Whether it's the renaissance of bonds, the increasing importance of sustainability, multi-asset strategies or crypto coins: with ETFs, investors can participate in all trends on the capital market. This is one of the reasons why exchange-traded funds remain an attractive asset class that continues to gain importance in a challenging market environment. This could be the conclusion of the 14th ETF Forum of Deutsche Börse Group, which took place on 27 April at the Meliá Hotel not far from the Frankfurt Trade Fair.

Host Eric Leupold and his team welcomed around 250 participants, including industry representatives from 17 issuers, who presented their product range at an exhibitor stand. In his welcoming speech, the head of Deutsche Börse's cash market emphasised how important ETFs are in times of various international crises and rapidly changing conditions on the financial markets. "The times for all of us could not be more exciting. They make it necessary to drive innovation and develop innovative products. Stay innovative and stay loyal to Deutsche Börse as a partner," said Leupold, who sees artificial intelligence as a potential driver of innovation - also for the ETF industries. "Maybe at the next ETF Forum we will already see the first ETF on the market developed by AI."

Inflation and interest rate turnaround will keep the market busy for a while yet

Following the welcome, the first of five panel discussions looked at the impact of the energy crisis on the global economy. Three chief economists discussed these with moderator Corinna Wohlfeil, known to many participants as a stock market reporter for n-tv. The representatives of Allianz Global Investors, M.M. Warburg and Union Investment agreed that monetary policy in Europe and the USA will continue to tighten the interest rate screw a little in order to curb inflation. Nevertheless, inflation will not reach pre-crisis levels this year. "Next year, however, we could see consumer prices back in the 2 per cent range," said Carsten Klude of M.M. Warburg. Although there was fundamental agreement, the three chief economists had different recommendations on how to position themselves in the market in view of the greatly changed framework conditions. Jörg Zeuner (Union Investment) and Stefan Hofrichter (Allianz Global Investors) advocated a higher weighting of bonds, while Carsten Klude (M.M. Warburg) sees further potential in the equity market if a recession fails to materialise.

Bonds interesting again - especially as ETFs

The speakers on the second panel spoke of "the hour of the bond ETFs" due to the turnaround in interest rates. The three panelists agreed that the recovery on the bond market is increasing the demand for bond ETFs. Among other things, they discussed the question of the right time to enter the bond market and whether further interest rate increases are already priced into current bond prices. In any case, the fact that banks are currently only hesitantly passing on interest rate increases to their customers is beneficial for the demand for bonds. That is why many of them prefer short-dated bonds with attractive coupons to overnight money. According to Konrad Kleinfeld, one of the advantages of bond ETFs is their liquidity. Individual bonds are often illiquid and difficult to trade. ETFs are used by professionals to unwind and build risk, said the head of fixed income distribution EMEA at State Street Global Advisors. The cost of bond ETFs could also continue to fall in the future. "Price pressure has already really taken place in equity ETFs, and we are seeing the same in bond ETFs right now," Kleinfeld said. Sascha Rehbein also recommended investors to pay attention to the index and to bet on corresponding products. "The index delivers what bonds promise," said the portfolio manager for bonds at Weberbank.

Stability through a mix of assets and strategies

After a break with plenty of time for networking, the focus was on multi-asset & multi-factor strategies - in particular the question of how ETFs can be used as an effective investment instrument in times of high volatility. The consensus was that the exact mix of equities and bonds depends on the goals and attitudes of the investors. Depending on the market situation, multi-asset funds bring different returns due to their composition, but above all they offer stability. This is one reason why investors are willing to bear the somewhat higher costs compared to other ETF classes. Also with regard to their preferred factor strategy, a mix of low volatility, highest possible dividend and good market performance provides stability in the portfolio. "Every year, a different strategy comes out on top. The important thing is that you are invested at all," Sebastian Wielert, Head of Xtrackers Sales Germany, summed up. "However, the market share of mixed products is still very small in this country. Multi asset ETFs are a tender plant that needs to be developed," said Fabian Behnke, Head of Strategic Accounts Germany at Vanguard.

Better data and decisive action for sustainable investment policies

A panel on how to incorporate the transition to a low-carbon economy into investment policy focused on the market share of sustainable ETFs and their prospects. For 20-25 per cent of investors, sustainability is currently the most important investment objective, said Katharina Nickel, Head of Sustainable Business IPS & Institutional Clients at BNP Paribas. Adrian Breyer from UBS reported that about 20 per cent of the assets currently invested in ETFs are allocated to products that take sustainability criteria into account in their investment strategy. To be successful in this part of the market, it is also important to measure or prove sustainability. Veronika Kylburg, Director Global Benchmarks DAX at Qontigo, emphasised the great importance of data. "Everything stands and falls with data quality. The more data we have and the more accurate it is, the more meaningful the indices we form on this basis will be." The Corporate Sustainability Reporting Directive, which will be mandatory for the first time in 2025, will further improve data quality, added Katharina Nickel, who also sees an important lever in an active role for asset management. "Fund management can exert a positive influence through its voting behaviour and through dialogue with companies, for example by regularly having the sustainability balance sheet of companies in which it is invested explained to it," said Nickel.

A little crypto belongs in every portfolio

Finally, three experts spoke about the future of the crypto market - and were optimistic despite the insolvency of the crypto exchange FTX and the interim "crypto winter". Bernhard Wenger, Head of Northern Europe at 21Shares, was convinced, just like his discussion partners, that a spring will soon follow this one. "Many investors believe that crypto is here to stay. And gold and bitcoin are the most liquid alternative assets in the world. For this, there are numerous products that can be traded on the stock exchange and must meet high quality standards to do so." Nevertheless, Wenger warned to first look into cryptocurrencies before investing and to observe the principle that "not all coins are the same". Especially Bitcoin and Ethereum have been established so far, Wenger said. In the opinion of all panelists, however, a small share of crypto belongs in every portfolio in the future.