ETFs: Europe MidCaps replace USA Techs
Profits are currently being taken in ETF trading on the Frankfurt Stock Exchange. US index funds in particular are on the sell list. European second and third-tier stocks are in demand in the run-up to the German parliamentary elections.
25. February, 2025. FRANKFURT (Börse Frankfurt). The major US stock indices have noticeably lost momentum in recent weeks. The momentum emanating from the “Magnificent Seven” has been completely extinguished. Following the strong price upswing and the subsequent consolidation, there is a risk that the price barometers will top out. Many investors also seem to have this impression. “Most US ETFs are being sold, right across the range,” explains Holger Heinrich from Baader Bank. In addition to the ETFs offered by Xtrackers (IE0002EI5AG0) and iShares (IE000MLMNYS0) on the S&P 500 Equal Weight and the iShares Dow Jones Industrial Average (IE00B53L4350), the Amundi S&P SmallCap 600 ESG (IE000XLJ2JQ9) is also affected. One reason for this could be that US small caps have not yet been able to benefit sustainably from the “America First” effect.
Fall in popular US tech index funds
However, thematic ETFs such as the Xtrackers MSCI USA Minimum Volatility (<IE00BDB7J586>) and the WisdomTree US Equity Income (IE00BD6RZT93) are also on the selling list, as Heinrich reports. Frank Mohr from Société Générale sees at least a “slight selling overhang” in US index funds. He reports significant losses for the UBS ETF (IE) MSCI USA (IE00B77D4428) and the Invesco S&P 500 Scored & Screened (IE00BKS7L097). In line with this, profits are also being taken on some very popular US technology index funds. The ETF specialist mentions Xtrackers Artificial Intelligence & Big Data (IE00BGV5VN51) and Xtrackers MSCI World Information Technology (IE00BM67HT60).
According to Mohr, however, there is still strong interest in the iShares S&P 500 Information Technology Sector (IE00B3WJKG14), while in the healthcare sector, the Xtrackers MSCI USA Health Care (IE00BCHWNW54) and the iShares Healthcare Innovation (IE00BYZK4776) are mostly sold. Ivo Orlemann, trader at ICF Bank, continues to observe strong demand for VanEck Defense (IE000YYE6WK5) despite the possible approaching peace negotiations in Ukraine. “This is definitely the most traded index fund at the moment”. He is seeing mostly purchases, but also some profit-taking. The picture is similar for Global X Defence Tech (IE000JCW3DZ3), which also focuses on defense technology.
Mid-caps from Europe are in demand
European ETFs are also in high demand in the current environment, with Mohr registering a slight buying overhang. The iShares Core EURO STOXX 50 (DE0005933956) and the iShares Core DAX (DE0005933931) are particularly on the shopping list. Heinrich, on the other hand, reported stronger selling in the larger indices such as the EuroStoxx50 (DE000ETFL029) and the MSCI Europe (IE00BFNM3D14) following the recent rally. According to Heinrich, the fact that buying still predominates overall is due to the increasing interest in country ETFs such as the iShares MSCI UK (IE00B539F030) and the iShares MSCI France (IE00BP3QZJ36) as well as strong buying in the mid-cap segment. In addition to the iShares EURO STOXX Mid (IE00B02KXL92), the MDAX ETFs from iShares (DE000A2QP349) and Amundi (FR0011857234) are also in demand in the wake of the change of government in Germany.
Money market ETFs as a "parking option"
In the bond segment, “fixed-term deposit replacement” products are experiencing a sustained boom. “A lot of money has flowed in here recently,” says Mohr. The trader suspects that some investors may have taken some risk out of their investments before the election. The capital was mainly parked in the Amundi EUR Overnight Return (FR0010510800) and the Xtrackers II EUR Overnight Rate Swap (LU0290358497).
Frank Mohr
By Thomas Koch, 25 February 2025, © 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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