FRANKFURT / LONDON (IT BOLTWISE) – The latest trade conflicts, in particular the USA’s tightened chip export restrictions towards China, are causing uncertainty for German companies. Nevertheless, the current market conditions offer attractive entry opportunities for long-term investors, particularly through cost-efficient ETFs.
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The recent trade conflicts, particularly the US’s tightened chip export restrictions on China, have sent markets into turmoil. These geopolitical tensions lead to uncertainty for export-oriented German companies that are heavily integrated into international supply chains. The technology and industrial sectors, which together make up over 45 percent of the DAX, are particularly affected. Despite these challenges, the fundamental starting point for German stocks remains stable.
The valuations of German stocks are moderate in international comparison. Many companies are benefiting from global reindustrialization and increasing defense spending. These factors always offer long-term investors attractive entry opportunities. Anyone who wants to invest in the German stock market in a broadly diversified manner will find cost-efficient solutions for different strategies with ETFs, from a focus on blue chips to mid caps to tech investments.
With a fund volume of EUR 8,631 million, the iShares Core DAX UCITS ETF (DE) EUR (Acc) is the largest ETF for investments in the 40 largest German companies. With a total expense ratio of just 0.16 percent, it is one of the cheapest DAX ETFs and tracks the index through complete physical replication. The accumulation variant reinvests all dividends automatically. SAP, Siemens and Allianz are also the top positions in the ETF according to their weighting in the DAX.
The Deka MDAX UCITS ETF, which covers German medium-sized companies with 50 positions, offers an attractive addition to the DAX heavyweights. With a TER of 0.30 percent and a fund volume of 743 million euros, the ETF is positioned in the middle cost segment. The quarterly volatility of 19.21 percent is higher than the DAX, but also offers higher growth potential. Top positions such as GEA Group, Scout24 and Lufthansa show the broader diversification across different industries.
Anyone who wants to focus on technology and innovation in the German market will find an interesting addition in the iShares TecDAX UCITS ETF. The ETF invests in the 30 largest German technology companies outside the DAX with a fund volume of 652 million euros and a TER of 0.51 percent. At 18.06 percent, the volatility is slightly higher than that of the DAX, which reflects the higher risk-return profile of tech stocks. Top positions such as Deutsche Telekom, Infineon and SAP show the concentration on technology-oriented future industries.
The German stock market remains fundamentally solid despite the domestic economic weakness and external disruptions. The current consolidation near the all-time high offers attractive entry opportunities for long-term investors. Anyone who takes geopolitical risks into account and has an investment horizon of several years can use the volatility to gradually build up their portfolio.
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