12/08/25 11:56:13

ETFs: Small caps – comeback achieved

USA, Europe, global – there are currently no regional preferences. In addition to shares in large companies, small and mid caps are also attracting interest again. Defense ETFs, on the other hand, are seeing initial profit-taking ahead of Friday's Trump/Putin meeting.


12 August 2025. FRANKFURT (Börse Frankfurt). The mood remains positive in ETF trading. “We are seeing more purchases than sales,” reports Holger Heinrich of Baader Bank. He points to the recovery on the stock markets following the significant price setbacks of the previous week. On Tuesday afternoon, the DAX was back at 24,060 points, while the Nasdaq 100 even reached a new all-time high on Friday. This brings the DAX up 20 percent since the beginning of the year, the Nasdaq 100 up 12 percent, and the S&P 500 up just under 9 percent.

World, US, and European stocks—this time, everything is being bought, as Heinrich explains. However, world ETFs are not as strongly represented. The focus is on classic MSCI World trackers, but also on more specialized ones such as the Xtrackers MSCI Global SDGs (IE000PSF3A70), the Vanguard ESG Global All Cap (IE00BNG8L385) and the Invesco Global Buyback Achievers (IE00BLSNMW37).

MDAX and SDAX even better than DAX

When it comes to US stocks, Heinrich says investors are turning to major indices such as the S&P 500, Nasdaq, and MSCI USA. “There was also demand for dividend ETFs (IE000Z4OBQK4),” he adds. Lang & Schwarz's trading-savvy clientele is increasingly betting on leveraged ETNs, as Andreas Schröer reports. Examples include the WisdomTree Nasdaq 100 3x in long and short versions (IE00BLRPRL42, IE00BLRPRJ20). 

Andreas Schröer

According to Heinrich, Euro Stoxx 50 (FR0012739431), MSCI Europe (IE00BFMNHK08) and MSCI EMU Tracker (LU1953137681) are performing well in the European equities sector. In terms of specific countries, Switzerland is attracting buyers, while British equities are tending to be sold off. “Small-cap ETFs such as the iShares Euro Stoxx Small (IE00B02KXM00) are also popular,” he notes. The MDAX and SDAX have outperformed the DAX since the beginning of the year, with gains of 21% and just under 24%, respectively. The US small-cap index Russell 2000, on the other hand, is still in negative territory.

Inflows into US equities resume. After record inflows at the turn of the year, sales in the European ETF market stagnated in July for the fifth month in a row, according to ETF trading and analysis firm Crossflow. “Nevertheless, €20 billion was still invested in equity ETFs and €3.6 billion in bond ETFs last month,” it said. In the equity sector, money flowed primarily into ETFs with global indices and European regional indices (€9.7 billion and €4.7 billion), but also back into US ETFs (€3.2 billion). “These were the highest inflows into US ETFs since February.” In terms of sectors, financials and technology were particularly in demand in July, as were defense ETFs. More on this: https://www.crossflow.de/wp-content/uploads/2025/08/2025_07_KnowtheFlow.pdf

 

Defense ETFs suffer losses

Trading in sector ETFs is largely focused on the tech sector, as Schröer reports. “Purchases dominate,” he notes. The iShares S&P 500 Information Technology (IE00B3WJKG14) is performing well, for example. The financial sector also remains a topic of interest. Schröer also sees growing interest in leveraged ETNs, such as the WisdomTree Euro Stoxx Banks 3x (IE00BLS09N40).
Defense ETFs are also recording high turnover. “The price losses of Rheinmetall and other defense companies are making themselves felt,” explains Schröer. Ivo Orlemann of ICF Bank is also seeing trading in both directions, but mostly still purchases. Prices are down ahead of the meeting between US President Trump and Russian President Putin on Friday this week. For example, HANetf Future of Defense (<IE000OJ5TQP4Y) is trending downward. 

Lively crypto trading

According to traders, there is also a lot going on with crypto ETNs. “This is likely related to the development of Bitcoin,” Orlemann suspects, reporting inflows and outflows, often in Bitcoin or Solana trackers (DE000A3GSUD3). Schröer from Lang & Schwarz also sees buying and selling in many currencies. Bitcoin recently approached its all-time high of 123,021 US-Dollar, but by Tuesday afternoon it was back down to around 119,000 US-Dollar.

By Anna-Maria Borse, 12 August 2025, © Deutsche Börse AG

Anna-Maria Borse is a financial and business editor specializing in financial markets/stock exchanges and economic issues.

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