19/07/22 15:07:00

ETFs: Bond trackers in demand again

Despite concerns about interest rates, inflation and recession, the DAX rose above 13,000 points at times. But the risk appetite was short-lived. This is also reflected in the ETF business. The demand for bond ETFs is rising.

19 July 2022. Frankfurt (Börse Frankfurt). Caution characterises ETF trading. Investors fear a gas crisis and its consequences as well as interest rate hikes. The DAX falls below the 13,000 mark again. The European Central Bank is expected to raise interest rates for the first time in eleven years on Thursday. "We expect it to start with a small rate hike of 25 basis points, followed by a bigger move of 50 basis points in September," predicts Martin Hartmann of Commerzbank. On the same day, maintenance work on the Nord Stream 1 gas pipeline is to end. It is questionable whether Russia will then supply gas to Europe again.

Uncertainty and restraint dominat

The mood is correspondingly restrained: "In the past two days we have seen volume increases, but overall we see a lot of uncertainty and restraint in the market," Torben Bendt from Lang & Schwarz comments on the events. He expects the environment to remain difficult.

Frank Mohr of Société Générale reported quiet, wait-and-see trading overall. Buying and selling were almost balanced. "The risk appetite is not very pronounced given the market situation."

Frank Mohr


The Lyxor barometer also reflects the low risk appetite. On a weekly basis, it recorded outflows primarily from equity and commodity ETFs, while bond products saw inflows.

Equity ETFs: European equity trackers in demand

At Bendt, demand for European products dominates among the equity trackers: "We see purchases of the STOXX 600 Europe in particular." Here, the iShares STOXX Europe 600 (DE0002635307) is particularly strong in terms of turnover.

At Mohr, the trading movements are mainly spread across the US and global equities, which are in demand in both their classic and sustainable variants. The Lyxor MSCI World (LU0392494562) is well received, as is the BNP Paribas Easy MSCI World SRI S-Series (LU1615092217). The US market is preferably tracked with the Lyxor S&P 500 (LU0496786657).

Sectors: Energy less dominant

Mohr reports a slight selling overhang in the technology sector, the highest turnover among the sectors. "We see a third of the sector turnover here." Despite mostly rebounding prices in technology stocks in particular, the SPDR S&P US Technology Select Sector (IE00BWBXM948) was removed from the portfolios.

Purchases dominated the health care sector as the second strongest sector. Lyxor STOXX Europe 600 Healthcare (LU1834986900) is in demand. Energy, the dominant sector in recent months, ranks third. MOhr is seeing buying, albeit in smaller numbers, of iShares S&P 500 Energy (IE00B42NKQ00) and SPDR MSCI Europe Energy (IE00BKWQ0F09).

Bonds: Europe is in demand again

Bendt reports strong demand for bond ETFs. At Lang & Schwarz, European government bonds of medium maturity, European corporate bonds with sustainability filters and emerging market securities are particularly sought after. Accordingly, the buy lists for iShares Euro Government Bond 7-10yr (IE00B1FZS806) , Amundi Euro AGG Corporate SRI (LU1737653987) and iShares J.P. Morgan USD EM Bond EUR Hedged (IE00B9M6RS56) are long.

In contrast, demand for fixed-income securities is weak at Mohr. Clients of Société Générale mainly buy European corporate and government bonds. The iShares Core Euro Corporate Bond (IE00B3F81R35) and the long-dated Lyxor Euro Government Bond 25+Y (<LU1686832194>) are included in the portfolios. In the inflation-linked bond segment, the Lyxor Euro Government Inflation Linked Bond (LU1650491282) ranks high.

ETCs and ETPs: Precious metals in focus - quiet crypto trading

Lang & Schwarz's order books for precious metals continue to show high demand. Bendt notes high turnover in WisdomTree Physical Precious Metals (<DE000A0N62H8>). Precious metals such as gold had fallen in value on a weekly basis, but are currently stabilising. Gold is currently trading at 1,713 US dollars. The all-time high in March was 2,070 US dollars.

Cryptos, on the other hand, are in little demand - despite the recent price recovery. Bendt assesses trading here as very quiet as well. "But at least we are seeing more buying than a fortnight ago."

Corporate Bonds EuropeBuys
Government bonds EuropeBuys
Inflationfixed bondsBuys

from: Antje Erhard, 19 July 2022, © Deutsche Börse AG

Antje Erhard is a journalist and moderator specialising in the stock market, business and finance.

Feedback and questions to redaktion@deutsche-boerse.com.


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