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Euro Stoxx 50 Index (Europe)

A stock market index is a measurement of a portion of the stock market. It is calculated from the prices of selected stocks (often a weighted average). It is a tool used by financial managers and investors to describe the market, and to compare the return on specific investments. Below you will find an interactive chart of some of the world's largest stock indexes. What is the Euro Stoxx 50 Index?

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The Euro STOXX 50 Index is a market-weighted index of the 50 largest companies in the 11 Eurozone countries (Austria, Belgium, Finland, France, Germany, Ireland, Italy, Luxembourg, the Netherlands, Portugal, and Spain. The companies are selected from the 19 supersectors in terms of free-float market capitalization. The index is part of the STOXX Limited blue-chip index family. The 50 companies in the index make up approximately 60% of the free-float market cap of the EURO STOXX Total Market Index (TMI).

Introduction

The United States stock exchanges have been in a historic bull market. Since 2011, the S&P Index has returned nearly 200%. Conversely much has been written about the weakness in the European economy. With that said, investors who are looking to gain some safe international exposure in the Eurozone can look at the Euro STOXX 50 Index. Since 2011, the Euro STOXX 50 has grown just a little over 25%. The Euro STOXX 50 Index is composed of the 50 largest blue-chip companies from the 11 countries in the Eurozone. In this article, we’ll go into detail on what the Euro STOXX index is, what are the components of the index and what countries have the highest percentage of the index.

What is the Euro STOXX 50 Index?

The Euro STOXX 50 Index is a market capitalization index. The index features the 50 largest blue-chip European companies (in terms of market cap) that operate within the Eurozone. These companies include Austria, Belgium, Finland, France, Germany, Ireland, Italy, Luxembourg, the Netherlands, Portugal, and Spain.

The Euro STOXX 50 Index typically represents 60% of the broader Euro STOXX index that contains large-, mid-, and small-cap companies operating in the Eurozone.

The Euro STOXX 50 Index is one of the most liquid indices for the Eurozone. It serves as the underlying index for a variety of financial products such as exchange-traded funds.

The market-cap-weighted index uses buffers to arrive at its fixed number of components. Selection methodology ensures a stable and up-to-date index composition. And fast-exit rules ensure the index accurately represents the performance of only the largest and most liquid companies in a sector.

History of the Euro STOXX 50 Index

The Euro STOXX 50 Index is part of STOXX Limited, which is owned by Deutsche Borse AG. The Euro STOXX 50 Index was launched in 1998 and was one of the first indexes launched by STOXX Limited. Since launching the Euro STOXX 50, STOXX Limited has expanded its offerings to go beyond the European market. The company now offers indexes in a large number of countries and regions.

What sectors are represented in the Euro STOXX Index?

The Euro STOXX Index includes the 19 supersectors in 11 Eurozone countries as measured by free-float market cap.  As of Sept. 30, 2019, the top 10 components in the Euro STOXX 50 Index were:

Company

Sector

Country of Origin

% of Index

TOTAL

Oil & Gas

France

4.99%

SAP

Technology

Denmark

4.59%

Linde

Chemicals

Denmark

3.84%

LVMH Moet Hennessy

Personal & Household Goods

France

3.81%

ASML Hldg

Technology

Netherlands

3.78%

Sanofi

Health Care

France

3.77%

Allianz

Insurance

Denmark

3.55%

Unilever NV

Personal & Household Goods

Netherlands

3.14%

Siemens

Industrial Goods & Services

Denmark

3.07%

Anheuser-Busch InBev

Food & Beverage

Belgium

2.87%

 

As of September 30, 2019, here are the top ten sectors and their associated weighting in the index.

  • Personal & Household Goods – 11.5%
  • Industrial Goods & Services – 10.7%
  • Technology – 10.5%
  • Health Care – 9.8%
  • Banks – 9.3%
  • Chemicals – 8.3%
  • Insurance – 6.8%
  • Consumer Services – 6.4%
  • Utilities – 5.3%
  • Food & Beverage – 4.9%

And here are the top eight countries with their percentage in the index:

  • France – 38.6%
  • Germany – 31.4%
  • Netherlands – 10.9%
  • Spain – 9.4%
  • Italy – 4.9%
  • Belgium – 2.9%
  • Finland – 1.0%
  • Ireland – 1.0%

How can investors invest in the Euro STOXX 50 Index?

Like the major exchanges in the United States, investors can’t invest directly in the Euro STOXX 50 Index. However, there are a number of passively managed index funds that track the Euro STOXX 50 Index. Most of these funds are exchange-traded funds. Perhaps the most popular of these index funds is the SPDR Euro STOXX 50 ETF (FEZ). This fund launched in 2002 and currently has $4.34 billion in assets under management. As of October 31, 2019, the FEZ was up 20.36% which was nearly identical to the return of the underlying index.

Some other popular funds that use the Euro STOXX 50 as its underlying fund include:

  • iShares Euro STOXX 50 UCITS ETF
  • DB X-Trackers Euro STOXX 50 ETF
  • DB-X Trackers Euro STOXX 50 UCITS ETF

The final word on the Euro STOXX Index

Diversification is a key strategy for every investor. For index fund investors, diversification goes beyond investing in different sectors. It also means being exposed to different areas of the global economy. Although at any given time, different regions may be outperforming or underperforming, one way to minimize risk while maximizing potential return is by choosing an index fund that selects the top-performing funds in that region. For the Eurozone, such an index is the Euro STOXX 50 Index. This is a market-cap-weighted index that provides exposure to the largest blue-chip stocks in Europe. In the last decade, this fund has gained about 25%. While this is far below the performance of the S&P 500 over that same timeframe, it can be a safe way for investors to gain exposure to the Eurozone.

 

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