ETFs: Caution despite price increases

Investors suspect a bear market rally behind the friendlier market and are holding back. However, with the easing of Corona measures in China, interest in Asian equity ETFs is on the rise. Less violent market swings make volatility ETNs less attractive.

7 June 2022 Frankfurt (Börse Frankfurt). Despite mostly rising stock prices, investors remain wary. Inflation and interest rate worries are not off the table. But easing measures in China are lifting the mood somewhat. "Investors are not grabbing with full hands - for fear of a bear market rally," reasons Holger Heinrich of Baader Bank. Skepticism prevails; sales have declined compared to the first quarter, he said.

Equity ETFs: Market-wide is bought

By far, equity trackers dominate ETF trading. At least the interest has returned with the price increases, reports Fabian Wörndl of Lang & Schwarz with regard to the demand for global equity ETFs.

Clients of Baader Bank are mainly focusing on MSCI World ETFs. In addition, according to Heinrich, the tracker of the FTSE All-World is bought both in the accumulating (IE00BK5BQT80) and in the distributing variant (IE00B3RBWM25).

Regionally, in addition to DAX ETFs, Asia in particular is in demand again, since the first easing of the Corona measures are implemented in Shanghai. Wörndl makes purchases of the Vanguard FTSE Developed Asia Pacific ex Japan (IE00B9F5YL18).

Vola exposures become less interesting

As volatility declines, corresponding products fly out of portfolios. Wörndl sees significant selling of the WisdomTree S&P 500 VIX Short-Term Futures 2.25x Daily Leveraged (IE00BLRPRH06). The VIX volatility index is down 29 percent for the month, while the VDAX-New is down 33 percent.

Caution in commodity ETCs despite rising prices.

Planned OPEC+ production increases are slowing oil price increases, despite initial openings in China, Brent and WTI are hovering around $120 in the wake of the news. Before the pause, oil prices had risen more than 50 percent in the past six months.  Energy remains popular as an investment focus: "Our clients are buying both oil and gas ETFs." The iShares Oil & Gas Exploration & Production (IE00B6R51Z18) is particularly in demand, he said.

Cryptocurrencies: skepticism prevails

Despite the recovery in the crypto market, investors remain cautious. Wörndl reports selling. In addition to popular cryptocurrencies such as Bitcoin and Ether, smaller stocks such as Avalanche are on the sell lists: Wörndl records sales of the AVAXetc - ETC Group Physical (DE000A3GWNN9).

Bond ETFs: Risk assets preferred

Yields on government bonds in Germany, the Eurozone and the USA are rising almost unchecked. In bond trading, riskier corporate bonds are now being preferred and Bunds are being sold off, as David Kepper of Commerzbank comments. The rise of the ten-year German government yield to an eight-year high and the ten-year Italian counterpart to well over 3 percent has no serious impact on trading at Lang & Schwarz: "There is no talk of a sell-off," explains Wörndl.

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by Antje Erhard 7 June 2022, © Deutsche Börse AG