Many stock markets are at record highs, which is also reflected in ETF trading. Buying enthusiasm continues, especially for technology and AI ETFs. And there is also a lot going on in the crypto market due to the two-year high for Bitcoin.
27 February 2024. FRANKFURT (Börse Frankfurt). The stock market world is in AI fever. According to Frank Mohr from Société Générale, tech stocks are "the big topic". "This is also being played out in the ETF world." Leo Puschmann from Lang & Schwarz agrees: "Tech stocks are still in focus," he reports. Good figures and an optimistic outlook sent the price of the most important AI share, Nvidia, soaring again to over USD 800 at the end of last week. The market capitalization climbed above 2 trillion US dollars. Yesterday, Monday, the share closed only slightly weaker.
According to Puschmann, the iShares S&P 500 Information Technology (IE00B3WJKG14) and the Xtrackers Artificial Intelligence & Big Data (IE00BGV5VN51) are widely used. The more broadly diversified iShares-ETF has scored with a price increase of 12.3 percent since the beginning of the year and 22 percent over three years, while the Xtracker-ETF has gained 11 percent and 14.7 percent respectively. Mohr also sees a lot of demand for the two ETFs, but also for other tech trackers such as security ETFs (IE00BYPLS672, IE00BLPK3577) from L&G and WisdomTree, the WisdomTree Artificial Intelligence (IE00BDVPNG13) and the HAN-GINS Tech Megatrend Equal Weight (IE00BDDRF700). Healthcare stocks also performed well - also driven by the AI fantasy.
The analyst firm Morningstar has examined AI ETFs and rated four of them positively, specifically the Amundi MSCI Robotics & AI ESG Screened (LU1861132840), the L&G Artificial Intelligence (IE00BK5BCD43), the WisdomTree Artificial Intelligence (IE00BDVPNG13) and the Xtrackers Artificial Intelligence & Big Data (IE00BGV5VN51). They are relatively cheap compared to their competitors and have achieved solid returns so far, it says. However, as Morningstar notes, the ETFs are focusing heavily on the "Magnificent 7" with Nvidia as the largest position, followed by Meta and Microsoft and also names such as AMD, Salesforce and Adobe. Only in Wisdom Tree Artificial Intelligence are there less well-known companies, such as PKSHA Technology of Japan, SentinelOne, Mediatek and UiPath.
More and more active ETFs
However, as always, the largest turnover is in the major indices MSCI World, S&P 500 and Euro Stoxx. "Purchases clearly predominate," says Mohr. According to Holger Heinrich from Baader Bank, buying also dominates, although it has become a little quieter: "Investors have been a little more cautious." Heinrich is particularly interested in products based on large US indices, such as the iShares MSCI USA SRI (IE00BZ173T46) and Amundi S&P 500 II (LU0496786574). Small cap and momentum ETFs (IE00B2QWCY14, IE00BD1F4N50) and the JPM Active US Growth (IE0003KQ8JX1) are also in demand. The JP Morgan ETF launched this January focuses on US companies with high earnings growth potential. It joins a whole group of new active ETFs from the US bank. More and more actively managed ETFs are also coming onto the market from other issuers.
India takes off
"In the case of world ETFs, it is mainly value, quality dividend and multi-factor ETFs," Heinrich also reports. Demand for ETFs that track European equities also tends to be for variants of the major indices. For example, the iShares Edge MSCI Europe Value Factor (IE00BQN1K901), the Amundi MSCI Europe Quality Factor (LU1681041890) and the WisdomTree Eurozone Quality Dividend Growth (IE00BZ56TQ67) are popular.
Puschmann also reports another conspicuous feature: "We are seeing high demand for Indian equities, and have been for several weeks." The iShares MSCI India (IE00BZCQB185) stands out. It has been rising almost constantly for a year. This year alone, the share price has already risen by 8.2 percent, and 16.7 percent over the past three years.
Money market ETFs popular, lively crypto-ETN trading
Buying enthusiasm is also continuing in the bond ETF business. According to Mohr, money market and money market-related ETFs such as Lyxor Euro Overnight Return (FR0010510800) and Xtrackers II EUR Overnight Rate Swap (LU0290358497) continue to do very well. Corporate bonds are also in demand, for example with the iShares Core EUR Corp Bond (IE00B3F81R35).
The continued soaring of Bitcoin is also leading to brisk trading in crypto ETNs. "Turnover has increased, with purchases and sales," reports Puschmann. Bitcoin trackers are particularly strong in terms of turnover. The Bitcoin price climbed to over 57,000 US dollars on Tuesday night and 56,224 US dollars on Tuesday morning. The new Bitcoin ETFs in the USA, for example from BlackRock or Fidelity, are driving prices in particular.
by Anna-Maria Borse, 27 February 2024 © Deutsche Börse AG
Anna-Maria Borse is a financial and business editor specializing in the financial market/stock exchange and economic topics.
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