ETFs: Profit-taking and Flight to Safety
Most of the long-favored US ETFs are being sold off. Instead, money is flowing into real estate equity funds and bond ETFs. There is lively speculation in crypto ETFs and volatility is also actively traded.
10 September 2024. FRANKFURT (Börse Frankfurt). The correction of many large tech stocks on Wall Street has also led to profit-taking in various ETFs. At Lang & Schwarz, Leo Puschmann is seeing “relatively heavy selling” in the WisdomTree NASDAQ 100 3x Daily Leveraged (IE00BLRPRL42) and the Vanguard S&P 500 (IE00B3XXRP09). Frank Mohr from Société Générale reports increased selling in Lyxor Nasdaq (LU2197908721) and Xtrackers Artificial Intelligence (IE00BGV5VN51), which has been extremely popular for months.
Bond ETFs on the rise
In line with this, “money market replacement products” such as the overnight rate ETFs from Xtracker (LU0290358497) and Amundi (FR0010510800) have recorded significant growth. “The money has probably been parked here,” Mohr suspects. Overall, there has also been a slight shift towards bond ETFs, which currently account for around 40 (normal: 30) percent. Against this backdrop, the trader speaks of a “flight to safety”. In the government bond segment in particular, he sees “high demand across several providers”. In particular, the iShares Italy Govt Bond (IE00B7LW6Y90) and the iShares USD Treasury Bond 7-10yr (IE00B1FZS798) are being bought.
On the equity side, global index funds continue to be bought. While the iShares Core MSCI World (IE00B4L5Y983) and the UBS MSCI World (IE000TG1LGI4) are on investors' shopping lists at Société Générale, the Amundi MSCI World Climate Net Zero Ambition (IE000CL68Z69) is being ordered at Baader Bank. Holger Heinrich also reports active trading in 5x leveraged products from Wisdom Tree on the US S&P 500, with both the long (XS2771643025) and short (XS2771642308) sides being played.
Real estate stocks are in demand
At sector level, the real estate segment stands out due to unusually high turnover and a very strong buying overhang. According to Mohr, lower interest rates and the defensive nature of this sector are likely to be the main reasons for this. The iShares European Property Yield (IE00B0M63284) in particular is on the shopping list. In the emerging markets sector, Puschmann reports on investments in the iShares Core MSCI EM (IE00BKM4GZ66).
Overall, Lang & Schwarz clients are showing their usual risk appetite. There is short-term speculation in the triple-leveraged ETFs from WisdomTree on natural gas (XS2819843900) and (XS2819843223) as well as on the Brent oil price (XS2819843736). There is also notable activity in the WisdomTree S&P 500 VIX Short-Term Futures 2.25x Daily Leveraged (XS2819843736). “This leveraged volatility tracker has been increasingly traded in recent weeks in order to participate in both sides of the volatility trend,” explains Puschmann.
Short-term speculation in cryptos
ICF Bank clients are currently acting “really pro-cyclically” in cryptocurrencies, as trader Frank Wöllnitz explains. “When things go down, they sell and when they recover, they buy back in a panic. However, the positions are then quickly closed again”. The still comparatively strong movement is used almost exclusively for short-term speculation. The time for long-term investors in this segment is over for the time being. The focus is primarily on 21Shares Solana Staking (CH1114873776) and VanEck Bitcoin (DE000A28M8D0).
At Lang & Schwarz, Puschmann reports turnover in the ETC Group Physical Bitcoin (DE000A27Z304). However, with Bitcoin prices having fallen significantly again in the past week, there is currently a lack of buyers who usually want to “dust themselves off” in such phases. According to the trader, it is likely to take another one to two weeks before stronger activity on the buying side can be observed again.
By Thomas Koch, 10 September 2024, © Deutsche Börse AG
About the Author
Thomas Koch is a CEFA investment analyst, investment specialist for structured products and a certified certificate consultant. He has been a freelance journalist covering events on the capital markets since the beginning of 2006.
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