ETFs: High oil price, popular oil stocks
Despite setbacks on the stock market, equity ETFs remain in demand, especially MSCI World trackers - sometimes as ESG versions, sometimes classic. At the same time, the high oil price is also generating inflows into oil and gas ETFs.
18 January 2021. Frankfurt (Börse Frankfurt). The stock markets cannot completely shake off concerns about inflation and tighter monetary policy. The DAX slipped again significantly on Tuesday and was at 15,770 points at midday. Exactly two weeks ago, the index had still approached its all-time high of 16,289 points at 16,181 points.
"According to most analysts, however, rising inflation and higher key interest rates will not put the brakes on the rally," explains Hubert Heuclin of BNP Paribas. There could even be a tailwind - for Europe. "Investors* could look for cheaply valued stocks in Europe, while in the U.S., highly valued stocks suffer due to the rise in interest rates."
ESG variants? Yes, gladly!
Heuclin reports very high inflows into equity ETFs, with BNP Paribas clients particularly interested in global equities. Classic MSCI USA trackers, such as those from iShares (<E00B4L5Y983>), are doing well, as are ESG variants, such as Xtrackers MSCI World ESG (IE00BZ02LR44) and iShares MSCI World ESG Enhanced (IE00BHZPJ569). The trader also reports clear inflows for European and U.S. equities. For example, iShares Core MSCI Europe (IE00B4K48X80) and iShares MSCI EMU ESG Enhanced (IE00BHZPHZ28) are popular, as is - with very high inflows - Fidelity Sustainable Research Enhanced US Equity (IE00BKSBGS44), an active ETF.
In contrast, investors are divesting equities from the Asia/Pacific ex-Japan region, for example with Fidelity Sustainable Research Enhanced Pacific ex-Japan Equity (IE00BNGFMY78), also an active ETF.
Heuclin
For some years now, more and more so-called active ETFs have been launched. They promise to combine the advantages of actively managed funds with those of passive ETFs. Active ETFs do not simply track an index, rather the fund management manages the assets with a strategy behind it. However, Active ETFs are traded in the same way as ETFs, i.e. on Xetra, and market makers are involved in price fixing. This form of fund is therefore cheaper, more flexible in buying and selling, and more transparent than conventional actively managed funds. There are currently 62 active ETFs listed on the Frankfurt Stock Exchange, compared with 1,663 "classic" ETFs.
Oil stocks sought after due to price rally
Oil and gas ETFs continue to be extremely sought after, as Fabian Wörndl of Lang & Schwarz reports, such as the Invesco Stoxx Europe 600 Optimised Oil & Gas (IE00B5MTWH09) and the iShares Stoxx Europe 600 Oil & Gas (DE000A0H08M3). Both are benefiting from the high oil price: the quotation for the North Sea Brent crude is currently at 87 U.S. dollars - the highest level since the fall of 2014. As early as 2021, the prices of the ETFs that track oil and gas companies had risen. This year, it continues to go up.
Rising interest rates = hope for banks
Also in demand, according to Heuclin, are European bank trackers (DE0006289309), which should benefit from higher interest rates. After all, the yield on ten-year Treasuries has risen to over 1.80 percent in the wake of interest rate hike speculation, and the yield on ten-year Bunds, long in negative territory, is approaching zero. The trader also registers inflows for European basic materials (DE000A0F5UK5), but outflows from telecommunications companies (DE000A0H08R2).
As far as thematic ETFs are concerned, water is once again the focus of interest, as Wörndl also reports. For example, investors are betting on Global X Clean Water (IE000BWKUES1) and Lyxor MSCI Water ESG Filtered (FR0010527275). The Lyxor ETF tracks the world's 20 largest companies involved in hydropower and water-related issues. Over three years, the yield is 21.3 percent a year.
Popular corporate bonds
Meanwhile, things are quiet in the fixed income sector. According to Heuclin, investors are currently clearly focusing on corporate bonds, especially U.S. bonds (IE0032895942). Government bonds, on the other hand, are mostly being sold, especially those from emerging markets (IE00BYXYYK40).
| Shares | |
| World | Buys |
| USA | Buys |
| Europe | Buys |
| Industries | |
| Oil and gas | Buys |
| Banks | Buys |
| Bonds | |
| Government bonds EM | Sales |
| Corporate bonds | Buys |
by Anna-Maria Borse, 18 January 2022, © Deutsche Börse AG
Deutsche Börse 
