24 October 2024 04h40

Most subscribed ETF in September: short-term bonds and American stock markets in the spotlight

In September there were several events relevant to the financial markets, directly affecting investors' decisions, "especially those who invest in higher risk assets, with the stock markets being marked by high volatility,” explains João Queiroz, head of trading at Banco Carregosa.

"One of these events,” he continues, ”was the statements by Fed member Goolsbee, who indicated uncertainty about the future pace of monetary policy, which caused significant movements in the main stock indices.” The EuroStoxx600, the professional also comments, "accumulated a gain of 2.6% in the third quarter, reflecting some optimism, but still with caution about the future”.

For investors in stock ETFs, this volatility can be seen as either an opportunity or a risk. Therefore, ETFs that follow indices such as the S&P 500, DAX40, or other European markets, were considered, "based on exposure to the technology sector, which continued to perform well, or more defensive sectors, such as healthcare and consumer goods,” says João Queiroz.

Short-term bond ETFs in greater demand

In bonds, meanwhile, there was still some uncertainty about the pace of interest rate cuts, given that the path of structural inflation is clearly downwards. "The expectation of a tighter monetary policy has led to an increase in long-term bond yields. This rise in yields has a negative impact on bond prices, leading to a fall in the value of ETFs focused on bonds, especially long-term ones,” says the professional.

However, short-term bond ETFs or ETFs with an inflation-linked bond investment strategy were more in demand as they offer another form of immunization against hypothetical interest rate rises and hypothetical persistent inflation scenarios. "Investors looking for income stability preferred these products, especially those that balance exposure between high-quality sovereign and corporate debt,” he says.

For ETF investors looking for high exposure to sovereign or corporate debt, the focus turned to regions with sounder fiscal policies and companies with low debt levels. "Given the situation in the markets in September, the selection of ETFs by clients appeared to be judicious,” says João Queiroz, adding that ”the volatility in equities, the uncertainty in interest rate cuts and the pressure in the debt markets indicate that investors considered a balanced allocation between different asset classes.” Geographical and sectoral diversification appeared to have been crucial, with a particular focus on interest rate risk, inflation and global economic growth.

American stock markets in the spotlight

On Banco Best's side, in September, shares were once again in the spotlight, being the most subscribed asset class, with special emphasis on the S&P500 US Index. "At the top of the month, iShares Core MSCI World UCITS, a more generalist and global share option, was once again preferred by investors,” says Ângelo Custódio, a trader at the entity.

As a result, the American stock markets were in the spotlight, "despite September not being a historically friendly month for American stock investors”, explains the professional. Ângelo Custódio also states that "the Federal Reserve's action, with the first interest rate cut since 2020, was fundamental, encouraging investors to put on their bull skin and place their chips on a stronger and more dynamic economy, focused on boosting consumption and increasing company profits”.

As for bonds, dollar-denominated emerging market sovereign bonds, long-term and short-term US government bonds were the choices of investors. "Also noteworthy was the oil and gas sector, with the iShares Oil & Gas Exploration & Prod UCITS ETF, an instrument focused on the performance of the main oil and gas producers, once again demonstrating investor appetite in the commodities market,” adds the professional.

Most subscribed ETFs in September