ETF: Profit-taking selling and flight to safety: a perspective from German analysts.

Most of the long-supported US ETFs are being sold. In their place, funds are flowing into real estate stock funds and bond ETFs. Speculation in cryptocurrency ETFs is also lively, and volatility is actively traded.

September 10, 2024 Frankfurt (Stock Exchange).

In Wall Street, many large-cap tech stocks have adjusted, resulting in profit-taking selling in various ETFs. Leo Pushman of Lang & Schwarz has noted 'relatively intense selling' in WisdomTree NASDAQ100 3x Daily Leverage (IE00BLRPRL42) and Vanguard S&P500 (IE00B3XXRP09). Frank Moer of Societe Generale reports an increase in selling of Lyxor NASDAQ (LU2197908721) and Xtrackers Artificial Intelligence (IE00BGV5VN51).

As a result, 'money market alternative products' such as Xtracker (LU0290358497) and Amundi (FR0010510800) overnight rate ETFs have shown significant growth. Mr. Moer speculates, 'Funds seem to be staying here.' As a whole, there is a slight shift towards bond ETFs, currently accounting for about 40% (normally 30%). Traders are talking about 'flight to safety.' In particular, in the field of government bonds, there is high demand from multiple providers. In particular, iShares Italian Government Bonds (IE00B7LW6Y90) and iShares USD Treasury 7-10 Years (IE00B1FZS798) are being bought.

In the stock market, global index funds continue to be bought. At Societe Generale, iShares Core MSCI World (IE00B4L5Y983) and UBS MSCI World (IE000TG1LGI4) are on the investors' buy list, while at Bada Bank, Amundi MSCI World Climate Net Zero Ambition (IE000CL68Z69) has been ordered. Also, according to Holger Heinrich, WisdomTree's 5x leveraged S&P 500 product is actively traded on both the long (XS2771643025) and short (XS2771642308) sides.

In terms of sectors, trading volume in the real estate sector is unusually high, with a very strong bias towards buying. According to Moa, this is mainly due to the low interest rates and defensive nature of this sector. In particular, iShares European Property Yield (IE00B0M63284) is on the buy list. In the emerging markets sector, the investment in iShares Core MSCI EM (IE00BKM4GZ66) is being pushed by Pushman's report.

Overall, Lang & Schwarz's clients are showing a normal risk preference. There are short-term speculations on natural gas (XS2819843900) and (XS2819843223), and Brent crude oil prices (XS2819843736) in the WisdomTree Triple Leverage ETF. There are also notable movements in the WisdomTree S&P 500 VIX Short-Term Futures 2.25x Daily Leveraged (XS2819843736). "This leveraged volatility tracker has seen increased trading activity over the past few weeks," explained Pushman.

As trader Frank Vernitz explains, ICF Bank's clients are currently acting "quite procyclically" in the cryptocurrency market. "They sell when the situation worsens and panic buy when it recovers. However, positions are quickly settled." Relatively strong movements are primarily used for short-term speculation. The period for long-term investors to thrive in this sector has come to an end. The focus is mainly on 21Shares Solana Staking (CH1114873776) and VanEck Bitcoin (DE000A28M8D0).

At Lang & Schwarz, Puschmann is reporting the trading volume of ETC Group Physical Bitcoin (DE000A27Z304). However, due to the significant drop in Bitcoin price last week, there is a shortage of buyers who would normally want to "go all in" at this stage. According to traders, it may take another 1-2 weeks to see strong buying activity again.