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Overweight industrial metals and underweight energy

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Overweight industrial metals and underweight energy our equity model suggests increasing allocation in US large caps and French equities while underweighting

ETF Securities Portfolio Insights: Overweight industrial metals and underweight energy

Highlights

  • For the third quarter 2017, our equity model suggests increasing allocation in US large caps and French equities while underweighting emerging market stocks mainly.
  • The bond model proposes keeping the weights unchanged compared to the benchmark while our contrarian model on commodities underweights energy, overweighting industrial metals, precious metals and livestock.
  • Our tactical portfolio outperformed the strategic and the 60/40 benchmarks by 0.9% and 0.5% per year respectively, improving the Sharpe by 36% on average.

Political uncertainties around the world have started to fade. However, centres of tension remain as criticisms over the Trump presidency are growing and as the US economic growth may be near peak. While the French and Dutch elections have defeated the risk of a populist victory, the Brexit negotiations remain full of uncertainties. The UK is unlikely to find in the US the trade partner it is seeking for. The country went through a tough test in early June as the Conservative party lost its majority during the general election. While market volatility is still at its lowest level ever, inflation is gradually rising in the US, EU and UK, increasing the risk of central bank policy errors.

Q3 2017 positioning

In Q2 2017, the market volatility index (VIX) fell below its lower band (-1x standard deviation), indicating that the level of risk on the equity market is low and that investors can have a higher allocation to equities (55%) compared to bonds (35%) similar to the strategic benchmark. For Q3 2017, volatility rose above its lower band making the tactical portfolio switch back to a more balanced split at 45% each. Commodities remain at 10% in both strategic and tactical portfolios.

Within the equity space, we have amended our model as we found, in our note Momentum for short-term tactical play, CAPE for the longer run, that the mean reversion strategy underneath the traditional CAPE (Cyclically Adjusted Price to Earning) valuation model based on 10 years earnings period works best when the investment horizon is longer than 4 years. For shorter investment horizons, such as in the tactical portfolio, a momentum strategy using a version of the CAPE indicator based on a shorter earning period of 5 years instead of 10 provides better results. For Q3, the model therefore suggests overweighting US large caps, France, Spain, the Netherlands and Denmark as valuations of these countries remain elevated compared to the 5-year medians of their real earnings. Valuations peaked in mid-2014 and abated until early 2016, before rising again. At the other end of the spectrum, the model reduces its allocation in Brazil, Russia, Italy, South Africa and Mexico. Italy shows the largest differential between its CAPE ratio and its 5-year median, reflecting its troublesome banking sectors and political instability with a potential new election next year. The domestic equity market is likely to remain undervalued as long as these risks remain unsettled.

The below table highlights how our tactical positions have changed for the past three quarters compared to the strategic benchmark and our new positions for this quarter.

(click to enlarge)

For Q3 2017, the bond model suggests to remain neutral in all categories. This contrasts with the second quarter where the model was overweighting all of them as inflation expectations and interest rate expectations in the US and the EU were signalling a turning point. The CDS (Credit Default Swap) of each bond continues to hover around its historical average.

Our commodity contrarian model, for Q3, is reducing the weight of all energy commodities except WTI crude and is taking a short exposure to Brent and gasoline. This is in line with our view that oil will continue to trade range between US$40/bbl. and US$55/bbl. as the attempt from the OPEC and non-OPEC agreement to restrain the increase in global oil production continues. On the other hand, the model is increasing its allocation in copper, zinc and lead, and is taking a short exposure to aluminium and tin. Fundamentals should remain price supportive as copper is likely to end this year in deficit for the ninth consecutive year. The model is also shifting from underweight all precious metals except palladium in Q2 to overweight palladium only in Q3, taking a short exposure to palladium at the same time as we see the price rally was overdone. Lastly, the model is increasing the weight of live cattle and is taking a short exposure to corn and lean hogs.

Portfolio performance

The tactical portfolio has the lowest level of volatility compared to the balanced 60/40 portfolio, and the strategic benchmark, improving the Sharpe ratio to 0.61 compared to 0.51 for the 60/40 and 0.40 for the strategic portfolio.

(click to enlarge)

The tactical portfolio outperforms the 60/40 and the strategic benchmarks by 0.5% and 0.9% per year since January 2005.

(click to enlarge)

Each asset class in the tactical portfolio also outperforms its equivalent in the 60/40 and strategic benchmarks. The bond component outperforms by 0.5% on average, the equity by 0.3% and the commodity by 4.5%, illustrating the efficiency of our fundamental-based models in improving the risk/return profile of the asset class as well as the tactical portfolio.

In addition, the tactical portfolio provides higher protection from the downside risk with a maximum drawdown of -25.4% compared to -33% for the 60/40 and -37% for the strategic benchmark.

