What’s going on?

Investments in ETFs in Europe reached their highest levels since December 2019.

An exchange traded fund (ETF) is a basket of securities that trade on an exchange, just like a stock.

What does this mean?

Investors have been celebrating the potential coronavirus vaccines by loading up on stocks:

• ETFs in Europe: raked in $6 billion worth of investments 
• ETFs in the US have kicked off too: investors have put over $400 billion into them so far in 2020, compared to just under $250 billion last year.

Why should I care?

For markets: Portfolio rebalances might hinder the growth

• JPMorgan is expecting investors to sell $300 billion worth of global stocks by the end of 2020.
• Stock markets did so well in Nov that investment managers are thought to rebalance their portfolios (selling stocks and buying bonds to manage their risk), which could obstruct the stock market from climbing higher.

The bigger picture: Stocks outside the US might be of play

• Goldman Sachs reckons stocks are more attractive than bonds.
• It’s particularly keen on stocks outside the US like Europe, Japan, and emerging markets: they’re lagging behind right now, but are thought to catch up over the next 3 months.
• Beyond that, GS thinks stocks in all regions will be looking good a year from now.

Content source:
1. Finimize. (2020) Cash Injection. Available at: https://www.finimize.com/wp/news/cash-injection/ [Accessed on November 24, 2020]
2. James Chen. (2020) Exchange Traded Fund (ETF). Investopedia. Available at: https://www.investopedia.com/terms/e/etf.asp [Accessed on November 24, 2020]