European shares are not doing so well; US and global shares are more in demand. Particularly popular at present: shares from the consumer goods sector. Money market funds are also a hot topic again.
9 August 2022 Frankfurt (Börse Frankfurt). U.S. and global equities remain the favorites in the ETF market. "The trend has been going on for several weeks now," notes Frank Mohr of Société Générale. Euro Stoxx 50 trackers, on the other hand, continue to be sold. Overall, however, turnover is low due to the vacations, as Torben Bendt of Lang & Schwarz also reports. "It's very, very quiet."
The preference for S&P 500 and MSCI World ETFs cannot be explained by performance. Because that's where the indexes are performing similarly to their European counterparts: the S&P 500 is down 13.7 percent year-to-date, while the MSCI World is down 15.5 percent. Since the beginning of the year, the DAX has fallen by 14.8 percent and the Euro Stoxx 50 by 13.4 percent. The Nasdaq 100 continues to be the worst performer, down 20 percent this year.
Nevertheless, Euro Stoxx ETFs such as the Lyxor Euro Stoxx 50 (FR0007054358) are on the sell lists, Mohr reports. On the other hand, iShares S&P 500 (IE00BMTX1Y45), iShares Core MSCI World (IE00B4L5Y983) and BNP Paribas Easy MSCI World SRI S-Series PAB 5 percent Capped (LU1615092217) would be bought.
Consumer sector performs well
"What is striking at the moment is the high level of interest in the consumer staples sector," explains Mohr. At Société Générale, the Lyxor MSCI World Consumer Staples (LU0533032263) was the top-selling sector ETF last week. "That's quite unusual, the sector is not usually in such focus." The MSCI World Consumer Staples has outperformed its parent MSCI World index this year, tracking companies such as Nestlé, Procter & Gamble, CocaCola, Pepsico, Walmart and Philip Morris.
Health care stocks are also still trading briskly, according to Mohr, with buying and selling in equal measure, as are technology stocks, with a buyer's overhang, albeit on low volume.
Clean Energy ETF: 20 percent up since the beginning of the year
The iShares Global Clean Energy (IE00B1XNHC34) also performed very well again recently. This had recorded a strong price increase until the beginning of 2021, but was then supported. Now it's doing better again, up 20 percent since the start of 2022. The $6.7 billion-plus ETF provides access to the largest and most liquid renewable energy companies. Current heavyweights include U.S. solar technology company Enphase Energy, Israel's SolarEdge, Danish wind turbine maker Vestas Wind Systems, U.S. district heating operator Consolidated Edison and U.S. fuel cell manufacturer Plug Power.
China market turns
Chinese equity ETFs were among the worst-performing category among passive funds traded in Germany in July, Morningstar reports. "Hopes for a quick pickup in the manufacturing sector after the lockdowns don't seem to be coming true," explains Antje Schiffler of the analysis firm. Recent economic data, such as the purchasing managers' index, have disappointed, she says, and global economic weakness is weighing on exports. The UBS Solactive China Technology (LU2265794276) and the HSBC Hang Seng Tech (IE00BMWXKN31), for example, suffered.
Comeback of money market ETFs?
High turnover on both sides was reported by Société Générale for U.S. Treasuries, such as Xtrackers II US Treasuries 1-3 (LU0429458895), as well as for inflation-linked government bonds (IE00B0M62X26). Inflows predominated in the Lyxor EuroMTS Highest Rated Macro-Weighted Govt Bond 3-5Y (LU1829219713). This tracks eurozone government bonds with maturities of 3 to 5 years and ratings of AAA and AA, weighted by fundamental factors such as debt-to-GDP ratio, current account balance and GDP growth.
In addition, an asset class long considered uninteresting seems to be making a comeback: money market ETFs. Mohr reports very strong demand for the Lyxor Euro Overnight Return (FR0010510800). At Lang & Schwarz, iShares EUR Corp Bond ESG (IE00BYZTVT56) and iShares Pfandbriefe (DE0002635265) are seeing a lot of trading.
Cryptos: On the road to recovery
Business in cryptocurrency ETNs remains quiet. "The mood continues to be subdued," Bendt describes the situation. "Too many have burned their fingers."
Yet cryptocurrency ETNs were among the top performers in July. According to Morningstar, the July list of top performers among listed passive funds in Germany includes many crypto ETNs. "These products were still among the losers in June." Ethereum trackers in particular performed well, he said. "The background to this is the merger between Ethereum and the Beacon Chain proof-of-stake system expected in September." But Avalanche and bitcoin trackers also did well, he said.
by: Anna-Maria Borse, 9 August 2022, © Deutsche Börse AG
Anna-Maria Borse is a finance and economics editor specializing in financial markets/stock markets and economic topics.
Feedback and questions to firstname.lastname@example.org