STOXX European Indexing: What it is, How it Works, FAQ

What Is STOXX?

STOXX, a subsidiary of Deutsche-Borse Group (stock symbol: DBOEF), is a leading provider of market indexes that are representative of European and global markets. Some of the more notable indexes provided by STOXX include Euro Stoxx 50, Stoxx Euro 600, Euro Stoxx 50 ESG, and the Stoxx Global 1800.

Understanding STOXX

Indices provided by STOXX cover a wide range of equity market segments, including the broad market, blue chips, individual sectors, and global indexes.

While global indexes are also included, the majority of STOXX indices place an emphasis on the European market. The STOXX indices were created out of a joint venture between Dow Jones, Deutsche-Borse AG, and the SIX Group (formerly SWX Group) in 1997 and launched their first products in 1998.

The STOXX indexes have since become quite popular and are tradable on the futures and options market, and are also used as benchmarks for funds that trade in the European and global markets. The indices are licensed to more than 500 companies globally, which include the world’s largest financial products issuers, capital owners, and asset managers. STOXX indices are used not only as underlying instruments for financial products, such as ETFs, futures and options, and structured products but also for risk and performance measurement.

In addition, STOXX Ltd. is the marketing agent for DAX indices in Germany and the SIX index in Switzerland. STOXX has benefited from the recent upswing in interest in passive investing of indexed funds, where several of their indexes are employed as the benchmarks to be replicated.

The Euro Stoxx 50 Index

The most popular of their many index offerings—and which may now be the most popular European stock market index overall—is the blue-chip Euro Stoxx 50, which provides a way for investors to track and invest in the largest 50 stocks in the eurozone. The components of the index are selected by ranking each company in the 19 Euro Stoxx "Super-sector" indexes by free-float adjusted market capitalization.

The Euro Stoxx 50 index covers stocks from 8 eurozone countries: Belgium, Finland, France, Germany, Ireland, Italy, the Netherlands, and Spain. The Euro Stoxx 50 Index is licensed to financial institutions to serve as an underlying for a wide range of investments like futures, options, and exchange-traded funds (ETF).

The 40 largest companies that participate in these 19 indexes are automatically chosen as components of the Euro Stoxx 50 index. The remaining 10 are selected by a committee from among the 41st to 60th ranked companies, with preference given to existing components in order to reduce turnover.

The index is reviewed in September of each year, but there are criteria that can turn over components sooner, such as a bankruptcy, merger, or otherwise slipping from the ranks of the top 75 in terms of overall market capitalization.

Several single-country sub-indices are derived from the Euro Stoxx 50 Index. They include Euro Stoxx 50 Subindex France, Euro Stoxx 50 Subindex Germany, Euro Stoxx 50 Subindex Italy, Euro Stoxx 50 Subindex Netherlands, and Euro Stoxx 50 Subindex Spain. Each one covers Euro Stoxx 50 components from the indicated country.

As of June 10, 2021, some of the components in the Euro Stoxx 50 included (sector and the home country also listed):

• ASML Holding: Technology, Netherlands
• LVMH Moet Hennessy: Consumer products and services, France
• SAP: Technology, Germany
• Linde: Chemicals, Germany
• Total Energies: Energy, France
• Siemens: Industrial goods, Germany
• Sanofi: Health care, France
• Allianz: Insurance, Germany
• Schneider Electric: Industrial goods and services, France
• Air Liquide: Chemicals, France
• Daimler: Automobiles and parts, Germany
• BNP Paribas: Banks, France
• Airbus: Industrial goods and services, France
• Enel: Utilities, Italy
• Iberdrola: Utilities, Spain
• BASF: Chemicals, Germany
• Banco Santander: Banks, Spain
• Deutsche Telekom: Telecommunications, Germany

Investing in the Euro STOXX 50 Index

Exchange-traded funds (ETFs) are the simplest way to get exposure to the Euro Stoxx 50 Index. While mutual funds usually come with high management fees, ETFs can be bought and sold with relatively low management fees.

The two most popular Euro Stoxx 50 ETFs are the SPDR Euro Stoxx 50 ETF (NYSE: FEZ) and the iShares Euro Stoxx 50 ETF (EUE).

Other popular ways to gain exposure to major European stocks include:

• The Vanguard MSCI Europe ETF (VGK)
• The iShares S&P Europe 350 Index (IEV)
• The iShares MSCI EMU Index (EZU)

Of course, investors can always purchase European stocks listed on US exchanges through the use of American Depository Receipts (ADRs).

For example, Euro Stoxx 50 components like ING Group (ING), SAP (SAP), and Banco Santander (SAN) all have ADRs listed on the New York Stock Exchange.

