DAX record? That's not really of interest in ETF trading. The focus continues to be on trackers of global or U.S. equities - and since the Nasdaq is doing so well, tech stocks as well. More conservative investors are buying US government bonds.
23 May 2023. FRANKFURT (Börse Frankfurt). Things remain quiet in ETF trading. "The markets are moving slowly and steadily upwards, but this is not having a major impact," says Frank Mohr of Société Générale, describing the situation. "Sales remain subdued." However, purchases continue to clearly predominate. "57 percent buys to 43 percent sells is already a clear vote."
The DAX had climbed to a new all-time high of 16,332 points on Friday in the hope of an agreement in the U.S. debt dispute, on Tuesday noon it is 16,191 points. Things are also going very well for US technology stocks at the moment. The Nasdaq 100 rises and rises, since beginning of the year meanwhile by 28 per cent. However, the record highs of late 2021/early 2022 are still a long way off.
Large equity market trackers most popular
In trading with equity ETFs, trackers of global and U.S. equities continue to dominate, as Mohr reports. At the top of the list of the most popular ETFs: the iShares Core MSCI World (IE00B4L5Y983). However, S&P 500 ETFs (IE00B5BMR087, IE00B3XXRP09) and Nasdaq trackers (LU1681038243) would also be clearly bought.
Torben Bendt of Lang & Schwarz sees a lot of interest in European stocks. "There's a lot more going on now." For example, investors* were betting on Euro Stoxx 50 ETFs from Xtrackers (<LU0274211217) or iShares (DE0005933956). At Société Générale, on the other hand, European and German equities are currently not playing a major role. For the iShares Core DAX (DE0005933931), Mohr also reports rather decreases. On the other hand, the Fidelity Sustainable Research Enhanced Europe Equity (IE00BKSBGT50), an active ETF, is being bought. In the case of active ETFs, the index only serves as a benchmark that has to be beaten - by means of proprietary strategies based on intensive research.
Only the tech sector is doing well
As for sectors, most revolve around healthcare, technology, energy and financial stocks, Mohr notes. "The tech sector is being bought, everything else is being sold." For instance, investors* are parting with iShares Healthcare Innovation, Xtrackers MSCI World Energy (IE00BM67HM91) and Xtrackers MSCI USA Financials (IE00BCHWNT26).
In contrast, they back iShares Automation & Robotics (IE00BYZK4552), Xtrackers MSCI World Information Technology (IE00BM67HT60) and WisdomTree Battery Solutions (IE00BKLF1R75). iShares' popular Automation & Robotics ETF, now worth $3 billion, is up 19 percent year-to-date and 12 percent for the year over three years. Xtrackers' broad-based IT ETF is up 26 percent year-to-date and 17 percent annually over three years, while WisdomTree's battery ETF is up 5 percent and 21 percent annually.
The dividend season is currently underway. Morningstar has just unveiled five trackers of high-dividend stocks with "positive medalist ratings," i.e., with the best chances of above-average performance, according to Morningstar. In general, the analyst firm advises looking for funds with stable payouts and consistent dividend growth - rather than the highest yield. "Stable and consistent dividend growth indicates responsible corporate governance," explains Morningstar editor Valerio Baselli. Suitable ETFs, according to Morningstar, include Fidelity Europe Quality Income (IE00BYSX4283) for Europe, SPDR S&P US Dividend Aristocrats (IE00B6YX5D40) for the U.S, the iShares UK Dividend (<IE00B0M63060<) for the U.K., the WisdomTree Emerging Markets Equity Income (IE00BQQ3Q067) for emerging markets and the Fidelity Global Quality Income (IE00BYXVGZ48) for global equities.
A lot going on in money market ETFs
At Lang & Schwarz, bond ETFs are noticeably busy. "Investors are already clearly more conservative at the moment." On the one hand, this concerns money market and near-money market funds such as Xtrackers II EUR Overnight Rate Swap (<ISIN: LU0290358497>) and iShares eb.rexx Government Germany 0-1yr (DE000A0Q4RZ9). However, longer-dated U.S. government bonds would also be bought, for example with the iShares USD Treasury Bond 20+yr (IE00BSKRJZ44). "That's where the renewed rise in interest rate expectations is likely to play a role." In the markets, further rate hikes are again seen as more likely following recent comments from U.S. central bankers.
At Société Générale, money market funds are also showing high turnover, for example from Lyxor/Amundi (FR0010510800). Mohr sees clear buying for Deka Deutsche Boerse Eurogov Germany 10+ (DE000ETFL219), which tracks long-dated government bonds from Germany, and for Amundi Index Euro Corporate SRI (LU1681039647), with access to European corporate bonds with an SRI filter.
Equities |
|
World | Purchases |
USA | Purchases |
Europe | Purchases |
Germany | Sales |
|
|
Industries |
|
Technology | Purchases |
|
|
Bonds |
|
Money market | Purchases/Sales |
US government bonds 20y+ | Purchases |
by Anna-Maria Borse, 23 May 2023, © Deutsche Börse
Anna-Maria Borse is a finance and economics editor specializing in financial markets/stock markets and economic topics.
Feedback and questions to redaktion@deutsche-boerse.com
Borse