19/11/24 17:21:00

ETFs: Ongoing “Trump trades”

What course will Donald Trump take? This is also a major topic in ETF trading. Supposed “Trump profiteers” are being bought - such as US blue chips, small caps and cryptocurrencies. 


19 November, 2024 FRANKFURT (Frankfurt Stock Exchange). S&P 500, Russell 2000, Bitcoin - ETF and ETN trading continues to be dominated by the US election and (supposed) Trump beneficiaries. “Our focus remains on US equities,” reports Holger Heinrich, who trades ETFs for Baader Bank. He is still seeing significantly more buys than sells - with a slight decline in turnover. “It's mostly about S&P 500 and MSCI World ETFs as well as crypto ETFs - with a lot of buying,” explains Moritz Kretschmann from Lang & Schwarz, reporting an extremely strong week in terms of turnover.

The DAX has recently moved sideways, but fell below the 19,000 point mark on Tuesday morning. The S&P 500 and Dow Jones had reached new all-time highs at the beginning of last week, but are now trending somewhat weaker. It is currently a case of tense waiting: Nvidia will present its quarterly figures tomorrow, Wednesday, after the close of trading, which could shape the mood on the stock markets going forward. 

Russell 2000 - still in demand

According to Frank Mohr from Société Générale, US equities in particular are also doing well, for example Nasdaq trackers such as the iShares Nasdaq 100 (IE00B53SZB19). According to Heinrich, Russell 2000 ETFs (IE00B60SX402) and S&P 500 trackers are bought a lot, for example from Xtrackers, sometimes without, sometimes with currency hedging (LU2009147757, IE00BM67HW99). ETFs with an ESG focus, such as the Ossiam Bloomberg USA PAB (IE000IIED424), were sold. According to Heinrich, small caps are also popular when it comes to ETFs with global investments, such as the relatively new Avantis Global Small Cap Value from American Century (IE0003R87OG3), as well as minimum volatility and high dividend index funds.

“European ETFs were not in great demand overall,” Heinrich also notes. Here, too, ETFs with an ESG focus tended to be sold. The exception in Europe: ETFs with a UK focus, such as the Xtrackers FTSE 100 Income (LU0292097234). Trading in emerging market ETFs is quieter. “We are seeing buying and selling, but at a lower level,” notes Kretschmann.

Mohr

ESG - returns can certainly be right

Sustainable investments no longer have it as easy as they did a few years ago. The reason: sectors classified as unsustainable are doing well, but are excluded - such as the defense or oil and gas sectors. The analysis company Morningstar has now presented the ten top-rated sustainable ETFs in 2024, including some without abbreviations such as ESG, SRI or PAB. The frontrunner is Xtrackers MSCI World Information Technology (IE00BM67HT60), followed by SPDR MSCI World Technology, iShares MSCI World Information Technology Sector ESG, Fidelity US Quality Income and HSBC Nasdaq Global Semiconductor. Year-to-date returns range from 34% (for the iShares product) to 21% (for the Fidelity ETF).

Focus on tech stocks and gold

Tech stocks are by far the favorites in trading sector ETFs, as Mohr also notes. One example: the Xtrackers MSCI World Information Technology (IE00BM67HT60). Healthcare (IE00B43HR379) and financial ETFs (IE00B4JNQZ49) also recorded high turnover, with mostly outflows and inflows respectively. According to Kretschmann, the gold mining ETF VanEck Junior Gold Miners (IE00BQQP9G91) also remains very popular. The price of gold rose to a new all-time high of just under USD 2,790 at the end of October, but then fell.

According to Kretschmann, gold and silver ETCs are also in high demand, including those with leverage, such as the WisdomTree Gold 3x Daily Leveraged (IE00B8HGT870) and its short version (IE00B6X4BP29) as well as the silver counterparts (IE00B7XD2195, IE00B8JG1787). “There is a lot of intraday trading here.”

Back and forth in money market trackers

Money market ETFs remain strong, as Mohr reports, such as the Lyxor Smart Overnight Return (LU1190417599) - but now with inflows and outflows in equal measure. “Liquidity is parked here and then withdrawn again.” 

Bitcoin with a price of 100,000 US dollars?

Trading in crypto ETNs is also showing high turnover. According to Kretschmann, a lot of bets are being placed on Bitcoin and Solana (CH1114873776) and Ethereum ETNs (DE000A3GMKD7). Bitcoin had climbed to a new record high of USD 93,208 last Wednesday and was still at USD 91,700 on Tuesday lunchtime.

By Anna-Maria Borse, 19 November, 2024, © Deutsche Börse

Anna-Maria Borse is a financial and business editor specializing in the financial market/stock exchange and economic topics.

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