ETF News and Views (April 10 to 14, 2023)

Crypto bull market

The crypto bull market continues to roar on, as Bitcoin recently jumped to a nine-month high, crossing the key $30,000 mark. This follows a strong rally in March, during which major cryptocurrencies overcame negative headlines from the collapse of Silvergate Capital and US regulators taking action against top crypto exchange Binance.

Digital currencies have emerged as the top-performing asset class in Q1 2023, as investors continue to pour money into the sector. The Grayscale Bitcoin Trust (GBTC), with over USD 19 billion in assets under management, has gained +110.25% year-to-date, highlighting the growing popularity of digital currencies among investors.

This week, the ProShares Bitcoin Strategy ETF (BITO) gained 8.348%, while the ETC Group Physical Bitcoin (DE000A27Z304) earned 8.813%. Overall, crypto-related ETFs earned 9.651% week to date.

Cryptocurrency

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Long duration government bond ETFs see positive flows amid rising yields 

Investors showed a preference for long duration government bond ETFs this week, with significant net inflows recorded despite rising yields. Yields on the 10-year US Treasury note rose from 3.29% to 3.51% (+22.5 basis points) since April 6th. In Europe, the yield on the 10-year German Bund jumped 25.1 basis points from 2.181% to 2.432% over the same period.

The performance of long-term government bond ETFs has been negatively impacted by rising yields. As an illustration, the iShares 20+ Year Treasury Bond ETF (TLT) dropped 3.22% while the iShares 10-20 Year Treasury Bond ETF (TLH) lost 2.54% over the previous week. Government long-term maturity ETFs in general were down 3.13% during the same period but recorded net inflows of $898 million.

And it’s a similar story in Europe where the iShares € Govt Bond 15-30yr UCITS ETF and the Lyxor Euro Government Bond 25+Y (DR) UCITS ETF shed 4.54% and 3.42% respectively. Euro government bond long-term maturity ETFs had net inflows of €97 million but lost 3.358%.

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China Tech stocks slump on a new AI regulation proposal

Chinese tech stocks took a hit this week as new AI regulation suggested by the Cyberspace Administration of China sparked a sell-off. The proposal calls for Chinese companies to comply with certain government protocols in order to offer AI services, which would have a significant impact on many tech giants.

Investors responded swiftly by selling off shares in Chinese tech companies, causing a slump in the market. The Invesco China Technology ETFand the KraneShares CSI China Internet ETF were among the biggest losers, dropping 3.37% and 3.15% respectively over the week. As a result, China Tech-related themes such as China Disruptive technology ETFs (-1.615% WTD) and China Digitalization ETFs (-3.152%) took a nosedive. 

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