Finally, the portfolio recovers faster to its previous peak (2 years versus around 3 years for both benchmarks).

Portfolio methodologies

Our strategic benchmark follows a long-only strategy with 60 investments across three asset classes: commodities (25), equities (28) and bonds (7). As illustrated below, the initial weights are based on the weighting methodology of:

• The Bloomberg Commodity Index for commodities
• The MSCI AC World Index for equities
• The Barclays bond indices for bonds

(click to enlarge)

For more information contact:

ETF Securities Research team
ETF Securities (UK) Limited
T +44 (0) 207 448 4336
E info@etfsecurities.com

Important Information

This communication has been issued and approved for the purpose of section 21 of the Financial Services and Markets Act 2000 by ETF Securities (UK) Limited (“ETFS UK”) which is authorised and regulated by the United Kingdom Financial Conduct Authority (the “FCA”).

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Defence and AI dominate as European Thematic ETF flows hit record $8.73 billion H1 2025

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Top Performer: Defence (+$7.87 billion) Emerging Themes: Cybersecurity (+$318 million), Uranium (+$253 million) ARK Invest

• Top Performer: Defence (+$7.87 billion)

Emerging Themes: Cybersecurity (+$318 million), Uranium (+$253 million)

European thematic UCITS ETFs posted a dramatic resurgence in the first half of 2025, with net inflows of $8.73 billion year-to-date, according to ARK Invest Europe’s latest quarterly update detailing H1 2025 European thematic ETF flows.

The turnaround marks a decisive reversal from the muted flows of 2024 ($308 million net outflows for the whole of 2024), as investors rotate back into forward-looking, innovation-driven themes with clearer earnings visibility.

Defence remains the dominant thematic allocation, capturing $7.87 billion in combined net inflows between Global ($4.81 billion) and European ($3.05 billion) defence ETFs underscoring its evolution from a tactical trade to a structural portfolio allocation. Maintaining its position as the defining technological theme, AI ETFs saw $904 million in net inflows, with investor appetite fuelled by relentless innovation in large language models, robotics, and autonomous systems.

In the same period, Cybersecurity ETFs continued to rebuild momentum after significant outflows in 2024 ($311 million net outflows for H1 2024), drawing $318 million, reflecting growing investor conviction in cybersecurity as a structural necessity amid rising digital threats.

Clean Energy ETFs saw outflows of $307 million. As policy momentum stalls in key markets, investors are increasingly selective within the energy transition space. Capital is rotating toward subsectors with clearer economic moats, such as nuclear and grid infrastructure. Supporting this sentiment, Uranium ETFs rank fifth at $253 million, reflecting growing investor interest in the nuclear sector as a potential solution to global energy needs.

Healthcare Innovation ETFs recorded net outflows of $279 million. The drawdown reveals investor caution around legacy biotech firms with uncertain drug pipelines and reimbursement risks. Interest is shifting toward AI-driven healthcare platforms offering faster innovation cycles and more scalable business models.

Electric Vehicles and Battery Tech ETFs saw net outflows of $203 million as investor enthusiasm cools amid subsidy rollbacks and plateauing EV demand in major markets. Persistent concerns around battery raw materials and production bottlenecks have further weighed on the theme.

Rahul Bhushan says, “After a cautious 2024, it’s evident that investors are re-engaging with innovation themes that offer clearer earnings visibility and resilience in an increasingly complex macro landscape. We’re seeing investor conviction in megatrends with structural tailwinds, particularly defence, AI, and energy security. Thematics are no longer just tactical bets, they’re core strategic exposures.”

2025/2024 Comparative Study

Thematics are back

After a weak 2024, investor appetite for thematic risk has returned in force:

• H1 2025 total net inflows: +$8.74B

• That’s a sharp reversal from -$791M in H2 2024 and only +$483M in H1 2024

• The rotation is clear: capital is moving back into forward-looking themes with stronger earnings visibility.

Defence is now a structural trade

• Global and Europe Defence saw a combined $7.87B in inflows in H1 2025 and $1.59B in June alone.

• This continues a multi-quarter surge as geopolitical tensions, rising military budgets, and renewed industrial policy drive long-term allocations.

• Defence is no longer a tactical trade—it’s becoming a core exposure.

AI inflows normalise, but conviction remains

• Artificial Intelligence ETFs drew $904M in H1 2025, following $1.47B in H1 2024.

• Inflows may be slowing, but investor conviction is holding firm.

• With earnings delivery now catching up to narrative, AI remains a centrepiece of thematic portfolios.

