The current DAX rally has not triggered any new euphoria in the market for exchange-traded funds (ETFs). However, European equities, which have been neglected for a long time, are moving more into the focus of investors following their recent outperformance.

14 May 2024. FRANKFURT (Börse Frankfurt). “In line with the performance, European ETFs were the most actively traded,” reports Holger Heinrich from Baader Bank. In recent days, the trader has observed continued strong interest in small-cap and mid-cap ETFs, such as those offered by Amundi in the MDAX (FR0011857234) or SDAX (LU2611732475). The iShares MSCI EMU Mid Cap (IE00BCLWRD08) and the Xtrackers MDAX ESG Screened (IE00B9MRJJ36) were also in demand.

Overall, even more buys than sells

According to the Baader Bank specialist, value ETFs such as the Lyxor MSCI EMU Value (LU1598690169) and the Xtrackers MSCI Europe Value (LU0486851024) as well as individual country indices such as the iShares Core FTSE 100 (IE00B53HP851) or the Amundi MSCI Switzerland (LU1681044720) were also on the shopping list. Overall, the trader recorded “around twice as many purchases as sales” of index funds.
At Société Générale, the ratio is currently around 60 to 40, as Frank Mohr explains. This time, however, there is also a buying overhang for shares from Europe. Specifically, he mentions the iShares Core Euro Stoxx 50 (IE00B53L3W79) and the Amundi MSCI Europe ESG Leaders (LU1940199711). In addition, with a “normal turnover volume”, mainly global index funds are bought. The iShares Core MSCI World (IE00B4L5Y983) as the world's largest ETF and the iShares MSCI ACWI (IE00B6R52259) with a slightly different weighting are very popular.

Profit-taking in German equity ETFs

Jan Duisberg from ICF Bank sees an increasing tendency to take profits, at least in German equities: “After the recent rally in Germany, some selling is now taking place”. The trader cites the Deka DAXplus Maximum Dividend (DE000ETFL235) and the Invesco MDAX (IE00BHJYDV33) as current examples. By contrast, there was buying interest in the Invesco MSCI Japan (IE00B60SX287). Overall, Duisberg describes trading activity as “relatively quiet”.
This is in line with Mohr's impressions, who sees a decline in the still existing buying overhang, especially in the highly sought-after technology stocks. “It is no longer quite as pronounced as in previous weeks and months,” explains the trader. The Xtrackers Artificial Intelligence & Big Data (IE00BGV5VN51) is still particularly sought after. In line with this, Duisberg is seeing individual sales in the otherwise also very popular L&G Battery Value Chain (IE00BF0M2Z96).

Corporate bonds move into focus

Away from the equity markets, corporate bonds are currently in particular demand, according to Mohr. The trader reports stronger buying in the iShares EUR High Yield Corp Bond (IE00B66F4759) and the iShares Core EUR Corp Bond (IE00B3F81R35). ETFs that are often used as fixed-term deposit substitutes, such as the Amundi EUR Overnight Return (FR0010510800) and the Xtrackers II EUR Overnight Rate Swap (LU0290358497), continue to trade well.
According to Duisberg, the crypto segment is experiencing a “declining trading frequency” as part of the current consolidation phase. Some sales in the ETC Group Physical Bitcoin (DE000A27Z304) and the 21Shares Crypto Basket (CH0445689208) are noticeable.

ETFs: “Buying overhang no longer quite so pronounced”

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