Euro Stoxx 50 Index licensed to China Universal to underlie ETF

Feb 27th, 2013 | By | Category: Equities

Stoxx, a leading index provider, has announced that its flagship index, the Euro Stoxx 50, has been licensed to China Universal to serve as the basis for an exchange-traded fund (ETF). The CEOs of Stoxx and China Universal gathered at an official signing ceremony in Shanghai yesterday to mark the occasion.

Euro Stoxx 50 Index licensed to China Universal to underlie exchange-traded fund (ETF)

The eurozone blue-chip Euro Stoxx 50 Index has been licensed to China Universal to underlie an exchange-traded fund (ETF).

Founded in February 2005, Shanghai-based China Universal is one of the fastest-growing asset managers in China, with assets under management of $9 billion.

Although the Euro Stoxx 50 is one of the most widely tracked indices – there are currently 21 ETFs linked to the index globally – this is the first time that the blue-chip eurozone benchmark has been licensed to underlie an ETF in China.

Hartmut Graf, Chief Executive Officer of Stoxx, said: “The Euro Stoxx 50 Index is Europe’s most favoured and successful equity index. Its liquidity, transparency and rules based methodology makes the index an ideal tool to participate in the performance of the eurozone equity markets. Licensing this index for the first time in China is a big step for Stoxx as we enlarge our global footprint, and also highlights the importance we place on the Asian market.”

Shelley Yang, Managing Director of international business at China Universal, added: “The Euro Stoxx 50 Index is the most well-known flagship index for the eurozone. Its component stocks include BMW, Volkswagen, Total, Siemens, Nokia and other famous companies. By licensing the Euro Stoxx 50 Index, China Universal offers Chinese investors exposure to the eurozone, and also strengthens its overseas business.”

The Euro Stoxx 50 Index was launched in February 1998 and represents 50 supersector leaders in the 12 eurozone countries, namely Austria, Belgium, Finland, France, Germany, Greece, Ireland, Italy, Luxemburg, the Netherlands, Portugal and Spain. Major holdings include Total, Sanofi, BASF, Siemens and Banco Santander. Financials is the largest sector weight, representing 25.91% of the index, followed by Consumer Goods at 17.62%, Basic Materials at 10.48%, Industrials at 10.09% and Oil & Gas at 9.35%.

The index is weighted by float-adjusted market capitalisation, and each component’s weight is capped at 10% of the index’s total free-float market capitalisation. The underlying methodology ensures a well-balanced sector representation while capturing approximately 60% of the free-float market capitalisation of the Euro Stoxx TMI Index, a ‘total market index’ encompassing approximately 95% of the free float market capitalisation of Europe.

Within Europe, investors are spoilt for choice when it comes to the Euro Stoxx 50 Index. Almost every provider has an ETF based on the index. Among the largest, in terms of assets under management, are the iShares Euro Stoxx 50 ETF (EUE) with €4.7 billion, the Lyxor ETF Euro Stoxx 50 (MSE) with €3.9 billion and the db X-trackers Euro Stoxx 50 UCITS ETF (XESX) with €2.0 billion. The cheapest is the db X-trackers fund with a zero expense ratio (TER 0%) – Deutsche Bank earns a profit from stock lending.

In addition to conventional long delta one (unleveraged) Euro Stoxx 50 ETFs, there are also leveraged, inverse, equal weight, equal risk and buy-write (covered call) versions of the index available in ETF format.

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