What Is the MSCI EMU Index?
The MSCI EMU Index is a market capitalization-weighted index maintained by MSCI that represents 10 developed markets in the EMU.
- The MSCI EMU Index is a eurozone equity index that tracks mid- and large-cap companies in 10 developed markets in the European Economic and Monetary Union.
- Roughly 85% of the EMU’s free float-adjusted market capitalization is covered by the MSCI EMU index and it is heavily weighted in holdings from France, Germany, and the Netherlands.
- Anyone in the U.S. who wants to invest in the MSCI EMU index can do so through the iShares MSCI Eurozone ETF.
Understanding the MSCI EMU Index
The MSCI EMU Index is Morgan Stanley’s eurozone market capitalization-weighted equity index. The index tracks mid- and large-cap companies in 10 developed markets in the European Economic and Monetary Union (EMU) which include Austria, Belgium, Finland, France, Germany, Ireland, Italy, the Netherlands, Portugal, and Spain. Roughly 85% of the EMU’s free float-adjusted market capitalization is covered by the index.
Morgan Stanley launched the EMU Index in April 1998. The methodology of the index is based on MSCI Global Investable Market Indexes. According to the fact sheet, the methodology is “a comprehensive and consistent approach to index construction that allows for meaningful global views and cross-regional comparisons across all market capitalization size, sector and style segments and combinations.” In essence, component companies are adjusted for available float and must meet objective criteria for inclusion in the Index.
The MSCI EMU Index seeks to measure the performance of the equity market of the EMU member countries, which includes those members of the European Union (EU) that have adopted the euro as their currency. The MSCI EMU Index Fund invests in a representative sample of securities included in the Index that collectively has an investment profile similar to the index.
As of August 2021, the index is comprised of 237 constituents. The index’s top five constituents, along with their index weight and sector, are:
- ASML Hldg (5.11%) – Information technology
- LVMH Moet Hennessy (3.86%) – Consumer discretionary
- SAP (2.61%) – Information technology
- Siemens (2.15%) – Industrials
- Sanofi (2.1%) – Health care
MSCI EMU Index sectors include Consumer Discretionary (17.96%), Industrials (14.87%), Financials (14.4%), Information Technology (13.6%), Consumer Staples (8.03%), Health Care (7.74%), Materials (7.27%), Utilities (6.18%), Communication Services (4.43%), Energy (3.78%), and Real Estate (1.8%).
MSCI EMU Index weighting by country as of August 2021 is as follows:
- France: 34.6
- Germany: 28.26%
- Netherlands: 13.07%
- Italy: 7.43%
- Spain: 7.36%
- Other: 9.28%
The one-year gross return for the index is 38.28%, while the 10-year gross return is 5.98%. Its dividend yield is 2.08%, while its price-to-earnings (P/E) ratio is 28.06.
Index investing is considered to be a passive investment strategy that tries to profit from returns that mimic a broad index while diversifying against risk. That’s because the index fund has a broad mix of assets instead of just a small number of investments. In order to capture these returns, investors purchase shares in exchange-traded funds (ETFs). These funds track the underlying index.
Anyone in the United States who wants to invest in the MSCI EMU can do so through the iShares MSCI Eurozone ETF. This fund is designed to follow the price and yield performance of publicly-traded securities in the aggregate in the European Monetary Union markets as measured by the MSCI MU Index.
The iShares MSCI Eurozone ETF follows the price and yield performance of publicly-traded securities in the aggregate in the European Monetary Union markets.
The iShares MSCI EMU Index Fund started on July 25, 2000. As of Aug. 4, 2021, 2021, the iShares MSCI Eurozone ETF’s value is listed at $8.2 billion, with a P/E ratio of 25.94. The fund’s expense ratio is 0.51%. The top five companies held in the ETF by value are:
- ASML Hldg. (ASML)
- LVMH (MC)
- SAP (SAP)
- Siemens N AG (SIE)
- Loreal (OR)
As of August 2021. the ETF’s 1-year return is 35.06%, its 5-year return is 10.63% and its return since inception is 3.5%.