U.S. equities are the favorite - that was true in August and remains true. Global ETFs are also in demand, but European ones less so. Tech and money market ETFs are perennial favorites.
19 September 2023. FRANKFURT (Börse Frankfurt). At the moment, it is mainly U.S. stocks that are convincing. "We see significantly more buying," reports Frank Mohr from Société Générale. Unlike the previous week, Nasdaq trackers are also in demand again, previously profits were often closed out. According to Mohr, the turnover has increased somewhat, but overall it remains quiet. The DAX continues its months-long sideways movement around 15,800 points, on Tuesday at noon, the index is at 15,700 points. The S&P 500 and Nasdaq are also treading water after the upward movement that lasted until July.
S&P 500 trackers from iShares, Invesco and Amundi (IE00B5BMR087, IE00B3YCGJ38, LU1681048804) are doing very well. Also popular: MSCI World and MSCI ACWI ETFs from iShares (IE00B4L5Y983, IE00B6R52259). Things are calmer for trackers of European and German equities. "There, inflows and outflows balance each other out," notes Mohr.
Classic indices, but also equal weight variants
In August, the picture was similar. "On the equity side, there was only one theme: the U.S.," is how the Munich-based ETF analysis and trading house Crossflow puts it. A total of 87.5 percent of equity investments flowed into U.S. companies. The focus was on the major indices, but also on ESG variants. An equal weight strategy on the S&P 500 was also popular. However, since the beginning of the year, world ETFs have been the most popular: They received 30.2 billion euros of the total 47.9 billion euros in equity ETFs, North America ETFs "only" 9.3 billion euros.
Tech ETF with price increase of 35 percent
Technology, healthcare, energy - these three sectors regularly dominate trading in sector ETFs. Mohr currently reports significantly more buying than selling for tech ETFs such as the iShares Digital Security (IE00BG0J4841), the iShares Automation & Robotics (IE00BYZK4552) and the Xtrackers MSCI World Information Technology (IE00BM67HT60). All three are coming off hefty year-to-date gains: the iShares products are up 19.4 percent, and the Xtrackers ETF is up as much as 35 percent.
Things look much worse for health ETFs, which are currently on the sell lists, Mohr observes. The iShares S&P 500 Health Care Sector EUR hedged (<IE00BMBKBZ46>) is down 3 percent this year, while the Xtrackers MSCI USA Health Care (IE00BCHWNW54) is down 2 percent. Since mid-year, energy ETFs (IE00BJ5JP105) have made significant gains again and are now also being bought again. The background is the significant increase in oil prices. However, the Lyxor MSCI New Energy ESG Filtered (FR0010524777) is also in demand. This offers access to the world's 20 largest companies in the alternative energy sector. Also conspicuous are larger drops in water ETFs, such as iShares Global Water (IE00B1TXK627).
Money market ETFs continue to impress
In the bond ETF business, it's business as usual: money market and near-money market trackers continue to be favorites, as Mohr reports. On the shopping lists are, for example, the Lyxor Euro Overnight Return (FR0010510800) and the iShares EUR Ultrashort Bond (IE00BCRY6557), as well as ETFs that track floaters such as the iShares EUR Floating Rate Bond ESG (IE00BF5GB717). In addition, Mohr still sees positioning in emerging market bonds, such as with the iShares J.P. Morgan USD EM Bond (IE00B2NPKV68).
With the Xtrackers II EUR Overnight Rate Swap (LU0290358497), a money market ETF even made it onto the Xetra turnover list for August, which is typically dominated by equity ETFs. The tracker ranked sixth after all. Only the iShares equity ETFs on MSCI World, Euro Stoxx 50, DAX and Stoxx Europe 600 as well as the Xtrackers DAX were more actively traded. Incidentally, the sector ETF with the highest turnover on Xetra is not a technology, healthcare or energy ETF, but the iShares Euro Stoxx Banks 30-15 (DE0006289309).
Wave off crypto ETNs
Investors* don't want to know much more about crypto ETNs. Digital investment products saw outflows for the fifth week in a row, according to digital asset manager CoinShares. "This brought the year-to-date net inflows down to just $51 million." Regionally, the negative sentiment was mostly concentrated in the U.S., but Germany, Canada and Sweden also continued to suffer, he said. CoinShares tracks weekly inflows and outflows in ETPs, mutual funds and OTC trusts related to bitcoin, ether and other digital assets. Bitcoin had risen significantly in the first half of the year, but has been on a downward trend since then. Currently, the cryptocurrency costs 26,840 US dollars.
by: Anna-Maria Borse, 19 September 2023, © Deutsche Börse AG
Anna-Maria Borse is a finance and economics editor specializing in financial markets/stock markets and economic topics.
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