Weekly Market Monitor – Week Ending 21 October 2022

  • The top performing ETFs last week overwhelmingly focussed on US technology companies. Most also used currency hedging. As markets took stock of reports that the Federal Reserve would slow interest rate hikes, the US dollar fell and growth stocks saw some much-needed relief.
  • The Global X Ultra Long Nasdaq 100 Hedge Fund (LNAS) – which uses currency hedging and buys the US tech giants on a geared basis – was the top performing ASX-listed fund for the week.
  • Bottom performers focussed on the US dollar (YANK) and precious metals (ETPMAG, ETPMPD). Precious metal prices usually rise when the US dollar falls. However precious metal prices fell anyway last week as markets priced in a greater likelihood of recession. Many of these metals also have industrial uses.
  • There were $350 million in reported inflows. Cash ETFs continued to see strong interest due to rising rates. While currency hedged equity ETFs (IHVV, QAU, QHAL) saw strong flows perhaps reflecting investor sentiment that the US dollar has peaked.
  • There were $143 million in reported outflows, meaning the industry saw another net inflow week. Inverse funds (BBUS, BBOZ) and ETFs betting on the US dollar (YANK, USD) accounted for a large chunk of outflows. This perhaps reflects more bullish sentiment from Australian investors.
  • The most heavily traded ASX-listed fund for the week was the Global X Ultra Short Nasdaq 100 Hedge Fund (SNAS). Trading volumes in SNAS have surged on the back of heightened volatility in US tech stocks.

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