As January saw the equity markets rebound from a difficult end to 2018, momentum carried on throughout February.
Most notably, February was a strong period for ETFs comprised of Chinese A shares. Seven CSI 300 and China A ETFs produced returns in the double digits, according to data from JustETF. The Xtrackers CSI 300 Swap UCITS ETF produced returns of 15.23% for the month, the largest of any European ETF for the period. Trade talks between the US and China caused a spike for the Chinese ETFs and is likely to improve the liquidity in the country’s financial system despite the slow down in its economic growth.
|Xtrackers CSI 300 Swap UCITS ETF||417||15.23%||20.08%|
|Xtrackers Harvest CSI 300 INDEX UCITS ETF||400||14.69%||19.06%|
|Lyxor Fortune SG UCITS ETF MSCI China A||38||14.41%||18.92%|
|L&G E Fund MSCI China A UCITS ETF||17||13.98%||19.87%|
|HSBC MSCI China A Inclusion UCITS ETF||180||13.71%||18.29%|
Another top performer for the month was the US industrial sector. The largest holdings for most industrial ETFs include Boeing and 3M . The performance of the sector, similar to the previously mentioned China ETFs, was heavily influenced by the negotiations between the US and China. The SPDR S&P US Industrials Select Sector UCITS ETF and the Invesco US Industrials Sector UCITS ETF saw monthly returns of 8.67% and 8.66%, respectively.
|SPDR S&P US Industrials Select Sector UCITS ETF||41||8.67%||13.99%|
|Invesco US Industrials Sector UCITS ETF||53||8.66%||14.01%|
|iShares S&P 500 Industrials Sector UCITS ETF||7||8.40%||13.73%|
The third strong performer for February was the US and world information technology sectors. The US and World information technology ETFs may differ in names, however the “World” technology ETFs are still significantly comprised with US-domiciled companies. The Xtrackers MSCI World Information Technology Index UCITS ETF’s country allocation is 85% in the US, with the second largest country being Japan with just under 6%.
Apple has a significant weighting in technology ETFs and therefore heavily influences the NAV of the funds. The FAANGs giants had an underwhelming end to 2018 in terms of revenue and faced a major sell off throughout Q4. However the share price has since recovered, bouncing back from its decline which was a loss of over a third of its value. Other holdings for the sector’s ETFs include Microsoft, Intel and Visa have started the year well.
|Xtrackers MSCI USA Information Technology Index UCITS ETF||18||7.88%||10.68%|
|Invesco US Technology Sector UCITS ETF||294||7.55%||9.96%|
|SPDR S&P US Technology Select Sector UCITS ETF||46||7.52%||9.94%|
|iShares S&P 500 Information Technology Sector UCITS ETF USD||1026||7.35%||9.87%|
|Xtrackers MSCI World Information Technology Index UCITS ETF||310||7.06%||10.34%|