The month of February 2025 was marked by high volatility in the financial markets, driven by political uncertainty in the US, expectations of interest rate cuts by the ECB, and the dynamics of the technology sector. This environment determined investor choices and capital flows to certain ETFs, reflecting both a defensive and strategic approach.

The Relevance of Currency Hedging and Betting on Global Markets

The S&P 500 EUR Hedged (IE00B3ZW0K18) and iShares MSCI World EUR Hedged (IE00B441G979) ETFs were among the most traded, signaling investors' concern about the possible relative strength of the US dollar and the currency impacts on their portfolios. Uncertainty over US tariff policy has led investors to seek global exposure while mitigating currency risk.

iShares MSCI World UCITS (IE00B4L5Y983) and SPDR MSCI World UCITS (IE00BFY0GT14) were also in strong demand, reinforcing the preference for international diversification in a context of fragmented economic growth.

Gold and Infrastructure as Safe Havens

The iShares Gold Producers UCITS (IE00B6R52036) saw sustained interest, with investors increasing positions in safe haven assets in the face of volatility on the stock markets and the ECB's hesitation to implement more aggressive interest rate cuts. The temporary drop in the gold price throughout February (-1% in the last session of the month) opened up buying opportunities for those looking for protection against inflation and geopolitical risks. The iShares Global Infrastructure (IE00B1FZS467) benefited from the interest in long-term assets with predictable cash flows, as the expectation of interest rate cuts fuels the attractiveness of the infrastructure sector.

Defense and Fixed Income as Low Correlation Alternatives

With geopolitical uncertainties and increased military spending announced by several NATO countries, VanEck Defense UCITS (IE000YYE6WK5) has attracted significant investment. The need to strengthen military capabilities, coupled with growing financial support for Ukraine, has boosted the valuation of companies in the sector.

Additionally, in the fixed income segment, the iShares Lehman 20+ Year Treasury (US4642874329) reflected the search for alternatives in a falling yield environment in the US, with 10-year bonds reaching 4.24% at the end of the month. The iShares Markit iBoxx High Yield (US4642885135), on the other hand, was driven by demand for higher yields, given the possibility of a less restrictive monetary policy in the coming months.

Outlook for the coming weeks

The ECB's decisions at its meeting on March 6 were decisive for European markets, with the -0.25% cut in the key rate likely to sustain a positive performance for ETFs exposed to risk assets in the Eurozone. In the US, the next major benchmark will be the behavior of the technology sector and the uncertainty surrounding the management of Trump's proposed trade tariffs. The correlation between defensive assets and value sectors will continue to be a crucial factor for investors, while gold and infrastructure should continue to attract flows as a hedge against uncertainty. With a market that is constantly adapting, the selection of ETFs remains a fundamental pillar for diversification and risk management in any portfolio.