previously, the picture was more mixed, with inflows mainly in US stocks. Meanwhile, most don't want to know much about corporate bonds.
5 Oct 5, 2022 FRANKFURT (Frankfurt Stock Exchange). October is here, and already prices are rising. The DAX stands at 12,567 points at noon on Tuesday. Last week, the index had still fallen to 11,862 points - the lowest level since November 2020. Overall, September had once again lived up to its reputation as the worst stock market month.
The recent upswing is also reviving ETF trading. "There is more activity again, especially in the major indices," explains Frank Mohr of Société Générale. Torben Bendt of Lang & Schwarz also reports significantly busier trading today. "We see many buyers, optimism is back, at least for the moment."
"Strikingly high demand for Swiss equities"
According to Mohr, the previous trading week was already characterized by a buyer overhang, albeit a small one. Once again, U.S. and global diversified ETFs accounted for most of the turnover. "U.S. stocks accounted for 40 percent of turnover, which is where the music plays."
On the shopping lists, for example, was the currency-hedged Lyxor S&P 500 Daily Hedged to EUR (LU0959211243), but also the UBS Factor MSCI USA Low Volatility (IE00BX7RQY03), which focuses on low volatility stocks from the MSCI USA. There is also a lot of buying of the iShares Core MSCI World (IE00B4L5Y983), he said. "Also noticeable is the high demand for SMI ETFs, which are Swiss stocks." Apparently, people are trying to bring a bit of security into their portfolios.
At Baader Bank still dominated the reductions. "In line with the slight weekly loss in the markets, we had about 25 percent more sales," Holger Heinrich specifies. Much traded were the heavyweights iShares Core MSCI World and Vanguard FTSE All-World (<IE00BK5BQT80A2PKXG>). In addition, however, quality and dividend products also showed high turnover.
Sustainability is not forgotten
According to Heinrich, global as well as European ESG stocks remain much in demand. As examples, he cites iShares ETFs on the MSCI Europe SRI (IE000CR424L6) and the MSCI World Quality Dividend ESG (IE00BYYHSQ67), as well as products from Amundi on the MSCI World ESG Universal Select (LU2109786587) and the MSCI World SRI PAB Hedged EUR (LU2249056297).
Volatility products, such as the Lyxor S&P 500 VIX Futures Enhanced Roll ETF (LU0832435464) and the WisdomTree S&P 500 VIX Short-Term Futures 2.25x Daily Leveraged ETN (IE00BLRPRH06), are also currently seeing brisk turnover, according to Bendt. Both allow investors* to invest in the expected volatility of the S&P 500 Index. "Recently, though, it's been more selling." A lot is also going around in the WisdomTree Euro Stoxx 50 3x Daily Short (IE00B8JF9153), also an ETN.
Clean Energy ETF up more than 8 percent
Bendt also reports high demand for the iShares Global Clean Energy (IE00B1XNHC34). The $5.7 billion ETF was not immune to the general market weakness in September, but is still up 8.5 percent year-to-date.
Otherwise, in terms of sectors, consumer staples (<IE00B435BG20>), technology (LU1834988518) and healthcare (LU0533033238) are in focus, Mohr notes. Everywhere, however, outweighed the outflows. Also on the down list: the Invesco Global Buyback Achievers (IE00BLSNMW37). This offers access to Nasdaq companies with share buyback programs.
Government bonds rather than corporate bonds
Government bonds are back in the spotlight in fixed income ETF trading. "Corporate bonds are trading much less," notes Mohr. The iShares USD TIPS EUR Hedged (IE00BDZVH966), which tracks inflation-linked U.S. bonds and is currency hedged, and the Amundi Govt Bond Highest Rated Euro Investment Grade (LU1681046691) are being bought. The tracks the performance of euro-denominated bonds with high ratings.
Bet on falling bitcoin
Lang & Schwarz continues to see a lot of turnover in cryptocurrency ETNs. Very much turnover is currently recorded especially a product that can be used to bet on a falling bitcoin rate, the 21Shares Short Bitcoin (CH0514065058). The Bitcoin continues to fluctuate around 20,000 US dollars, at noon on Tuesday it is 19,957 US dollars.
by: Anna-Maria Borse, 5 Oktober 2022, © Deutsche Börse AG