Broadly diversified ETFs are currently at the top of the investor's list, but there can also be more specialized strategies - such as Bulgarian equities. Among factor ETFs, quality strategies have proved particularly successful this year.
13 July 2021. FRANKFURT (Börse Frankfurt). Things are still going well on the stock market - and in the ETF business, too. "While the weather is November-like, the same cannot be said of ETF flows," notes Hubert Heuclin of BNP Paribas. He reports high inflows into equity ETFs, but also bond ETFs.
The DAX climbed to a new all-time high of 15,806 points yesterday (Monday), and is barely lower at 15,780 on Tuesday morning. The U.S. stock markets also continue to soar: S&P 500 and Nasdaq reached new all-time highs yesterday, the Dow Jones is only just below.
"Back to the basics"
In equities, global stocks (IE00B4L5Y983, IE00BJ0KDQ92) and S&P 500 trackers (IE00B5BMR087) are in particular demand, according to Heuclin. "It's 'back to the basics' at the moment," notes the trader. While eurozone stocks are selling off the bottom line, he still reports small inflows for German stocks, such as the Lyxor DAX (LU2090062436).
Heuclin
Andreas Schröer of Lang & Schwarz also sees interest in more specialized products at the moment. He observes many purchases, for example, in British shares, while Bulgarian and South Korean shares are traded in both directions with increasing turnover. Recently, Asian and especially Chinese stocks are seeing more buying again, Schröer also notes, such as the UBS MSCI China ESG Universal (LU1953188833).
Expat Bulgaria SOFIX (BG9000011163), which tracks the Sofia Stock Exchange, is one of the more unusual ETFs. It was launched back in 2018, but the fund volume is very small at not even 5 million euros.
Factor ETFs: Quality preferred
Factor ETFs such as the iShares Edge MSCI World Momentum Factor (IE00BP3QZ825) and the iShares Edge MSCI World Minimum Volatility (IE00B8FHGS14), meanwhile, are seeing high outflows, Heuclin notes. Only quality stocks continued to attract investors (IE00BP3QZ601).
No wonder, because they have done best with quality stocks this year: Since the beginning of the year, the iShares Edge MSCI World Quality Factor has gained 20.2 percent (three years: 15.5 percent p.a.). The iShares Momentum ETF is up 11.1 percent (three years: 15.9 percent p.a.), while the Minimum Volatility ETF is up 12.7 percent (three years: 9.6 percent p.a.).
Factor strategies aim to outperform the market return or to reduce risk. To achieve this, certain stocks are selected from an index, such as the MSCI World.
In the quality strategy, the stocks with the highest quality are selected. Criteria include dividends, low debt and low year-on-year earnings volatility. For the Momentum strategy, the stocks that have recorded price increases in the past six or twelve months are identified. The background to this is the assumption that these increases will continue. For the minimum volatility strategy, stocks are selected according to the lowest volatility.
The market-wide iShares MSCI World (IE00B4L5Y983) without any factor does not need to shy away from the comparison: With it, investors have achieved a plus of 18.5 percent since the beginning of the year, and 14.5 percent p.a. over a three-year period.
China bonds in demand again
According to Heuclin, bond ETFs have recently become very popular again. Favorites are government bonds, especially those from China. Examples include the Goldman Sachs Access China Government Bond (IE00BJSBCS90) and the iShares China CNY Bond (IE00BYPC1H27). But corporate bonds - especially from the eurozone - are also doing well.
Cryptocurrencies: Bulls and bears
Quieter trading has been seen in cryptocurrency ETNs. "Not much is happening in cryptocurrency prices at the moment, after all," Schröer notes. The Bitcoin price has almost halved since its high of 64,749 US dollars in April, but has been moving sideways for several weeks.
There are now 14 cryptocurrency ETNs listed on the Frankfurt Stock Exchange, with BTCetc - Bitcoin Exchange Traded Crypto (DE000A27Z304), 21Shares Ethereum (CH0454664027) and CoinShares Physical Bitcoin (GB00BLD4ZL17) having the highest assets under management.
By: Anna-Maria Borse
13 July, 2021, © Deutsche Börse AG.
Shares | |
USA | Buys |
World | Buys |
Quality | Buys |
Momentum/Minimum Volatility | Sales |
Bonds | |
Government Bonds China | Buys |
Cryptocurrency ETNs | Buys and Sales |