In ETF trading, market-wide trackers continue to be the main beneficiaries, although demand for more cyclical sectors and slightly riskier bonds suggests a greater appetite for risk. This is also reflected in altcoin purchases.
14. September 2021. FRANKFURT (Börse Frankfurt). Carsten Schröder, trader at Société Générale, speaks of "really quiet" days in ETF trading. The trend towards ETFs that track large indices is unbroken. The tech influx also continues. The money problems of real estate group Evergrande are shaking up the market and sparking interest in ETFs with Chinese stocks, according to Schröder's observation. Besides that, "there are no extraordinary issues."
Hubert Heuclin of BNP Paribas recaps that the S&P 500 was able to end its five-day downtrend yesterday. But 1.7 percent loss is not yet a sign of the end of the rally, he said. It does show, however, that nerves are raw over the expected tapering, the withdrawal from expansionary monetary policy. For Heuclin, it's a good sign that investors and traders are making peace with the idea of more restrictive measures, which lowers the likelihood of a stampede out of the market if the Fed comes true.
Heuclin
Schröder reports brisk buying of an S&P 500 ETF (IE00B5BMR087) from iShares and MSCI World ETFs (IE00B4L5Y983, IE00BJ0KDQ92), three standard offerings. Sold, on the other hand, would be a factor ETF focusing on value stocks in MSCI World, a specialty offering. Also being sold are shares in a global equity ETF from VanEck, though it keeps them equally weighted in the portfolio, the VanEck Vectors Global Equal Weight UCITS ETF (<NL0009690221>).
Heuclin is seeing majority inflows in equities overall, "strong appetite," especially for globally invested ETFs, but also the U.S. indexes and Chinese securities, equities as well as bonds.
Market Cap Indices vs. Equal Weighting
Most indexes distribute the shares of their constituents according to free float market capitalization, i.e. number of share packages below a certain size such as 3 percent times share price. In equal-weighted stocks, all companies have the same share, such as 0.2 percent in the S&P 500. Index weighting by market capitalization better reflects market performance, it is generally believed, while equal-weighted stock indexes leverage smaller and undervalued companies. Since large stocks with a good past performance have a greater weighting in the former, equal weighting is often said to have more return potential.
Fabian Wörndl of Lang & Schwarz sees sales of an ETF with companies from Asian emerging markets (IE00B5L8K969).
Small shifts in sectors
Schröder is seeing sales of an ETF with global companies in the consumer durables sector, Xtrackers MSCI World Consumer Discretionary (IE00BM67HP23).
Consumer Staples vs. Consumer Discretionary
Companies in the consumer staples sector can be categorized into two areas, with ETFs usually having the U.S. terms in their names. Consumer Staples includes everyday goods such as staples and are considered non-cyclical to the economy. Consumer Discretionary refers to upscale consumer durables, and stocks from the sector are considered cyclical.
Wörndl is registering sales in one of the most heavily traded sector trackers of all, the Global Clean Energy ETF from iShares (IE00B1XNHC34). ETFs specializing in water would also be in demand at the moment (IE00B1TXK627, FR0010527275). In the exotics corner are buyers* of two uranium ETFs from Global X and VanEck (<US37954Y8710>, <US92189F6016>), both not in Xetra trading.
Heuclin sees dip buyers in Chinese tech stocks (IE00BFXR7892, LU0779800910).
Altcoins still in demand - with ups and downs
In cryptocurrency trading, Wörndl observes buying in Bitcoin and Ethereum trackers. Solana and Cardona continue to be heavily traded, with movements of 20 percent, at the moment the purchases predominate.
Bond ETFs: a bit more risk, please.
Given the recent turmoil in China mentioned above, Schröder wonders about the buying of Chinese government bond trackers, such as the iShares China CNY Government Bond (<IE00BMC7BF44>), which is not traded on Xetra. Heuclin calls this welcome-back buying.
Schröder is also taking down an ETF of high-yield U.S. dollar corporate bonds (IE00B74DQ490). He suspects the absence of last week's ECB meeting has opened the door to more risk.
Selling would be an investment grade low-rated government bond ETF from Amundi (LU1681046774) and a European government bond ETF with no other filter, the SPDR Bloomberg Barclays Euro Government Bond (IE00B3S5XW04).
Von Edda Vogt, 14. September 2021 © Deutsche Börse