Cybersecurity shows signs of stabilisation

After brutal outflows in 2024 (-$311M H1, -$260M H2), cybersecurity ETFs finally saw inflows:

• $318M in H1 2025, including $67M in June.

• This rebound suggests investors are once again prioritising digital resilience in an AI-driven world.

Infrastructure themes are quietly regaining traction

• Global and Europe Infrastructure ETFs pulled in $284M in H1 2025, following modest gains in H2 2024.

• Infrastructure is benefiting from government stimulus, defence modernisation, and the reshoring trade.

Uranium’s steady climb continues

• $253M in H1 2025, after $216M in H2 2024 and $67M in June alone.

• Indeed, the $67M in June alone nearly matches the $66M pulled in during the entirety of H1 2024.

• A rare clean energy theme that’s bucking the downtrend, reflecting growing recognition of nuclear as a pragmatic decarbonisation solution.

Clean Energy sentiment is so bad, it might be investable

• Outflows across all periods: -$307M (H1 2025), -$505M (H2 2024), -$409M (H1 2024)

• June 2025: A mere -$8M

• Sentiment is arguably as negative as it’s ever been—yet structural drivers remain in place. The setup for a contrarian rebound is building.

About ARK Invest Europe

ARK Invest International Ltd (”ARK Invest Europe”) is a specialist thematic ETF issuer offering investors access to a unique blend of active and index strategies focused on disruptive innovation and sustainability. Established following the acquisition of Rize ETF in September 2023 by ARK Investment Management LLC, ARK Invest Europe builds on over 40 years of expertise in identifying and investing in innovations that align financial performance with positive global impact.

Through its innovation pillar and the ”ARK” range of ETFs, ARK Invest focuses on companies leading and benefiting from transformative cross-sector innovations, including robotics, energy storage, multiomic sequencing, artificial intelligence, and blockchain technology. Meanwhile, its sustainability pillar, represented by the ”Rize by ARK Invest” range of ETFs, prioritises investment opportunities that reconcile growth with sustainability, advancing solutions that fuel prosperity while promoting environmental and social progress.

Headquartered in London, United Kingdom, ARK Invest Europe is dedicated to empowering investors with purposeful investment opportunities. For more information, please visit https://europe.ark-funds.com/

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UBS Asset Management lanserar sin första aktivt förvaltade ETF

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UBS Asset Management planerar att erbjuda ett utbud av aktiva ETFer som utnyttjar deras differentierade räntebärande kapacitet, följt senare av en serie avkastningsfokuserade ETFer med optionsöverlägg.
  • UBS Asset Management planerar att erbjuda ett utbud av aktiva ETFer som utnyttjar deras differentierade räntebärande kapacitet, följt senare av en serie avkastningsfokuserade ETFer med optionsöverlägg.
  • Den första som lanseras idag ger tillgång till den aktiva förvaltningsexpertisen hos UBS AMs Credit Investments Group (CIG), en av de ledande förvaltarna av collateralized loan obligations globalt.
  • Den nya UBS EUR AAA CLO UCITS ETF erbjuder investerare exponering mot den högsta kreditkvaliteten inom CLO-strukturen i ett likvidt och kostnadseffektivt omslag.

UBS Asset Management (UBS AM) tillkännager idag lanseringen av sin första aktivt förvaltade ETF, som ger kostnadseffektiv exponering mot de högst rankade trancherna av marknaden för collateralized loan obligation (”CLO”). UBS EUR AAA CLO UCITS ETF kombinerar den aktiva förvaltningsexpertisen hos UBS AMs Credit Investments Group med skalan hos deras väletablerade ETF-erbjudande.

André Mueller, chef för kundtäckning på UBS Asset Management, sa: ”CLOer erbjuder stark avkastningspotential och diversifieringsfördelar. Att navigera på denna marknad kräver dock förståelse för CLO-strukturer, regleringar och riskerna i denna sektor. Vi har kombinerat mer än 20 års ETF-innovation med expertisen hos vår Credit Investments Group för att effektivt och transparent tillhandahålla de högst rankade CLO-värdepapperen. Den aktiva förvaltningsdelen erbjuder kostnadseffektiv exponering med potential att överträffa.”

John Popp, chef för Credit Investments Group på UBS Asset Management, tillade: ”Vi är glada att kunna erbjuda vår expertis inom hantering av CLO-trancher i över två decennier till en bredare investerarbas. Vårt teams djupa kreditkunskap och meritlista genom flera kreditcykler gör oss väl positionerade för att tillhandahålla övertygande investeringar. På dagens marknad anser vi att AAA CLO-skulder erbjuder en attraktiv risk-avkastningsprofil. Att erbjuda denna investering via en ETF kommer att utöka tillgången till denna växande marknad.”

