ETFs

Retail investors' choices in July: between the pursuit of growth, protection and diversification. The investment pattern observed during July reveals a relatively sophisticated approach on the part of retail investors. Despite the volatility associated with the artificial intelligence theme, the doubts surrounding the sustainability of the investment cycle in semiconductors and data centres, the rise in long-term yields and the recurring geopolitical tensions in the Middle East, flows remained concentrated in three broad themes: structural growth linked to AI, protection against macroeconomic uncertainty, and global diversification.

The leadership of the Vanguard S&P 500, the Invesco QQQ, the iShares MSCI World, the Vanguard FTSE All-World and the iShares S&P 500 EUR Hedged demonstrates that investors continue to favour exposure to the global equity market, above all to the United States. This preference occurred in a context in which the earnings season exceeded expectations, market breadth improved beyond the "Magnificent 7", and artificial intelligence continues to be seen as a structural driver of economic and corporate growth. Even so, July was also marked by a growing differentiation between winners and losers within the technology universe, leading many investors to seek broad exposure through global indices while simultaneously making more targeted bets on specific segments.

This thematic demand is visible in the presence, among the most heavily traded ETFs, of the VanEck Semiconductor, the Global X Robotics & Artificial Intelligence and, indirectly, the QQQ. Despite the significant correction seen across various companies linked to AI, semiconductors, memory chips and digital infrastructure over the course of the month, investors continued to interpret these falls essentially as valuation adjustments rather than a structural change in the technology narrative. The focus shifted from the pursuit of AI to companies' ability to convert investment into revenue and earnings growth, but conviction in the theme remained high.

In parallel, demand for the iShares Gold Producers UCITS ETF highlights the growing importance of diversification and real assets in portfolios. With gold trading 28% below its all-time high, in an environment characterised by elevated real yields, persistent geopolitical risks, doubts over the sustainability of public debt and energy-related inflationary fears, many investors sought to reinforce positions in gold-mining companies as a way of capturing the appreciation of the precious metal while also benefiting from the operational leverage of the producers.

Also notable was the presence of the iShares 20+ Year Treasury Bond ETF, reflecting interest in taking advantage of historically high US yields. While part of the market maintained reservations about the future trajectory of US public debt, other investors began to view long-dated sovereign debt as a potential opportunity should the economy slow and the US Federal Reserve adopt a less restrictive stance in the coming quarters.

Finally, the inclusion of the ProShares Bitcoin Strategy ETF demonstrates that interest in digital assets remains significant. Despite the volatility seen during July, investors continue to regard Bitcoin as an alternative asset with appreciation potential in a scenario of improving global liquidity, growing institutionalisation of the sector and the progressive integration of blockchain technology into financial infrastructure.

Outlook for the coming weeks — The short-term backdrop remains constructive, but more demanding than in the first half of the year. The earnings season will continue to serve as the main test of companies' ability to justify the substantial investments associated with artificial intelligence. At the same time, the trajectory of US yields, energy prices and US macroeconomic indicators may determine the direction of markets during August.

Against this backdrop, investors are expected to continue favouring a combination of global exposure through broad indices, structural themes linked to AI, semiconductors and automation, and diversification assets such as gold, US Treasury bonds and, to a lesser degree, digital assets. The main change relative to the start of the year appears to lie in greater selectivity: the market still believes in artificial intelligence, but increasingly demands concrete evidence of profitability and value creation.