DAX ETF

The German DAX is one of the most popular market indices in Europe. This is not a surprise of course as Germany has been the best performing European economy since many years and even worldwide there are not many countries that do much better.

Despite the fact that Germany is the largest economy in Europe and that it harbors many large and important companies the DAX market index only consists of 40 stocks of publicly traded German companies. That is a bit of shame I think.

Another thing to keep in  mind is the fact that the DAX consists of the 40 largest companies measured by the peculiarly rules of the DAX itself. There are many rules and regulations, and some are a bit complex and hard to grasp I may say.

What it boils down to is that not every company within this magnificent 40 will always have a larger market capitalization than others that are trading outside the DAX. I will not dwell on that any further here otherwise it would become a little boring to say the least.

All in all I would have been glad if the DAX would consist of much more than 40 companies. At this moment some market sectors are overrepresented. Especially the chemical industry, car manufacturing and industry in general take up a large part of the DAX 40 which makes a DAX ETF very dependent on the economic climate.

It also implies that in periods of economic downturn a DAX ETF always suffers hard. The sunny side of this is of course that in economic upturns the DAX 40 flourishes and outshines other European indices.

The DAX also deviates in another respect. Most market indices do not include paid dividends, but the DAX 40 does. Because of this the DAX will rise much faster than other market indices such as the AEX or CAC 40 that do not comprise paid dividends.

In a situation that most market indices will decrease the DAX decreases in a less rapid pace due to the dividends within the index. The paid dividends here will act as a brake on declining prices of the DAX and the traded ETF. In a way you might say that the DAX will give you a better view of the total return on investment as it comprises the paid dividends. 

Lyxor DAX (DR) UCITS ETF

There are many ETF’s to trade if you want to trade the DAX, I myself have chosen the Lyxor DAX ETF  as it provides you with lower costs and high turnovers.

For this DAX ETF Lyxor has opted for physical replication which means they are actually buying the underlying stocks. This also is an advantage in my opinion. 

All my transactions older than 1 month FOR FREE: Click here