To The Moon

Inflows into broadly diversified equity ETFs are continuing - albeit at a lower level. Shares in gold and copper producers are doing very well. Some are taking profits on tech stocks.

7 May 2024. FRANKFURT (Börse Frankfurt). ETFs continue to enjoy great popularity. “We had more than twice as many buys as sells,” explains Holger Heinrich from Baader Bank, looking back on the past week. Fabian Wörndl from Lang & Schwarz also sees continued buying, especially in the major indices such as the MSCI World and S&P 500. However, things are quieter due to the holidays. Heinrich speaks of another decline in turnover. “We are seeing significantly less trading volume,” reports Ivo Orlemann from ICF Bank.

The stock markets have been able to catch up again after the recent setback. At midday on Tuesday, the DAX was just under 18,300 points, 600 points higher than two and a half weeks ago. The US stock markets also rose again. The latest trigger: the weak US labor market figures published on Friday. These are fueling hopes of an imminent easing of monetary policy.

Betting on falling prices with short ETFs

According to Heinrich, as in the previous week, European and US equities were the main targets. “Among Europeans, small and mid-cap ETFs were in demand,” explains the trader. Dividend ETFs were also once again a topic, for example with the Amundi Euro Stoxx Select Dividend30 (LU2611732558). “It was noticeable that short ETFs on the Euro Stoxx were also in focus again.”

In trading with US trackers, short products were also on the turnover list, even with leverage of 2 or 3. Canadian equities were also actively traded (LU0476289540). Quality is also in demand, specifically with the JPM Active US Value (IE000TD3TI26), an active ETF. MSCI World ETFs, on the other hand, are once again playing a subordinate role at Baader Bank. “The focus here was on dividend ETFs,” says Heinrich.

First tech sales - high inflows into commodity ETFs

Technology index funds are no longer quite so popular, as Wörndl reports. “We are seeing sales, albeit not on a large scale.” The Amundi MSCI World Information Technology (LU0533033667) and the iShares S&P 500 Information Technology (IE00B3WJKG14), for example, are affected.

According to Wörndl, many are currently focusing on commodity ETFs. The background to this is the sharp rise in the price of gold and some industrial metals. For example, the Global X Copper Miners (IE0003Z9E2Y3), which tracks shares in copper producers, has been well received, as have gold producer ETFs such as VanEck Gold Miners (IE00BQQP9F84) and iShares Gold Producers (IE00B6R52036). These scored with price gains of 27 percent, 12.6 percent and 12.4 percent this year. Also in demand, according to Wörndl: oil and gas ETFs such as iShares Oil & Gas Exploration & Production (IE00B6R51Z18).

Bond ETFs cannot keep up with equity ETFs, which have achieved price gains of over 30 percent this year, depending on their focus. “It has been a challenging start to the year for bond investors,” explains Sophia Wurm from issuer SPDR State Street Global Advisors. Strategies with short maturities and high-yield bonds have been successful.

According to the ETF portal justETF, high-yield trackers have recorded the highest price gains in the bond sector since the beginning of the year, such as the Tabula Haitong Asia ex-Japan High Yield Corp (IE000DOZYQJ7), which tracks US dollar high-yield bonds from the Asia-Pacific region, with 8.7 percent, and the VanEck Emerging Markets High Yield Bond (IE00BF541080), which has a broader regional spread, with 6.4 percent. The Amundi US Inflation Expectations 10Y (LU1390062831) also performed well, gaining 6.3%.

Back and forth in crypto trackers

While crypto ETN trading at Lang & Schwarz is much quieter than it was weeks ago, Orlemann from ICF is still reporting some business. Bitcoin had recently fallen below USD 60,000, but is currently back at USD 64,270. At its all-time high in mid-March, however, it was 73,559 US dollars. Orlemann sees high turnover with purchases and sales for Bitcoin trackers from VanEck and WisdomTree (DE000A28M8D0, GB00BJYDH287).

By Anna-Maria Borse, 7 May 2024 © Deutsche Börse AG