Despite the summer slump, ETFs are still on the rise, especially traditional equity trackers, but also technology and money market products. A real innovation in the ETF market are the first ETFs with maturity caps.
23 August 2023. FRANKFURT (Börse Frankfurt). The vacation season and the lack of stimulus are currently making for extremely quiet ETF trading. "However, buying continues to predominate," reports Frank Mohr of Sociéte Générale. Fabian Wörndl of Lang & Schwarz also reports a continuing buying overhang.
Concerns about China and especially the real estate sector there are currently weighing on the markets, as is the uncertainty about the further action of the U.S. Federal Reserve. On Tuesday morning, the DAX is up slightly to 15,754 points, but remains well below the new all-time high of 16,524 points marked at the end of July. The situation in the USA was similar.
Equity repurchasers and demographic profiteers
In equity ETF trading, S&P 500 and MSCI World trackers are most in demand, according to Wörndl. According to Mohr, ETFs with access to U.S. equities have the highest turnover. "Here, however, inflows and outflows balance each other out." He sees predominant buying in global, European (LU1681042609) and German equities (DE0005933931).
According to Mohr, technology, healthcare and energy ETFs dominate the sector ETF trade - with more buys than sells. For example, the Lyxor Stoxx Europe 600 Healthcare (LU1834986900) and the Invesco Morningstar US Energy Infrastructure (IE00B94ZB998) are very popular.
Mohr
Also sought after: the Invesco Global Buyback Achievers (>IE00BLSNMW37>). This enables investors to invest in shares of international companies that are conducting share buyback programs. Since the beginning of the year, the share price has risen by an unimpressive 9.7 percent compared with the market, but over a three-year period it has risen by an impressive 33 percent. In addition, the iShares Ageing Population (IE00BYZK4669), a theme ETF, is on the shopping lists. It can be used to invest in companies from various sectors that are benefiting from the megatrend of an aging population. This means not only pharmaceutical and healthcare companies, but also financial services providers, for example, which could benefit from the trend.
Money market trackers: higher interest rates convince
According to traders, money market and money market-related products continue to be in demand in bond ETF trading, such as Xtrackers II EUR Overnight Rate Swap (LU0290358497) and Lyxor Euro Overnight Return (FR0010510800).
A lot of money continues to be invested in gas ETCs (IE00BLRPRG98, IE00B76BRD76) and also increasingly in gold ETCs, as Wörndl also notes. Among gold ETCs, it is mainly Xetra Gold (DE000A0S9GB0) and iShares Physical Gold (IE00B4ND3602) that are doing well.
Trading in crypto ETNs has also picked up. Buying is trending in Lang & Schwarz Bitcoin (DE000A27Z304) and Ethereum trackers, as well as crypto baskets (DE000A3GWEU3). Ripple ETNs, on the other hand, would play both sides. Last week, Elon Musk had caused heavy price losses in cryptocurrencies: his company SpaceX parted with the entire Bitcoin holdings.
Novelty: ETFs with a fixed maturity
Incidentally, fixed maturity ETFs have been available in Europe for the first time since August 10. The total of six bond ETFs from iShares ("iBonds ETFs") offer access to fixed-income, sustainable corporate bonds with investment grade ratings. These expire in the same calendar year as the ETF matures, which is 2026 or 2028, depending on the product, resulting in an instrument that combines the advantages of bonds and ETFs: clear maturity, (more or less) clear interest income, repayment at 100 percent, diversification, easy tradability and entry with small amounts. On offer are variants denominated in euros and U.S. dollars, sometimes distributing, sometimes accumulating.
The new ETFs are well received: "I'm skeptical about 'innovative' financial products, but #iBonds from #iShares are a good idea," writes investment expert Christian W. Röhl on the platform X. "The same profile as with an individual bond: clearly defined and gradually decreasing duration, interest income that can be (largely) planned for the term - but diversified, at the fair 'packaging price' of 0.12 percent per year.
JustETF's assessment is a bit more nuanced, saying the products are something for more advanced ETF fans. "Passive investors and all those who don't want to worry about reinvesting on their own are better off with conventional bond ETFs." Because here, the ETF operator automatically takes care of the reallocation of the securities contained in the ETF, he said. Still, "iShares' iBonds concept may not be a revolution that makes all other bond ETFs obsolete, but it's definitely a great evolution and useful addition to previous bond ETFs."
Equity |
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USA | Purchases, Sales |
World | Purchases |
Europe/Germany | Purchases |
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Industries |
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Technology | Purchases |
Health | Purchases |
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Bonds | |
Money Market | Purchases |
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Crypto-ETNs | |
Bitcoin | Purchases |
by: Anna-Maria Borse, 23 August 2023, © Deutsche Börse AG
Anna-Maria Borse is a finance and economics editor specializing in financial markets/stock markets and economic topics.
Feedback and questions to redaktion@deutsche-boerse.com
Borse