WisdomTree Newsletter 7 Nov 2023
Welcome to the 7th issue of WisdomTree's newsletter. In this update, we will share our latest insights, resources, podcasts and company news.
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Investor Inspiration Award ESG
We're thrilled to announce that WisdomTree Artificial Intelligence UCITS ETF has been honoured with the Investor Inspiration Award for ESG (categorised under Article 8 or 9 of SFDR). Among 939 contenders in the category, we led with the most significant growth in monthly page views on the Trackinsight website.
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Crypto outlook: new flows needed to mark the end of the crypto winter
The short-term crypto outlook is uncertain as the industry could face some liquidations in October. The most important potential catalyst for the price of bitcoin would be the approval of a spot bitcoin exchange-traded fund in the US combined with a bitcoin halving event, expected in April 2024. Macro matters, improved liquidity, and lower rates have the potential to benefit crypto prices.
Read more here.
Entering or exiting thematic strategies based solely on valuations could be a trap
Timing thematic investment success hinges on understanding the theme and its drivers more so than on valuations and fundamentals. Themes are driven by various factors over time, from regulatory changes to technological advances. Understanding those factors and how they impact the themes are the main drivers of performance. This is why expertise is the key to thematic investing.
Read more here.
Looking back at equity factors in Q3 2023 with WisdomTree
Despite good performance in July, Q3 saw markets reverse course and post negative returns. After two quarters of Growth dominance, Value and High Dividend outperformed in Q3. Looking forward, it is quite likely that market breadth continues to increase, favouring Value and Dividend stocks.?
Read more here.
????Thought Leadership
Gold Outlook to Q3 2024
Gold’s value has been influenced by geopolitical tensions, appreciating US Dollar, and bond sell-offs. Despite these challenges, gold, viewed as an 'insurance asset', remains resilient, demonstrating a significant rebound. Strong retail demand in China and Turkey, alongside continuous central bank activities, bolster its position. Global risks enhance its appeal as a hedge against financial, geopolitical, and inflationary uncertainties.
Read the full outlook here.
WisdomTree Gold Monthly
Gold?has demonstrated resilience against macroeconomic headwinds such as higher bond yields and a strong US dollar, rising 20% YoY due to its role as a safe-haven asset amidst geopolitical uncertainties. Retail demand remains strong, especially in China, while institutional demand is subdued. Current trends suggest gold’s continued appeal as a strategic hedge against global risks.
Read the full update here.
Commodity Monthly Monitor: Gold and oil take centre stage as geopolitics rise to the fore
The latest edition of the WisdomTree Commodity Monthly Monitor is now available.
Download the full report here.
Thematic Monthly Update
Throughout September, thematics in line with global equities, continued to suffer in light of a more resilient US economy and the “higher for longer” narrative communicated by the Federal Reserve. All themes but one in the WisdomTree Thematic Classification posted negative returns for the month, with seven beating the global equity benchmark, the MSCI ACWI. Driven by performance, the total AUM in thematic funds in Europe dropped further to $296 billion but are still up $7.7 billion year-to-date. Year-to-date flows continue to be negative with around $4.6 billion taken out of thematic strategies in Europe.
Download the full report here.
???Podcasts
Crypto Clarified: Why Macro Matters in the Crypto Space
In this episode, Ben is joined by Mirva Anttila, Director in Digital Assets Research at WisdomTree. Together they cover a lot of macro and the outlook for the next six months or so. Mirva also explains why macro matters for the Crypto Space.
?? Market Commentary
COMMODITIES: Geopolitics driving volatility in oil prices
The oil market has recently witnessed significant fluctuations driven by geopolitical tensions in the Middle East, increasing market volatility, although there’s been no direct impact on physical supply. Prices surged in mid-September due to production cuts and low inventories but dropped in early October on macroeconomic concerns and declining U.S. demand. The International Energy Agency forecasts 2.3 million barrels per day demand growth in 2023, primarily from China, with a slowdown to 900,000 barrels per day in 2024 due to post-Covid effects and energy efficiency improvements. OPEC+[1] is expected to maintain voluntary production cuts, while non-OPEC+ producers will dominate global supply growth. Uncertainty persists, particularly in the Middle East.
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COMMODITIES: Gold lifted by geopolitics despite macroeconomic headwinds
Gold has made meaningful gains in recent days despite many macroeconomic headwinds (higher bonds yields and a strong dollar). The Israel-Hamas War that many worry could become a broader regional conflict, has driven greater interest in the metal. Gold has had a long history of being a geopolitical hedging instrument and has performed true to its reputation. Gold continues to defy its historic relationship with bonds, with bond prices falling hard while gold prices have risen. Bond yields have risen to the highest level since 2007, which would normally place immense downward pressure on gold. The geopolitical premium, however, has helped gold rise to its highest level since May 2023 in US dollar terms. Gold in terms of the Euro, Sterling and Yen are all trading at record highs. The fact that gold isn’t trading at record highs in the US is a statement about the strength of the US dollar.
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Source: WisdomTree, Bloomberg, data as of 01 November 2023.
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Thank you for reading our latest newsletter.
This material is prepared by WisdomTree and its affiliates and is not intended to be relied upon as a forecast, research or investment advice, and is not a recommendation, offer or solicitation to buy or sell any securities or to adopt any investment strategy. The opinions expressed are as of the date of production and may change as subsequent conditions vary. The information and opinions contained in this material are derived from proprietary and non-proprietary sources. As such, no warranty of accuracy or reliability is given and no responsibility arising in any other way for errors and omissions (including responsibility to any person by reason of negligence) is accepted by WisdomTree, nor any affiliate, nor any of their officers, employees or agents. Reliance upon information in this material is at the sole discretion of the reader. Past performance is not a reliable indicator of future performance.
[1] The Organization of the Petroleum Exporting Countries and its partners.