Euro Stoxx 50 – EU

Stoxx or Euro STOXX 50

Euro STOXX 50 is a stock index of Eurozone stocks which are designed by STOXX. Whereas STOXX is an index provider which is designed and owned by two groups Six Group and Deutsche Börse Group. If we talk about STOXX, the one and only goal of STOXX are to provide a blue-chip representation of super-sectors leader in the Eurozone Stocks. 50 largest and most liquid stocks are combined together in the creation of Euro STOXX 50. All the index features and options of this STOXX 50 are traded on Eurex. This is the most liquid products in Europe and well as in the whole world. On 26, February 1998 this Euro STOXX 50 was introduced. The whole composition of this STOXX 50 is reviewed annually in the month of September. This index is available in several currencies of the world such as USD, CAD and EUR. In this index calculations take place after every 15 seconds. The time of calculations in this index is from 09:00 to 18:00 CET. For the two currencies USD and EUR, calculations are taking place variant of any return type and in the case of other currencies like CAD, JPY and GBP the calculations are only taken place at the end of whole day calculation. The index futures and options on the Euro Stoxx 50, traded on Eurex, are among the most liquid such products in Europe and the world.

This index is derived from another index which is called 19 Euro STOXX. This 19 Euro STOXX is a regional super-sector index and this represents the largest super sectors leaders in the Euro zone based on the Free-Float Market Capitalization method. Approximately 60% of the free float capitalization of Euro STOXX Total Market Index, which is also known as “TMI”, is captured by this index. So due to this reason, this index covers about 95% of free float market capitalization of the represented countries. This index also serves as a basis for lots of single sub-indices such as Euro STOXX 50 ex-financials. This sub-index excludes all the companies, which are assigned to the ICB code 8000. This index is one of the best liquid indices for the Euro zone and also it is an ideal underlying for the benchmarking purposes of financial products.

On the other hand, Euro STOXX 50 also serves as an ideal underlying for lots of strategy indices like Euro STOXX 50 Risk Control indices. Buffers are also another feature available on this index. The purpose of using Buffers is to achieve the fixed number of components and maintain the stability of the whole index of the indices by reducing the changes like index composition changes. Selection methodology is another feature or option which ensures index composition stable and up to date. Also, there are two rules available which are used to ensure the index to accurately represent one of biggest and most liquid stocks and these rules are Fast-Entry and Fast-Exit.

History of Euro STOXX 50

On 26, February 1998 this index was introduced. The composition of this index is reviewed annually in the month of September. At the beginning of this index, there is only EUR currency available in this index. But now there are several currencies available in this index such as EUR, USD, and JPY. The high closing value from the creation of this index to till now is 5456. This value was recorded on 6, March 2000. At the end of the first working year, the closing value of the index is 982.

Weightage in Euro STOXX 50

The method through which share prices are weighted is Free-Float Market Cap method. This is a method with the help of which market capitalization of an index underlying companies is calculated. The free-float market cap can be calculated by taking the equity price and multiply it by the number of shares available in the stock market. In full-Market capitalization method it is a must for you to use all the shares readily available in the market but Euro STOXX 50 uses free-Float capitalization method which did not includes look in shares those held by government or promoters. Euro STOXX 50 is different from Dow Jones Industrial Average DJIA because DJIA uses price-weighted capitalization and this index is also different from S&P 500 because S&P use Market Capitalization Index.

Investing in Euro STOXX 500

There are 50 companies are included in the list of this index. These companies belong to 12 Eurozone countries. These countries include Australia, Germany, Greece, Finland, Italy, Spain, Netherlands, Portugal and Luxembourg. This index contains fixed number of components. The Eurozone is suffering from lots of crisis since 2010 so due to this reason its stock market has also reflected these problems. But nowadays its situation is pretty best. This is the great exposure for the investors because investors who want to invest their money Euro STOXX 50 provides Exchange traded funds which are plenty of good options to consider for them. However, it is very important for every investor to understand that most of the options provided by this are domiciled in only a few countries like Ireland and other European countries. In fact in December 2015 the only one company which offers Euro STOXX 50 Exchange Traded funds (ETFs) which are domiciled only in the United States.

Also, there is another list is which leads off with that company of 2 united states domiciled products and these products are followed by lots of best foreign domiciled Exchange Traded Funds (ETFs) in the whole category. It is the must for the investors that before considering a foreign domiciled Exchange Traded Funds (ETFs), Investors in foreign countries must learn about Tax Implementation on the foreign investment. In order to compile this index, some largest companies based on the method free-float Market Capitalization in every Eurozone country are added to the selection list of Euro STOXX 50. Later on, 50 companies who possess high standing and high market value are selected from the list which meets the liquidity requirements of this index. In every September, this index is reviewed and reconstituted. Components in this stock are weighted with the help of Free-Float Market Capitalization.

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