The first half of the year could hardly have been better for equity ETFs, regardless of whether they were global, US or European stocks. But technology ETFs did particularly well. Some are now cashing in.
4 July 2023. FRANKFURT (Börse Frankfurt).
After strong price gains for most equity index funds in the first half of the year, there is currently restraint in ETF trading, although the price dip of the past week has long since been made up. "Turnover was below that of the previous week," reports Holger Heinrich of Baader Bank. "And although the stock indices were up significantly across the board, we only had about 20 percent more buying than selling." At noon on Tuesday, the DAX stands at 16,066 points after 15,800 points a week ago. Currently, however, the impetus is missing: Due to the Independence Day in the U.S. today, Tuesday, and the shortened trading already yesterday, Monday, it is currently quiet on the stock markets.
Fabian Wörndl of Lang & Schwarz reports mainly purchases for the large ETFs on European or U.S. indices. "The investment focus has shifted back towards the US," reports Holger Heinrich. The focus is on broad indexes, with purchases of iShares S&P 500 ESG EUR Hedged (IE000CR7DJI8) and iShares MSCI USA ESG Screened (IE00BFNM3G45), for example. Value stocks are also sought after, specifically with the Ossiam Shiller Barclays CAPE US Sector Value (LU1079841273), he said.
In global products, there is also strong interest in ESG and SRI products (IE00BF2B0N83), Heinrich adds, but standard products are also in demand. "Interest in European products has declined somewhat compared to the previous week," the trader also explains. ESG products are also popular here, for example the BNP Paribas Easy MSCI Europe ESG Filtered (LU1291099718) and the Amundi Index MSCI Europe SRI PAB (LU2059756598), he adds.
Emerging market equities: small recovery
Wörndl currently sees more interest in emerging markets trackers that have long been in the shadows, such as the iShares Core MSCI EM IMI (IE00BKM4GZ66) and iShares Asia Pacific Dividend (IE00B14X4T88). Also on the shopping lists: Turkish (IE00B1FZS574) and Brazilian stocks (IE00B0M63516). "We are seeing increased inflows." Emerging markets have made some gains recently, but still lag developed markets. While the S&P 500 and also the DAX were up about 16 percent in the first half of the year, the MSCI Emerging Markets was up just over 3 percent.
"Portfolios with emerging market equities more robust"
According to UBS, portfolios with emerging market and China A-share ETFs can be more robust. According to analysis by the bank, over the past 25 years, investing solely in MSCI EM would have produced higher returns than investing in MSCI World, but with much higher volatility. The lowest volatility would have resulted from a portfolio allocation of 70 percent MSCI World and 30 percent MSCI EM. "Despite its important role in the world economy, China is mostly underrepresented in global indices," Dag Rodewald, head of UBS ETF Germany & Austria, explains in his latest commentary. In 2021, for example, China accounted for 18.1 percent of global GDP, but the country was represented by only 3.6 percent in the MSCI ACWI, the global developed and emerging market index. "China A-shares, or domestic stocks, represent a large part of the Chinese equity market and should not be missing from any allocation."
Tech stocks with rich half-year gains
As far as sector ETFs are concerned, technology ETFs had a real run in the first half of the year. The Nasdaq 100 gained almost 39 percent - the best first half in its history. Now some investors are selling their positions, as Wörndl from Lang & Schwarz observes. For example, the iShares S&P 500 Information Technology Sector (IE00B3WJKG14) is being sold. "This is likely to be profit-taking."
Crypto ETNS: Bitcoin back above $30,000
In crypto ETN trading, the bitcoin rise above $30,000 is noticeable. "We are seeing more business again, but in both directions," Wörndl explains. He reports the most turnover for the ETC Group Physical Bitcoin (DE000A27Z304). The background for the recent price increase was the news that BlackRock in the U.S. has filed an application for a so-called spot bitcoin ETF with the U.S. Securities and Exchange Commission. But the applications were rejected, as the "Wall Street Journal" now reports. "It didn't have an impact here," Wörndl notes. As of Tuesday morning, bitcoin is trading just below $31,000.
Equities |
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USA | Purchases |
World | Purchases |
Europe | Purchases |
Emerging markets | Purchases |
Asia | Purchases |
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Industry |
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Technology | Sales |
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Crypto-ETNs | |
Bitcoin | Purchases/ Sales |
by: Anna-Maria Borse, 4 July 2023, © Deutsche Börse
Anna-Maria Borse is a finance and economics editor specializing in financial markets/stock markets and economic topics.
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Borse