Den aktiva UBS EUR AAA CLO UCITS ETF* erbjuder tillgång till den växande CLO-marknaden genom en likvid och kostnadseffektiv ETF-struktur, vilket innebär:

  • Förbättrad avkastningspotential med strukturellt skydd – AAA CLOer erbjuder högre avkastning jämfört med liknande rankade investeringar, med strukturella egenskaper som har testats genom cykler, utan fallissemang ens under perioder av ekonomisk kris**
  • Portföljdiversifiering – tillgångsslagets rörliga ränta ger betydande diversifieringspotential i samband med en bredare ränteportfölj
  • Aktiv fördel – Credit Investments Group, en av de främsta förvaltarna av säkerställda låneförpliktelser globalt, hanterar dynamiskt risk och avkastning för att fånga marknadsmöjligheter
  • ETF-effektivitetETF-strukturen möjliggör likviditet och kostnadseffektiv tillgång till denna komplexa tillgångsklass

*Fonden är registrerad för försäljning i Österrike, Schweiz, Tyskland, Danmark, Spanien, Finland, Frankrike, Irland, Italien, Liechtenstein, Luxemburg, Nederländerna, Norge och Sverige.

**S&P Global Ratings, “Default, Transition, and Recovery: 2023 Annual Global Leveraged Loan CLO Default and Rating Transition Study”, 27 juni 2024

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AZEH ETF är en aktivt förvaltad ETF som investerar i Asien ex Japan

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iShares Asia ex Japan Equity Enhanced Active UCITS ETF USD (Acc) (AZEH ETF) med ISIN IE000D5R9C23, är en aktivt förvaltad ETF.

iShares Asia ex Japan Equity Enhanced Active UCITS ETF USD (Acc) (AZEH ETF) med ISIN IE000D5R9C23, är en aktivt förvaltad ETF.

Den börshandlade fonden investerar minst 70 procent i aktier från Asien (exklusive Japan). Upp till 30 procent av tillgångarna kan placeras i private equity-instrument, värdepapper med fast ränta med investment grade-rating och penningmarknadsinstrument. Värdepapper väljs utifrån hållbarhetskriterier och en kvantitativ investeringsmodell.

Den börshandlade fondens TER (total cost ratio) uppgår till 0,30 % p.a. iShares Asia ex Japan Equity Enhanced Active UCITS ETF USD (Acc) är den enda ETF som följer iShares Asia ex Japan Equity Enhanced Active-index. ETFen replikerar det underliggande indexets prestanda genom fullständig replikering (köper alla indexbeståndsdelar). Utdelningarna i ETFen ackumuleras och återinvesteras.

iShares Asia ex Japan Equity Enhanced Active UCITS ETF USD (Acc) är en mycket liten ETF med 9 miljoner euro förvaltade tillgångar. ETFen lanserades den 31 juli 2024 och har sin hemvist i Irland.

Investeringsmål

Fonden förvaltas aktivt och syftar till att uppnå långsiktig kapitaltillväxt på din investering, med hänvisning till MSCI AC Asia ex Japan Index (”Riktmärket”) för avkastning.

Handla AZEH ETF

iShares Asia ex Japan Equity Enhanced Active UCITS ETF USD (Acc) (AZEH ETF) är en europeisk börshandlad fond. Denna fond handlas på flera olika börser, till exempel Deutsche Boerse Xetra och London Stock Exchange.

Det betyder att det går att handla andelar i denna ETF genom de flesta svenska banker och Internetmäklare, till exempel DEGIRONordnet, Aktieinvest och Avanza.

Börsnoteringar

BörsValutaKortnamn
Euronext AmsterdamUSDAXEE
XETRAEURAZEH
London Stock ExchangeGBPAXEE

Största innehav

KortnamnNamnSektorVikt (%)ISINValuta
USDUSD CASHCash and/or Derivatives12.85USD
ISTUSADBLK ICS US TREAS AGENCY DISCash and/or Derivatives9.01IE00B3YQRB45USD
2330TAIWAN SEMICONDUCTOR MANUFACTURINGInformationsteknologi8.55TW0002330008TWD
700TENCENT HOLDINGS LTDKommunikationstjänster5.58KYG875721634HKD
005930SAMSUNG ELECTRONICS LTDInformationsteknologi4.40KR7005930003KRW
9988ALIBABA GROUP HOLDING LTDSällanköpsvaror2.50KYG017191142HKD
GSIFTCASH COLLATERAL USD GSIFTCash and/or Derivatives2.02USD
1299AIA GROUP LTDFinans1.99HK0000069689HKD
000660SK HYNIX INCInformationsteknologi1.27KR7000660001KRW
PDDPDD HOLDINGS ADS INCSällanköpsvaror1.27US7223041028USD

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