ETFs: "Biggest sales increases in ESG products".
The Fed Chairman's speech seems to have spoiled the mood quite a bit, despite stabilisation today. The ETF market was also dominated by declines - but not on a large scale. ESG and clean energy products remain in demand.
30 August 2022 Frankfurt (Börse Frankfurt). The significant price declines on the stock markets since the middle of the month and especially the sharp price slide last Friday are leaving their mark on the ETF market. "In line with the general market movement, we had about a third more sales than purchases in our large ETFs," reports Holger Heinrich from Baader Bank. Jan Duisberg from ICF Bank also reports outflows. "In view of the big crash on the stock market, however, it was not so much." Turnover had remained manageable.
On Friday, the speech by US Federal Reserve Chairman Powell with clear signals in the direction of very tight monetary policy had caused prices to fall significantly. Yesterday morning, the DAX fell below 12,800 points, but then turned upwards. By midday on Tuesday, the index was already back at 13,124 points. However, it was still almost 14,000 points in the middle of the month.
Much turnover with short products
Duisberg sees the focus continuing on classic equity ETFs. According to Heinrich, the ETFs with the highest turnover are - as always - globally diversified products, specifically the iShares Core MSCI World (IE00B4L5Y983) and the Vanguard FTSE All-World in reinvesting and distributing versions (IE00BK5BQT80, IE00B3RBWM25). According to Duisberg, Nasdaq trackers such as the Lyxor Nasdaq 100 (LU2197908721) also continue to receive a lot of attention. The technology index slumped by more than 4 per cent on Friday, but has now also recovered.
Duisberg
On the Frankfurt Stock Exchange, the iShares Core MSCI World (IE00B4L5Y983) was the most traded ETF over the past five trading days, followed by iShares ETFs on the DAX (DE0005933931), the Euro Stoxx 50 (DE0005933956) and the S&P 500 (IE00B5BMR087). Short products are also currently showing high turnover, led by the Xtrackers Short DAX Daily Swap (LU0292106241) and the Xtrackers Short DAX x2 Daily Swap (LU0411075020). According to Duisberg, there is also a lot going on in WisdomTree DAX 3x Daily Short (IE00B8GKPP93), an ETN that tracks DAX performance inversely and with leverage 3.
"Green" ETFs still in demand
Heinrich also reports continued high inflows into ESG products. "These also brought the biggest increases in turnover last week." Examples are the UBS MSCI World Socially Responsible (hedged to EUR) (IE00BK72HM96), the Lyxor MSCI World ESG Leaders Extra (<LU1799934499>) and the UBS MSCI EMU ESG Universal Low Carbon Select (IE00BNC0M913).
Also sought after by Baader Bank clients: multi-factor ETFs, such as the currency-hedged iShares Edge MSCI World Multifactor (IE00BYXPXK00). Multi-factor ETFs combine different factors such as value, quality and size. They aim to take advantage of the fact that these play to their strengths at different points in the economic cycle.
Clean Energy ETF: up 21 percent since January
In terms of sectors, the iShares Global Clean Energy (IE00B1XNHC34) is once again attracting a lot of attention, with turnover high on the Frankfurt Stock Exchange. The ETF, which had shown strong gains until the end of 2020 but then lost heavily, is now on the rise again. Since the beginning of the year, the ETF has gained 21 per cent. Also heavily traded is the iShares Euro Stoxx Banks 30-15 (DE0006289309). However, it has lost a lot this year.
According to Duisberg, VanEck Semiconductor (IE00BMC38736) remains in demand as a niche product. The Invesco Nasdaq Biotech (IE00BQ70R696) is also always buzzing.
Morningstar: TINA still applies.
In view of the difficult stock market year 2022, the analysis house Morningstar has looked at whether TINA ("There is no alternative" to shares) still applies. This year, of course, it does not look good: If one had invested $10,000 in a global equity index fund (S&P Global) at the beginning of the year, the value would now only be $8,751. In bonds (Bloomberg Global Aggregate Index) it would hardly be more, while a commodity investment (Bloomberg Commodity) would have grown to 12,500 US dollars. But over the long term, equities would still be ahead. "Over a 20-year horizon, no asset class can match equities," Morningstar explains. If you had invested $10,000 in a global index fund 20 years ago, you would have $56,485 today. Investing in bonds would have yielded only $18,932, and in commodities only $15,681. "A well-diversified portfolio with a long-term horizon is an investor's best friend," is the conclusion.
Not much is happening in bond ETF trading. "After interest had increased in the previous weeks, it is now quiet again," explains Duisberg. The bond ETF with the highest turnover on the Frankfurt Stock Exchange is currently the Xtrackers II Eurozone Government Bond 5-7 (LU0290357176).
by Anna-Maria Borse, 30 August 2022, © Deutsche Börse AG
About the author
Anna-Maria Borse is a finance and economics editor specialising in the financial market/stock exchange and economic topics.
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