The Stoxx Europe 600 Index

The Stoxx Europe 600 Index is derived from STOXX's Europe Total Market Index and is a subset of the popular Stoxx Global 1800 Index.

It has a fixed number of 600 components, representing large, mid, and small-capitalization companies from 17 countries in Europe: Austria, Belgium, Denmark, Finland, France, Germany, Ireland, Italy, Luxembourg, the Netherlands, Norway, Poland, Portugal, Spain, Sweden, Switzerland, and the United Kingdom.

As of June 10, 2021, some of the components in the Euro Stoxx 50 included (sector and the home country also listed):

• Nestle: Food, beverage, and tobacco, Switzerland
• ASML Holding: Technology, Netherlands
• Roche Holding: Health care, Switzerland
• Novartis: Health care, Switzerland
• LVMH Moet Hennessy: Consumer products and services, France
• Unilever: Personal care, drug and grocery stores, United Kingdom
• SAP: Technology, Germany
• AstraZeneca: Health care, United Kingdom
• Linde: Chemicals, Germany
• Novo Nordisk: Health Care, Denmark

The Stoxx Global 1800

The Stoxx Global 1800 Index is composed of a fixed number of 1800 components from the world's most developed markets. Its intention is to provide broad but liquid exposure.

The Stoxx Global 1800 Index is made up of 600 European, 600 American, and 600 Asia/Pacific region stocks. In fact, they're represented by the Stoxx Europe Index, the Stoxx North America 600 Index, and the Stoxx Asia/Pacific 600 Index.

As of June 11, 2021, some of the components in the Euro Stoxx 50 included (sector and the home country also listed):

• Apple: Technology, US
• Microsoft: Technology, US
• Amazon: Technology, US
• Royal Bank of Canada: Banks, Canada
• Toyota Motors: Automobiles and parts, Japan
• Softbank Group: Telecommunications, Japan
• Mitsui & Co: Industrial goods and services, Japan
• Unilever: Personal care, drug, and grocery stores, United Kingdom
• Novo Nordisk: Health care, Denmark

The Euro Stoxx 50 ESG Index

The Euro Stoxx 50 Index is a reflection of the Euro Stoxx 50 Index, but with standardized Environmental, Social, and Green (ESG) screens applied for global standards, controversial weapons, thermal coal, military contracting, and tobacco.

Companies in the Euro Stoxx 50 are removed until 20% of the initial components are excluded. Each component is then replaced by a Euro Stoxx company with a higher ESG score from the same sector as the excluded component.

As of June 11, 2021, some of the components in the Euro Stoxx 50 ESG Index included (sector and the home country also listed):

• ENI: Energy, Italy
• Pernod Ricard: Food, beverage, and tobacco, France
• Worldline: Industrial goods and services, France
• Danone: Food, beverage, and tobacco, France
• Daimler: Automobiles and parts, Germany
• Deutsche Post: Industrial goods and services, Germany
• Vinci: Construction and materials, France

STOXX FAQs

Does STOXX Include U.K. Companies?

Yes. While the Euro Stoxx 50 Index doesn't include any companies from the United Kingdom, some of STOXX's other indices do.

For example, UK-based companies Unilever and AstraZeneca are two components that make up the Stoxx Euro 600 Index.

What Are the U.S. Equivalents of the STOXX 50 and STOXX 600?

Since the Euro Stoxx 50 Index is an index of large European blue-chip companies, the Dow Jones Industrial Average (DJIA) represents a good US equivalent.

The DJIA tracks 30 of the largest publicly-owned blue-chip stocks trading on the New York Stock Exchange and the NASDAQ. As of June 2021, components of the Dow included the likes of Apple, Coca-Cola Company, Goldman Sachs, Walmart, and The Walt Disney Company.

The Stoxx 600 seeks to offer broader exposure to European companies. Thus, it's often cited as a close European alternative to Standard & Poor's 500 Index (S&P 500).

The S&P 500 is a broadly diversified index consisting of the 500 largest companies in the US.

Do S&P and MSCI Have European Indexes?

The S&P Europe 350 Index is comprised of 350 large blue-chip companies from 16 developed European markets. Meanwhile, the MSCI Europe Index seeks large and mid-cap exposure across 15 developed countries in Europe.

What Countries Make Up the Highest Concentration in the STOXX 50?

France (17 components) and Germany (16 components) are the two countries that make up the highest concentration in the STOXX 50. They're followed by the Netherlands (6), Spain (4), Italy (3), Ireland (2), Belgium (1), and Finland (1).