How do you interpret this market environment from the manager in 2025, with still persistent inflation, increasing geopolitical risks?
The market moves by a high degree of uncertainty, which has taught us during these months that volatility has probably come to stay. On the economic level, after the day of the release of April 2, the market discounted practically 70 % recession in the US and these fears have been decreasing. Now that percentage is only 30%. As for interest rates, they will be linked to this forecast of economic evolution. In Europe we continue to think that there will be two other additional cuts by the European Central Bank and in the US, although the Forward curve of the American market discounts two other declines, It is complex to think that the types can upload And I think it will depend more on the evolution of the macro data and the tariff episode of the US government. A few days ago a court has questioned that Trump has the capacity to impose this type of tariffs and that it would be one more thing in Congress and the market has reacts again. We think that there will continue to be episodes of volatility because uncertainty will not leave
What data have the tariffs of the Trump era about the evolution of flows in ETFs left?
In the European ETFs market the impact has been quite large and directional. If we look since Trump was chosen at the end of November, the flows in North America in December and January were very stable and almost reached 30,000 million flows, while the European market was relatively flat. From February We have seen a change of feeling and until April negative flows of the American ETFS market which is a novelty because it had not been produced for many years – and we have seen interest in European underlying. In fact, since the Trump’s choice there have been more flows in European ETFs than in North American ETFs and, which has continued its usual march, have been the Global ETFs, which have captured around 40,000 million. So far this year, in the first quarter Europe it has caught 100,000 million, a rhythm of 30,000 million per month of net collection, and April has meant a slowdown in which there have only been half of the flows, around 15,000 million.
And if we do a Estimation of where we could end the year, We talked about a figure around 300,000 million, compared to the 260,000 million of 2024 that were already a record year. With what we see a certain relocation of geographies, some slowdown and yet it is seen that the ETFs remain the vehicle of investor preference and that they continue to offer all their characteristics that are useful for their investment.
What sectors have been more and less punished?
It is a very interesting question because we can do an analysis one month, in the month of April, of the immediate effect of the tariff announcement of April 2 or we can do a slightly longer analysis like three months.
Three months we see that More harmed sectors have been in the ITU Communication Services and discretionary consumption. These have a drop between 9%and 14%and yet, if we go to an analysis only one month, of the month of April, we see that just two of these It Communications Services are those that are positive, while the one that is negative is energy, which is -13%. What does this mean? The volatility in the market. We have had intradiaries in some sectors and in some markets such as the US of +/ -10 %.
This means that volatility is large and that ETFs are a great tool because they allow this intra -entranges, and take advantage of market opportunities with such volatility. What will happen in the future is difficult to predict, but we believe that uncertainty will continue to give opportunities to enter variable income.
Are you seeing a flow of flows from global ETFs to more localized or sectoral ETFs by protection?
Here we have seen two main effects: yes there has been a relocation of flows, output of North America and entry into Europe, but not so much a flow out of global products. Global products have continued to work quite well and proof of this are € 40,000 million of net flows in the last four months. What we have seen is a different orientation of these global flows.
How are the technology and semiconductor ETFs reacting to the rebound of commercial protectionism?
21% of the weight of the MSCI World is the 7 magnificent North American ones, 50% are the rest of North American companies and 29% are the rest of companies in the world. The magnificent 7 have almost the passage of the rest of the world. Obviously this has been growing, the US weight in the index in recent years has gone from 50% to 75%. It is true that many investors consider that there is a high risk of concentration in the American market. We have seen two trends: 1) Customers trying to diversify in the US well separating the United States from the world to moderate the relative weight of each of the two block and 2) Invest through the MSCI World Equal Weighted that allows you to diversify that high exposure to the United States. In fact, If the US weighs around 70-75%, in an equal weighted index weighs only 35% And, while exposure to IT in the MSCI World is 25%, in the Equal Weighted it is reduced to 10%. Investors are looking for this type of diversification.
In addition, we have seen a high interest in European defense products. There is great interest, especially based on two pillars: the European Decision to Rearme which gives 800,000 million to the Rearme Plan of Europe and the other SAFE Plan, which gives 150,000 million in loans for the same, this combined with that 65% of that investment has to be made in defense or related companies, has pushed this type of investors a lot. There is much interest on the part of the final investor.
In these two trends we have recently launched two products, one from Equal Weighted World and another European Defense.
In the end, ETFs give liquidity to the market and what has been seen is an increase in hiring volumes, which gives good faith of how effective and efficient they are to channel customer investments. What is true is that volatility has been great, as I told you before, we have come to see falls of more than 20 % or 30 % in technology indices. But it is true that, as we have seen in April, it has been one of the few sectors that has ended up positively which denotes that are products very affected by volatility and uncertainty. Without a doubt I believe that during the rest of the year we will continue to see this volatility and this uncertainty with the information that comes to us through new tariff decisions or the existing geopolitical risks.