What Is 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.
- The MSCI EMU Index is a eurozone equity index which tracks mid- and large cap companies in 10 developed markets in the European Union.
- Roughly 85% of the EMU's free float-adjusted market capitalization is covered by the index.
- The index is heavily weighted in holdings from France, Germany, and the Netherlands.
- Anyone in the U.S. who wants to invest in the index can do so through the iShares MSCI Eurozone ETF.
Understanding the MSCI EMU 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 its 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. The Fund’s investment advisor is Barclays Global Fund Advisors.
As of Nov. 29, 2019, the index was comprised of 244 constituents. The index's top five constituents were SAP (information technology), Total (energy), LVMH Moet Hennessey (consumer discretionary), ASML Holding (information technology), and Sanofi (health care). Financials dominated the index making up just under 17%, followed by industrials, consumer discretionary, and consumer staples. The weighting by country was as follows:
- France: 35.53%
- Germany: 27.26%
- The Netherlands: 12.25%
- Spain: 8.74%
- Italy: 7.3%
- Other: 8.93%
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 Dec. 9, 2019, the iShares MSCI Eurozone ETF's value was listed at $6.18 billion, with a P/E ratio of 16.39. The fund's expense ratio was 0.47%. The top five companies held in the ETF by value are:
- ASML Holding
As of Sept. 30, 2019, the ETF returned -2.22% in one year, 2.87% in five years, and 2.32% since its inception—all slightly lower than the benchmark MSCI EMU index.