Frankfurt-based index provider Solactive has partnered with Börse München to launch a new equity index providing exposure to the mid-cap segment of the German stock market.
Robert Ertl, CEO of Bayerische Börse AG.
The m:access Index covers ‘Mittelstand’ companies – those with market capitalizations between €5 million and €100m – that are listed on the m:access segment of Börse München.
Constituents are weighted by market capitalization, subject to a 15% cap per stock. Reconstitution and rebalancing occur quarterly.
The index currently consists of 63 stocks. In addition to German companies, it includes one Swiss, two Austrian, and two Dutch firms that meet the criteria for inclusion.
The mid-cap segment is often perceived as the ‘sweet spot’ of a stock market as mid-cap stocks have historically provided higher growth than large-caps while offering enhanced stability compared to small-caps.
Most mid-cap firms have longstanding business records with proven revenue streams, while many are able to sustain growth by maintaining competitive advantages through niche-specialization. These companies also provide greater exposure to their local economy compared to large-caps which tend to be more multinational in nature.
Robert Ertl, CEO of Bayerische Börse, the exchange operator of Börse München, commented, “With this index, Börse München is underscoring its claim to stand as the German stock exchange for small and medium enterprises (SMEs). With Solactive, we have found a reliable and experienced index provider that calculates both a performance index (GTR and NTR) and a price index (PR), providing both issuers and investors with reliable benchmarks.”
Timo Pfeiffer, Head of Research at Solactive, added, “We at Solactive find ourselves in the same shoes as the companies included in the m:access All-Share Index; like them, we provide our services all over the globe while retaining and carrying the “made in Germany” attitude with every bit of work we create.”
The m:access index will act as a competitor to Deutsche Börse’s MDAX Index, which consists of 60 German Mittelstand companies and is arguably the most popular German mid-cap benchmark currently available.
Solactive has launched several generic alternatives to well-known benchmarks in recent years, aiming to disrupt the market by offering these indices to product issuers at very low licencing fees.
Just last month, the Solactive Germany 30 Index, which is unashamedly similar to the well-known German large-cap DAX Index, was chosen to underlie a new ETF, the Deka Germany 30 UCITS ETF (ELFG GR), from Deka Investment.
ETF investors looking for exposure to German Mittelstand companies may wish to consider the Invesco MDAX UCITS ETF (DEAM GY) which launched at the beginning of the year. It is the cheapest ETF to track the MDAX Index with an expense ratio of just 0.19% and has grown its assets under management to €270m.