ETFs: Into the new year with momentum

After the Christmas break, ETF trading is already in full swing, with many focusing on equity ETFs at the start of the year, especially MSCI World trackers. Tech stocks are also continuing to do well - despite a price setback last week. There is also a lot going on in Bitcoin and Solana trackers.  

9 January 2024. FRANKFURT (Börse Frankfurt). On the ETF market, the new year is starting as the old one ended: with good trading volumes and many purchases. "In the first week of the year, we had slightly above-average turnover and more buys than sells despite the poor start to the stock markets," reports Holger Heinrich from Baader Bank AG . Andreas Schröer from Lang & Schwarz confirms the picture. "Buying dominates, especially MSCI World ETFs are in demand." Frank Mohr from Societe Generale also reports a very good start to the new year. "The many savings plans at the beginning of the year, especially with MSCI World ETFs, have driven up turnover considerably."

The DAX, S&P 500 and especially the Nasdaq 100 lost ground in the first trading week of 2024, but are recovering this week. The DAX stands at 16,665 points at midday on Tuesday.

Focus on MSCI World

As in the previous year, ETF trading is mostly focused on the major world indices, such as MSCI World trackers from iShares, Xtrackers and SPDR (IE00B4L5Y983, IE00BJ0KDQ92, IE00BFY0GT14) or the Vanguard FTSE All-World (IE00BK5BQT80) at Baader Bank. According to Mohr, MSCI World ETFs are also popular, especially from iShares, including SRI variants. Incidentally, the iShares Core MSCI World was the best-selling ETF on Xetra in 2023, with the largest trading volume of EUR 6.1 billion.

"In the US ETFs, interest was also focused on the major indices, i.e. the S&P 500 (IE00B5BMR087) and Nasdaq 100 (IE00B53SZB19)," Heinrich also explains. The double- and triple-leveraged variants of the Nasdaq 100 are also in demand. According to Mohr, S&P trackers from iShares and Vanguard are also "heavily bought". As far as Europe is concerned, the picture is more mixed. Heinrich is observing greater turnover in EuroStoxx 50 and Stoxx 600 ETFs, for example the iShares Core Euro Stoxx (DE0005933956) and the Lyxor Core Stoxx Europe 600 (LU0908500753). According to Mohr, redemptions predominate, for example from Amundi MSCI Europe ETFs or the iShares DAX Tracker (DE0005933931).

"India ETFs are currently very popular," explains Schröer from Lang & Schwarz, citing the iShares MSCI India (IE00BZCQB185) as an example. According to the International Monetary Fund, India has already outperformed China in terms of growth in recent years, with GDP growth of 7.2 and 6.3 percent in 2022 and 2023, compared to China's 3 and 5 percent. For 2024, the Monetary Fund expects 6.3% for India and 4.2% for China.

Money market still very popular

There is also a lot going on in bond ETFs. Money market ETFs such as Lyxor Euro Overnight Return (FR0010510800) and Xtrackers II EUR Overnight Rate Swap (LU0290358497) remain favorites, as Mohr explains. However, global government bonds are also in demand, while US corporate bonds are being sold.

Tech sector: buys, including specialty stocks

Technology stocks continue to dominate trading in sector ETFs. Schröer reports continued buying, despite the Nasdaq losses last week. At Société Générale, on the other hand, there is buying and selling. For example, the Xtrackers Artificial Intelligence & Big Data (IE00BGV5VN51) is being sought after, while the Xtrackers MSCI World Information Technology (IE00BM67HT60) is being sold.

Cryptos - waiting for the ETF decision

The speculation surrounding the Bitcoin spot ETF is not without consequence. The US Securities and Exchange Commission is expected to make a decision on approval tomorrow, Wednesday, at the latest. Bitcoin had already risen from USD 16,500 to over USD 42,000 in 2023 and even briefly exceeded USD 45,000 in the first week of the new year. A lot is therefore happening in the ETC Group Physical Bitcoin-ETN (DE000A27Z304), the largest crypto tracker. Solana is also currently attracting a lot of attention, as its price has increased sevenfold in 2023. "We are seeing a lot of activity in Solana-ETNs (CH1114873776), with buying and selling," says Schröer.

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Solana ahead, natural gas behind.

The analysis company Morningstar has looked at which ETPs (ETFs, ETNs, ETCs) performed best in 2023. At the top are crypto trackers, especially Solana ETNs. They occupy the first six places in the top ten with price gains of around 1,000%. The best traditional ETFs are VanEck Crypto and Blockchain Innovators (IE00BMDKNW35) and Global X Blockchain Innovation (IE00BMDKNW35) with returns of 263% and 255% respectively. The list of the most loss-making products is dominated by natural gas ETCs. Rhodium and nickel ETCs can also be found there, as well as a product that tracks the volatility of the US equity market (LU0832435464). The only equity ETF on the flop list is the Electric Vehicle Charging Infrastructure (IE000HMSHYJ6), whose price has almost halved. Read more: www.morningstar.de/de/news/244554/die-besten-etfs-in-2023---hier-ein-blick-auf-die-performance.aspx

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By Anna-Maria Borse , 9 January 2024 © Deutsche Börse AG

About the author

Anna-Maria Borse is a financial and business editor specializing in the financial market/stock exchange and economic topics. 

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