The global capital flow activity has been unusually high in July, giving rise to several investment themes that have significantly impacted the global financial market.
Krona Weakness
A prominent theme has been the weakness of the Swedish krona. During the month, the krona has weakened considerably, benefiting returns measured in kronor due to currency exchange rate changes.
The euro, British pound, and Swiss franc have all strengthened by over 3 percent against the krona in July. The US dollar has also increased in value, but to a lesser extent, with a rise of just under 2 percent.
Commodity Declines
At the same time, many commodities have lost value due to lowered expectations of slowing global growth, particularly focused on weaker Chinese growth. Industrial metals have seen broad declines, with copper prices falling by around 9 percent, aluminum prices by 12 percent, and nickel prices by 8.5 percent.
Oil prices, measured in Brent crude, have decreased by 8 percent, while the price of US natural gas has dropped by a significant 18 percent. Gold stands out as one of the few winners during the month, with a 2.5 percent increase measured in dollars.
Sector Rotation
Another notable new theme is the global sector rotation, where investors have been selling off high-valued large tech companies and moving capital to lower-valued US small companies.
Despite these changed capital flows, global stock markets have moved sideways in July, measured in dollars. The US markets, which make up a large part of global indexes, have had a month of zero return in local currency. The growth and tech-heavy Nasdaq 100 index fell by over four percent during the month and a whole 9 percent since its peak on July 10.
In Europe, the indexes have shown mixed results. Despite the Paris stock exchange continuing to decline for the second consecutive month, the German DAX index showed a marginal increase of one percent. The Stockholm stock exchange had a relatively good month, with the largest companies performing in line with the DAX index, while Swedish small companies stood out with a return of 4 percent.
On a sector-specific level globally, seven of the top ten sectors have shown positive returns. Utilities companies performed the best with an increase of over 5 percent, while the financial sector also had a strong month with a return of nearly 5 percent.
Tech Struggles
The technology sector has faced challenges with declines of just under 5 percent, followed by the communication sector. The energy sector has also lost ground, influenced by the relatively large drop in oil prices.
Monthly ETF Performance in July
Among Placera’s selected ETFs for July, the majority have had a good month with positive returns. However, seven of the ETFs have shown negative developments, with declines ranging from 1 to 8 percent.
Strong Month for Small Companies and Real Estate
American small companies have performed exceptionally well in July. The JPM BetaBuilders US Small Cap Equity fund has risen by over 5 percent, measured in euros. On the Swedish market, the small company fund XACT Swedish Small Companies, listed in kronor, has increased by 4 percent. The other Swedish ETF, XACT OMXS30 ESG, shows a slight increase.
The broad global ETF Vanguard FTSE-All World UCITS ETF has had an unchanged development during the month. However, JPM Global Equity Premium Income, which focuses on global market-leading quality companies, has performed better with a return of over 2 percent. This fund diversifies its holdings significantly, with no holding weighing more than 1.9 percent.
BlackRock iShares NASDAQ 100, which tracks the Nasdaq 100 index, has faced challenges and declined by 4 percent. The broader US ETF Invesco S&P 500 UCITS ETF has fared better with a marginal decrease of 1 percent.
Among the more niche ETFs, VanEck Global Real Estate stands out. This fund, which provides exposure to the world’s 99 largest real estate companies, has had a good month with a 5 percent increase. Another fund with significant real estate exposure, Global X Data Center REITs & Digital Infrastructure UCITS ETF – USD Accumulating, managed to end the month with a marginal increase.
On the other hand, our commodity ETF, Invesco Bloomberg Commodity ex-Agriculture UCITS ETF, has had a tough month, with a decline of 8 percent, marking the largest loss among the selected ETFs for the period.
ETFs with exposure to Europe show mixed returns for July. Amundi EURO STOXX 50 UCITS ETF DR – EUR (C), focusing on the largest companies in the eurozone, declined by 2 percent. Xtrackers Stoxx Europe 600 UCITS ETF 1D, including 600 companies with a higher proportion of medium-sized and small companies, ended the month unchanged.
The recently added iShares MSCI France UCITS ETF EUR, which specifically invests in French companies, declined by two percent. A weak report from the Paris stock exchange’s largest company, the French luxury conglomerate LVMH, is believed to be a contributing factor to this decline.
Global Category
In the global category, we have selected the funds Vanguard FTSE All-World UCITS ETF, Fidelity Global Quality Income UCITS ETF, and JPM Global Equity Premium Income UCITS ETF.
Vanguard FTSE All-World is a passively managed global fund that tracks the FTSE All-World Index. It consists of large and mid-cap companies in both mature and emerging markets. The annual fee amounts to 0.25 percent.
Fidelity Global Quality Income is an exchange-traded fund focusing on global market leaders. The fund costs 0.43 percent per year and provides dividends.
JPM Global Equity Premium Income also focuses on large market-leading quality companies. The fund takes many small bites, with no holding weighing more than 1.9 percent. They sell options against these holdings. The options generate income each month. Together with the respective holdings’ dividends, this is what the fund distributes monthly. The idea behind this is to generate high dividends with relatively low volatility.
USA
When it comes to US-focused ETFs focusing on large companies, we have chosen Invesco S&P 500, which tracks the US large-cap S&P 500 index. The annual fee amounts to 0.09 percent, and dividends are reinvested.
For more focus on Nasdaq and tech companies, we have selected BlackRock iShares NASDAQ 100. This exchange-traded fund tracks the Nasdaq-100 index, consisting of the one hundred largest non-financial companies traded on the Nasdaq exchange based on market value.
The Ultimate Guide to Top ETFs for Global Investment Strategies
Are you looking to diversify your investment portfolio with top-performing ETFs? Look no further! In this comprehensive guide, we have handpicked the best ETFs across different regions and sectors to help you maximize your returns and minimize risks.
In the tech-savvy world we live in, the index is heavily weighted towards technology, internet, biotech, and telecommunication companies. For those focusing on the US market, we recommend the Fidelity US Quality Income for large dividend-paying companies.
If you’re interested in small-cap companies in the US, look no further than the JPM BetaBuilders US Small Cap Equity fund. Moving on to Europe, the Amundi EURO STOXX 50 is our top pick for large-cap companies, while the Xtrackers STOXX Europe 600 is ideal for exposure to large and mid-cap companies.
In France, the Paris stock exchange boasts some of the most internationally renowned companies. Our top choice here is the iShares MSCI France UCITS ETF EUR. For Swedish exposure, we recommend the XACT OMXS30 ESG for large companies and XACT Swedish Small Companies for smaller firms.
Venturing into Asia, we have selected the Franklin FTSE India fund for passive management that follows the FTSE India index with a low annual fee of 0.2 percent.
Delving into niche ETFs, we have identified five funds that cater to specific sectors. From data centers to robotics and artificial intelligence, these ETFs offer unique opportunities for growth and diversification.
ETFs provide quick exposure to a wide range of assets or specific sectors, markets, or regions. By trading on the stock exchange like stocks, ETFs are easy to buy and sell during trading days at current market prices, making them a convenient option for investors.
In conclusion, investing in ETFs can help you build a diversified portfolio, spread risks, and potentially enhance your returns. Take advantage of these top ETF picks to optimize your investment strategy and achieve your financial goals. Title: Expert Investment Manager Reveals Top Financial Market Trends for Maximum Returns
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