Whether equities, bonds, cryptos or commodities: Buyers dominate ETF trading in all asset classes. Previously neglected sectors are also in demand.
30 January 2024. FRANKFURT (Börse Frankfurt). The mood on the stock markets is good and is leading to brisk demand for exchange-traded index funds in ETF trading. Holger Heinrich from Baader Bank summarizes the past week as "around 30 percent more purchases than sales, with turnover picking up again". Customers were particularly active in European ETFs.
The Amundi MDAX ESG (LU2611731667) and the iShares Euro Stoxx Small ETF (IE00B02KXM00), which tracks the performance of the 100 smallest stocks in the Stoxx Europe 600, were the most popular. In the run-up to the upcoming dividend season in spring, companies with high payouts are also in demand. Investors are focusing on these with ETFs such as the iShares MSCI Europe Quality Dividend ESG (IE00BYYHSM20).
Emerging markets with catch-up potential?
Frank Mohr from Société Générale also reports an "exceptionally strong buyer overhang". There were consistently more buyers for the ten most frequently traded products. In addition to classics such as the iShares Core S&P 500 (IE00B5BMR087) or the Invesco MSCI World (IE00B60SX394), the UBS MSCI Emerging Markets (LU0480132876) was also in greater demand. The stock exchanges in the emerging markets have lagged significantly behind the performance of the major Western markets in recent years. Customers could see catch-up potential here.
A trend confirmed by Jan Duisberg. The ICF Bank trader has observed increased activity in China-related ETFs in particular. "Now that the problems are being addressed by the Chinese government, clients are willing to speculate on a successful bottoming out." Duisberg registered good turnover in Globel X China Electric Vehicle And Battery (IE00094FRAA6) and Global X China Clean Energy (IE000TMA7T63).
However, the positive start to the year on the stock markets has also led to a certain degree of skepticism. "It is interesting that there were noticeable increases in turnover in various short ETFs," says Heinrich. Specifically, three ETFs from Amundi were traded, which would benefit from falling prices on the DAX (FR0010869495) and the Euro Stoxx 50 (FR0010757781 and FR0010424143).
Tech stocks dominate, but real estate ETFs are also being bought
Looking at the sector ETFs, tech ETFs continue to dominate. Société Générale reports a share of more than 40% and a clear buyer overhang. According to Mohr, the Xtrackers Artificial Intelligence & Big Data (IE00BGV5VN51) is being bought again and again and there is also brisk demand for the iShares S&P 500 IT Sector (IE00B3WJKG14). However, the trader sees "great interest in the respective products across all providers" in the tech sector.
"Significant purchases" in the SPDR Dow Jones Global Real Estate (IE00B8GF1M35) are also striking. "This was not usually the case," says the trader, referring to the skepticism towards equities and ETFs from the real estate sector observed in the previous year.
Away from the equity markets, Duisberg reports continued unbroken interest in crypto products. Especially in 21Shares Solana Staking (CH1114873776) "there is always a lot going on". The same applies to VanEck Crypto and Blockchain Innovators (IE00BMDKNW35). The price losses since the approval of the first Bitcoin Cash ETFs by the US Securities and Exchange Commission are therefore not a deterrent.
Bond ETFs are catching up
The development in the fixed income sector, which is becoming increasingly popular in ETF trading, is also interesting. "More and more customers are interested in this area," reports Mohr. Institutional investors in particular are becoming more and more convinced of the benefits of ETF solutions. According to a Bloomberg report, this will lead to a record turnover of EUR 803 billion in fixed-income ETFs as early as 2023. Although equity ETFs still dominate the market, their lead is shrinking.
In Société Générale trading, money market products such as the ETFs from Lyxor (FR0010510800) and Xtracker (LU0290358497) are "far ahead". But there is also "a lot of trading" in the area of corporate bonds. Mohr sees good turnover in the iShares Core EUR Corp Bond (IE00B3F81R35). In addition, the iShares EUR High Yield Corp Bond (IE00B66F4759) is also "being bought diligently".
by Thomas Koch, 30 January 2024 © Deutsche Börse AG
Thomas Koch is a CEFA investment analyst, investment specialist for structured products and a certified certificate consultant. He has been a freelance journalist covering events on the capital markets since the beginning of 2006.
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