The difficult market situation is causing turnover to rise, but no clear direction can be discerned for equity ETFs. What is clear, however, is the continuing interest in money market trackers.
24 October 2023. FRANKFURT (Börse Frankfurt). Concerns about an escalation in the Middle East are also making themselves felt in ETF trading, especially in trading volumes. "Turnover has increased significantly," reports Frank Mohr of Société Générale. However, business is mixed. Mohr reports a clear buying overhang. "At the low levels, some are getting in." Fabian Wörndl of Lang & Schwarz, on the other hand, sees mostly selling. "The major indices are also affected." Meanwhile, Holger Heinrich of Baader Bank observes an almost balanced ratio between purchases and sales.
The stock markets have recently lost heavily. The DAX stands at noon on Tuesday only at 14,846 points, the plus since the beginning of the year has melted down to 5 percent. The U.S. stock markets have also lost heavily, in the Dow Jones are now all the gains from this year gone. The Nasdaq 100, on the other hand, is still up 34 percent despite recent losses.
Mixed picture for equity trackers
"Clearly more purchases than sales" Mohr registers for MSCI World and USA ETFs, for example from iShares. "The ETF savings plans from mid-month are certainly still having an impact there." According to Wörndl, MSCI World (IE00B4L5Y983, LU1781541179) and S&P 500 trackers, on the other hand, are on the sell lists. At Baader Bank, ETFs on major U.S. indexes such as the S&P 500 and Nasdaq (IE000QDFFK00) and their ESG variants (IE00BZ173T46) in particular are showing high turnover, as are quality ETFs (IE00BX7RRJ27, IE00BWT3KN65). Among global products, the focus is on ESG variants of MSCI World ETFs, according to Heinrich. However, ETFs focusing on quality dividends (IE00BYYHSQ67) are also heavily traded, he said.
As far as European equities are concerned, MSCI EMU and Euro Stoxx ETFs are on the sell lists of Société Générale clients, as are DAX ETFs. At Baader Bank, turnover - purchases and sales - is concentrated on ESG variants of the MSCI Europe and the Euro Stoxx 50. "In addition, European small caps are a topic," explains Heinrich. Wörndl reports increased selling for DAX ETFs with leverage, such as the Xtrackers LevDAX Daily Swap (LU0411075376).
In vogue: AI and money market ETFs
In the sector ETF business, much of the focus is once again on technology ETFs, this time specifically those with a focus on artificial intelligence. The Amundi MSCI Robotics & AI ESG Screened (LU1861132840) and Xtrackers Artificial Intelligence & Big Data (IE00BGV5VN51) are among the most popular.
Still popular: money market ETFs. "They are now always in demand," explains Wörndl, referring to Xtrackers II EUR Overnight Rate Swap (LU0290358497). Lyxor Euro Overnight Return (FR0010510800) and iShares EUR Ultrashort Bond (IE00BCRY6557) are also in demand, Mohr notes. On the other hand, corporate bond ETFs and those tracking longer-dated European government bonds are selling, he said.
Gold and bitcoin take off
A lot of turnover is also going into gold ETCs such as Xetra-Gold (DE000A0S9GB0) at Lang & Schwarz. "That's going both ways." The gold price has been rising for about two weeks and is currently just below the 2,000 U.S. dollar mark for the troy ounce. High turnover continued in WisdomTree's two leveraged gas ETCs (IE00BLRPRG98, IE00B76BRD76), one long, one short.
Bitcoin also rose sharply this week, climbing above $35,000 for the first time since May 2022. Crypto ETNs such as the ETC Group Physical Bitcoin (DE000A27Z304) are benefiting. The backdrop is speculation - as it was a week ago - that a bitcoin spot ETF will be approved in the United States. "Digital investment products saw inflows for the fourth week in a row," reports UK-based asset manager Coinshares, which specializes in digital investments.
ETF prices continue to fall. This week, issuer SPDR announced a significant reduction in management fees for S&P 500 ETFs for November. According to its own statements, this means SPDR offers the lowest-cost physically-replicating S&P 500 ETFs based in Europe. The TER for the classic S&P 500 tracker (IE00B6YX5C33) drops from 0.09 to 0.03 percent, for the currency-hedged version (IE00BYYW2V44) from 0.12 to 0.05 percent, and for the ESG version (IE00BH4GPZ28) from 0.10 to 0.03 percent.
by Anna-Maria Borse, 24 October 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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