With the DAX trading at an all-time high and posting its best start to a year in a decade, interest in German equities is also backed up by fund flows.
Net purchases of German assets ETFs listed in EMEA[1] have climbed to EUR 1.36 billion this year,[2] the most for any similar period since 2015, according to ETFBook (Figure 1). Net flows into funds tracking a DAX family index[3] outpaced the broader market, amounting to EUR 1.38 billion. Of those, EUR 1 billion flowed into ETFs tracking the benchmark DAX, while EUR 190 million was poured into MDAX benchmark funds and EUR 5 million into SDAX benchmark ETFs.
Figure 1: Net flows into German assets ETFs
German stocks
The DAX rose 12.6% between January 1 and February 24, including dividend payments, its best performance for any similar period since it jumped 14.3% at the start of 2015.
The strong performance of German equities this year contrasts with a domestic economy mired in stagnation. At the same time, uncertainty about the composition of the next government failed to deter investors. Germans held a general election on February 23, handing the most votes to the center-right candidate Friedrich Merz of the CDU, who must now negotiate a coalition government with opposition parties.
The VDAX®, which tracks the implied volatility in German equities, was little changed in the run-up to the elections, trading below the levels seen for most of this decade.
To be sure, investors’ bullishness is not limited to Germany and has also lifted the STOXX® Europe 600 to a record high this year. The pan-European benchmark has closed at a new record in 12 sessions since January 23.
[1] The analysis includes 70 funds with a German focus, covering equities and fixed income.
[2] Data through February 24, 2025.
[3] STOXX Ltd., part of the ISS STOXX group of companies, is the administrator of the STOXX and DAX indices under the European Benchmark Regulation.