Towards the end of the year, rising share prices create increasing pressure to act. People are busy buying on the ETF market. The focus is primarily on this year's favorites.
12 December 2023. FRANKFURT (Börse Frankfurt). According to an analysis by Crossflow Financial Advisors, the European ETF market recorded the largest net inflows of the current year in November at EUR 17.2 billion. Growth was driven primarily by equity ETFs (EUR 11.0 billion) and bond ETFs (EUR 6.2 billion). In the equities segment, technology-oriented products continue to be in particularly high demand. There were also inflows into crypto ETPs, while commodity ETPs lost popularity in the past month.
The trends continue with regard to activity on the Frankfurt Stock Exchange in December. Frank Mohr, a trader at Société Générale, reports an overall buying overhang and strong demand for US equity ETFs. The S&P 500 trackers from Vanguard (IE00B3XXRP09) and iShares (IE00B5BMR087) are particularly popular. At Lang & Schwarz, clients are still increasingly turning to the triple-leveraged NASDAQ 100 ETFs from Wisdom Tree. According to Fabian Wörndl, both the long side (IE00BLRPRL42) and the short side (IE00BLRPRJ20) are being used here.
Strong demand for MSCI Europe and DAX ETFs
For the European market, Mohr sees "very strong inflows" into MSCI Europe trackers. The ETFs from iShares (IE00B4K48X80) and Xtrackers (IE00BFMNHK08) in particular are being bought. Jan Duisberg, trader at ICF Bank, also reports "very strong demand overall" and "really strong turnover in DAX ETFs" in particular. The German benchmark index has recently performed above average, which many investors had probably not expected.
This has created "a certain amount of performance pressure", as Duisberg observes in trading. "Something still needs to be done at the end of the year". The DAX tracker from iShares (DE0005933931) is being bought in particular. The index is also "often leveraged", as the inflows of the DAX Daily 2x Long from L&G (IE00B4QNHH68) show.
Technology ETFS outshine everything
In terms of sectors, the tech sector continues to dominate. Société Générale's market makers account for a third of all turnover in sector ETFs. The Xtrackers Artificial Intelligence & Big Data (IE00BGV5VN51) and the Amundi S&P Global Information Technology ESG (IE000E7EI9P0) are at the top of the shopping list. However, Mohr observed losses in the Xtrackers MSCI World Communication Services (IE00BM67HR47).
ICF Bank customers are also focusing on tech-heavy ETFs such as the L&G ROBO Global Robotics and Automation (IE00BMW3QX54). Special commodity ETFs are currently less popular. Wörndl reports sales in the iShares Oil & Gas Exploration & Production ETF (IE00B6R51Z18) and the Global X Uranium ETF (IE000NDWFGA5). At least in the case of the uranium ETF, this is likely to be primarily profit-taking after the price has risen by over 50 percent since May.
Short-dated bonds remain in demand
In the segment of bond ETFs that are most in demand, short-dated bonds remain at the forefront. Both Mohr and Wörndl are seeing "a lot of business" with the Xtrackers II EUR Overnight Rate Swap (LU0290358497), which as a money market product currently offers yield opportunities of between 3.5 and 4.0 percent and is therefore very popular. The iShares EUR Ultrashort Bond (IE000RHYOR04) is also being purchased, as Wörndl explains.
The soaring cryptocurrencies may have suffered a slight setback at the start of the week, but the general trend is still clearly upwards. This is driving demand for the corresponding products. Duisberg, for example, sees "high turnover" in VanEck's Bitcoin ETN (DE000A28M8D0), where there was also some heavy selling yesterday. In contrast, the 21Shares Bytetree BOLD ETP (CH1146882308), where Bitcoin is combined with gold to form an ETP, is in demand. In a monthly allocation based on inverse historical volatility, the precious metal currently accounts for 72%, while Bitcoin has a weighting of 28%.
by: Thomas Koch, 12 December 2023, © Deutsche Börse AG
Thomas Koch is a CEFA investment analyst, investment specialist for structured products and certified certificate advisor. Since the beginning of 2006, he has been covering events on the capital markets as a freelance journalist.
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