Hopes of a year-end rally on the stock markets are generating increasing interest in the ETF market. Products with a US focus are particularly on the shopping lists. There is also strong demand for crypto-assets and money market ETFs.
14 November 2023. The majority of investors are still buying. This is the conclusion reached by the ETF traders we interviewed this week on the German stock exchange. "It looks like a rally," states Jan Duisberg, a specialist at ICF Bank. The diminishing fear of all negative scenarios and the easing on the interest rate front seem to mean that one or the other "still has to do something" in order not to miss out on the rise at the end of the year. The focus is on the Deka MSCI World UCITS ETF (DE000ETFL508) and the Deka MSCI Germany Climate Change ESG (DE000ETFL540), for example.
Frank Mohr from Société Générale also reports a "very good volume". Buying continues to predominate, although the overhang is no longer quite as pronounced with a buy share of 56% (compared to 60% in the previous week). The clear leaders in terms of turnover are products related to the US markets, which are also being purchased at an above-average rate.
USA ETF with thirds fees
In addition to the HSBC USA Sustainable Equity (IE00BKY40J65) and the Vanguard S&P 500 (IE00B3XXRP09), clients are also increasingly turning their attention to the S&P 500 ETF (IE00B6YX5C33) from State Street. At the beginning of the month, the management fee was significantly reduced from 9 to 3 basis points. According to the provider, this makes the security "currently the cheapest physically replicated S&P 500 ETF in Europe".
In Europe, and especially in Germany, purchases and sales at Société Générale are balanced. In particular, the iShares Core DAX (DE0005933931) and Xtrackers DAX (LU0274211480) are traded here.
When looking at specific sectors, according to Duisberg, the renewed significant increase in interest in technology ETFs is particularly noticeable. ICF Bank's clients are focusing on the leveraged WisdomTree NASDAQ 100 3x Daily Leveraged (IE00BLRPRL42). At Société Générale, the iShares Automation & Robotics (IE00BYZK4552) and Xtrackers Artificial Intelligence & Big Data (IE00BGV5VN51) are two perennial favorites. Mohr describes the strong interest in the iShares TecDAX (DE0005933972), which focuses on German industry players, as "extraordinary".
Tech and energy versus healthcare
Mohr points to energy stocks as the second sector in focus: "Tech and energy account for half of all turnover in sector ETFs". There is a "clear buying overhang" here. The trader cites Xtrackers MSCI World Energy (IE00BM67HM91) as an example. In contrast, he observed stronger selling in the Xtrackers MSCI World Health Care (IE00BM67HK77).
Away from the equity markets, Fabian Wörndl, trader at Lang & Schwarz, reports balanced turnover in Xetra-Gold (DE000A0S9GB0) and the WisdomTree Natural Gas 3x Daily Leveraged (IE00BLRPRG98). There is also "significantly more activity" in crypto assets. The specialist cites the 21Shares Bitcoin ETP (CH0454664001) as an example. Duisberg is also observing increasing interest in this asset class: "Crypto is coming back up due to the ongoing speculation on the first Bitcoin ETF".
Purchases of cryptos and short-dated securities
The resulting fantasy is also boosting other cryptocurrencies, which investors are speculating on, for example with the 21Shares Ripple XRP ETP (CH0454664043), the 21Shares Solana Staking ETP (CH1114873776) or the 21Shares Polkadot ETP (CH0593331561). "There is a bit of gambling, even in the smaller stocks," says the ICF Bank trader.
There continues to be strong demand for money market and bond ETFs (short maturities), which are often bought as a substitute for fixed-term deposits. While at Lang & Schwarz the Xtrackers II EUR Overnight Rate Swap (LU0290358497) is being bought in particular, at Société Générale it is the Amundi EUR Overnight Return (FR0010510800) and the iShares USD Treasury Bond 1-3yr (IE00BDFK1573).
By Thomas Koch, 14 November 2023 © Deutsche Börse AG
Thomas Koch is a CEFA investment analyst, investment specialist for structured products and certified certificate advisor. Since the beginning of 2006, he has been covering events on the capital markets as a freelance journalist.
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