ETFs: Tech stocks crowd favorites

Buoyed by the success of ChatGPT and the rapid rise in the share price of chip manufacturer Nvidia, AI and technology ETFs in general are currently extremely popular. However, the major US indices are also doing well again following the settlement in the US debt dispute. 
 

7 June 2023. FRANKFURT (Börse Frankfurt). Artificial intelligence (AI) remains a hot topic. "A lot continues to revolve around AI," explains Leo Puschmann, who trades ETFs for Lang & Schwarz. Jan Duisberg, a trader at ICF Bank, agrees. "AI has probably surprised everyone." Xtrackers Artificial Intelligence & Big Data (IE00BGV5VN51), for example, is being bought a lot, Puschmann explains. The large Nasdaq trackers also remained in demand. Duisberg sees strong turnover for L&G Cyber Security (IE00BYPLS672), but also for triple-leveraged Nasdaq ETNs such as WisdomTree Nasdaq 3x Daily Leveraged (IE00BLRPRL42).

Duisberg points out, however, that the Nasdaq 100 still lags other markets. The index currently stands at 14,557 points, while its all-time high was over 16,000. By contrast, the DAX, at 15,940 points as of midday Tuesday, is only slightly short of the all-time high of 16,332 points reached in mid-May.

Cyber security and semiconductor ETFs lead the way

Incidentally, technology ETFs came in with the best performance of all ETPs in May, according to analyst firm Morningstar. "The incredible progress we've seen in recent months in the artificial intelligence space around ChatGPT has been a tailwind for technology stocks," explains Morningstar editor Antje Schiffler. For example, WisdomTree Cyber Security (IE00BLPK3577), Lyxor MSCI Semiconductors (LU1900066033) and Van Eck Semiconductor (IE00BMC38736) gained 23 percent, 22 percent and 21 percent, respectively, in May. Also doing well were other cyber security and semiconductor as well as cloud ETFs and the AI-only WisdomTree Artificial Intelligence (IE00BDVPNG13) ETF.

Also popular: DAX, S&P 500 and MSCI World trackers.

Most of the turnover, however, is in ETFs on major market indexes such as the DAX, S&P 500 and MSCI World. The purchases predominate, as the traders note, according to Puschmann, for example, for S&P 500 trackers. Duisberg is seeing inflows mostly for MSCI USA and MSCI World ETFs, such as Invesco MSCI USA (IE00B60SX170) and Invesco MSCI World (IE00B60SX394). "There was a real relief rally after the settlement of the U.S. debt dispute."

Lang & Schwarz also reports greater turnover in utilities ETFs - buying and selling. "Very different products are affected," notes Puschmann.

Quiet is currently the business with bond ETFs, traders do not see clear trends.

Cryptos lack fans

Duisberg also reports sales of crypto ETNs, for example, the VanEck Bitcoin (DE000A28M8D0). As revealed yesterday (Monday), the U.S. Securities and Exchange Commission is filing a lawsuit against Binance, the operator of the world's largest digital currency trading platform. Binance is accused of various violations of securities laws. "It didn't have an impact here," explains Puschmann of Lang & Schwarz, on the other hand, reporting little turnover.

Losers among all ETPs in May were crypto ETNs and commodity ETCs, according to Morningstar. The VanEck FTX Token (<DE000A3GWNC2>), which has since been suspended from trading, db Physical Rhodium (DE000A1KJHG8) and an ApeCoin ETN that is not listed in Frankfurt brought the biggest losses. They fell 97 percent, 57 percent and 54 percent, respectively. Nickel and zinc trackers, as well as Algorand and Avalanche, also found themselves at the bottom of the list. Read more at: morningstar.de

by Anna-Maria Borse, 7 June 2023, © Deutsche Börse