The share price has risen by over 40 percent since the beginning of the year, which means that profits are often sold off. However, there is still potential for specific tech topics. Unsurprisingly, AI is one of them. Those who prefer a calmer environment can opt for money market ETFs.
12 September 2023. FRANKFURT (Börse Frankfurt). Despite the end of the vacation season - according to traders, not much is happening in ETF trading. In the markets, waiting is the order of the day ahead of the central bank meetings this week and next week. "However, the purchases predominate, especially MSCI World and S&P 500 trackers, which are sought after," explains Frank Mohr of Société Générale. It is noticeable that Nasdaq ETFs are sold, but ETFs with access to more specialized tech topics, such as artificial intelligence or cyber security are bought. Holger Heinrich of Baader Bank also registers a buying overhang. "The focus seems to have shifted from world products to USA products."
After an extremely good first half of the year, the stock markets have been moving sideways since the beginning of the second half. Still, the MSCI World is up 14 percent year-to-date, the S&P 500 is up 17 percent, and the Nasdaq 100 is up as much as 42 percent.
Small caps on the verge of a comeback?
Mohr reports inflows for the broad-based but now heavily U.S.-heavy iShares Core MSCI World (IE00B4L5Y983) and its SRI variant (IE00BYX2JD69). He also sees "good buys" for S&P 500 trackers from Invesco, iShares and Vanguard. On the sell lists, however, are Nasdaq index funds such as the Amundi Nasdaq 100 (LU1681038243).
According to Heinrich, focal points in MSCI World products are currently small cap trackers (IE00BKSCBX74, IE000C692SN6). These are still lagging large caps. "In addition, U.S. ETFs are again trading in greater numbers and in a variety of sectors." Strongly represented again: the ESG sector (IE00BHZPJ908), but also minimum volatility (IE00BYX8XD24) and multi-factor ETFs. The multi-factor ETF Invesco is looking for focuses on the three factors of quality, value and momentum (IE00BDZCKK11). Since the beginning of the year, however, it has only posted a small gain of 1.8 percent.
As far as European and also German shares are concerned, according to Mohr, purchases and sales balance each other out. Heinrich reports inflows into the Euro Stoxx 50 (<LU0908501488>), but also into products on country indices such as the French CAC 40 or British FTSE 100.
In August, BlackRock with its ETF brand iShares was for once not the issuer with the highest net inflows, but Xtrackers, as the Munich-based analysis and trading house Crossflow notes. "The reasons for this were relatively high redemptions in the iShares Core Euro Corporate Bond and the JP Morgan US Dollar EM Bond ETF," Crossflow explains. At the same time, three bond ETFs from Xtrackers saw above-average inflows, including the money market ETF Xtrackers II EUR Overnight Rate Swap (LU0290358497), he said.
AI, cyber security - special in demand
In terms of sectors, healthcare and technology ETFs dominate, according to Mohr. "We are seeing significant inflows into the healthcare sector, for example with Lyxor MSCI World Health Care (LU0533033238). Also, extremely popular is anything with Artificial Intelligence, Cyber Security or Robotics around its name, such as Xtrackers Artificial Intelligence & Big Data (IE00BGV5VN51), iShares Digital Security (IE00BG0J4841) and Amundi MSCI Robotics & AI ESG Screened (LU1861132840)."
Also doing really well, according to Mohr, are three thematic ETFs from Xtrackers launched in February this year: the Xtrackers MSCI Global SDG 7 Affordable and Clean Energy (IE000JZYIUN0), the Xtrackers MSCI Global SDG 6 Clean Water & Sanitation (IE0007WJ6B10) and the Xtrackers MSCI Global SDG 3 Good Health (IE00036F4K40). They provide access to companies of varying sizes from developed and emerging markets that make a positive contribution to one of the UN's 17 Sustainable Development Goals (SDGs) in total, such as affordable, reliable, sustainable and modern energy (Goal 7) or the availability and sustainable management of water and sanitation (Goal 6).
Money market ETFs continue to draw
In the bond ETF business, Mohr said money market trackers remain popular, such as Lyxor Euro Overnight Return (FR0010510800) and iShares EUR Ultrashort Bond (IE00BCRY6557), as do ETFs that track floaters such as Amundi EUR Floating Rate Corporate Bond ESG (LU1681041114). On the other hand, longer-dated government bond ETFs, specifically Lyxor Euro Government Bond 25+Y (LU1686832277), were sold.
by: Anna-Maria Borse, 12 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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