Industry Updates

STOXX Europe 600 and S&P 500 ETFs rebound from disappointing May

George Geddes

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It would appear the European and US equity markets are showing signs of positivity following a lacklustre month of May.

Geopolitical events, such as Brexit and the US in trade wars with numerous countries, caused global and regional equity ETFs to slump, but now prices appear to have recovered.

The Xtrackers STOXX Europe 600 ETF (DX2X) saw its net asset value (NAV) climb 4.1% last week, according to data from ULTUMUS. A similar product from BlackRock, the iShares STOXX Europe 600 UCITS ETF (EXSA), performed the same as the DX2X but suffered $139.5m worth of outflows as investors remain hesitant.

However, the sector specific ETFs for the STOXX Europe 600 outperformed the original and broader ETFs. In particular, the Lyxor STOXX Europe 600 Chemicals UCITS ETF (CHM) and the Invesco STOXX Europe 600 Optimised Utilities UCITS ETF (SC0Z) were the top performing ETFs last week, rising 6.7% and 6.4%, respectively.

Similarly, European domiciled ETFs for the S&P 500 offered some large returns for investors over the same period. The euro hedged Invesco S&P 500 UCITS ETF (E500) saw its NAV rise 6.1% last week.

Lyxor alone pulled in nearly $230m across three of its currency hedged S&P 500 UCITS ETF. The US dollar hedged (LSPX) and the euro hedged (LYPS) versions’ NAVs both raised by 4.5 percentage points where the pound sterling hedged (SP5G) raised by 5.6 percentage points.

Furthermore, it was factor S&P 500 ETFs which investors were most attracted to over the same period. The iShares Edge S&P 500 Minimum Volatility UCITS ETF pulled in a sum of $50m for both its US dollar (MVUS) and euro (IS31) hedged products with their NAV’s jumping 4.5% and 6.2%, respectively.

This further supports the argument that investors remain sceptical of the equity markets as they pull their capital from plain vanilla ETFs and choose the minimum volatility products instead.

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