Lyxor CAC 40 (CAC) - 04/07/2018
Short Term strategy: Negative (30%) / Trend -
Long Term strategy: Positive (100%) / Trend =
Characteristics of the ETF
The CAC ETF (Lyxor) replicates the CAC 40 index, which is composed of the 40 largest French securities representative of the main sectors of the french economy, while the securities are selected and weighted according to the size of their floating market capitalization.
The costs of the ETF CAC are quite low at 0.25% and the AUM is 4547M€. Replication is direct (physical) and there is a dividend distribution policy.
Alternative ETFs: C4D (Amundi in Euro), E40 (BNP in Euro)
Latest developments
In 2017, the CAC40 achieved a performance of 9.3% and after a rather chaotic first part of the year is now stable in 2018.
The CAC40 continued to enjoy in 2018 the excellent performance of luxury stocksthat are weighing more and more in the index with the recent arrival of Hermes, nearly 14% of the index including Loreal. However, US pressure on the Chinese economy and currency lead to profit taking on the sector, which remains significantly exposed to China. The index is also supported by Total, which continues to benefit from the appreciation of crude prices.
The black spot remains the poor performance of financials penalized by the monetary policy of the ECB that will wait until 2019 to normalize its monetary policy.
The risks to global growth become more tangible with the trade war initiated by D.Trump, which could cause increased volatility on the index which also benefits from a cycle of rising corporate profits well installed (+ 8% estimated in 2018) coupled with reasonable valuations (PER of 15x), which limits its bearish potential.
Index & components
It should be noted that the 10 main holdings (which represent about 52% of the index) belong to very different sectors, unlike the DAX (overweight in industrial stocks) or the FTSE100 (pharmacy and financials), the CAC40 is indeed more composite in its sectoral composition.
However, three high-weighted stocks, Total (10.7%), LVMH (6.9%) and Sanofi (6,8%), can influence the index according to their own fundamental factors, which represents a bias. From a sectoral point of view, we can see that the consumer goods sector represented by luxury goods and cosmetics such as LVMH or Loreal, is the most important for the index (20.4%), followed by industry (18.7%), financials (12.1%) and energy (10.8%).
The CAC40's stocks are often world leaders with a very international exposure, and little dependence on the domestic market and with a strong sensitivity to the US Dollar. French econoy is back to growth, but especially investors regained confidence with the election of Mr Macron, a liberal and pro-European. The risk premium linked to the disastrous catastrophe scenario in the euro zone began to decline as soon as the first poll results were released, but the positive impact on French growth linked to the election momentum and hopes for structural reforms as well as the lowering of corporate and capital taxes confirmed for the 2018 budget are still far from being fully integrated.
France is in the middle of a new cycle and strong, positive trends could start this time. The medium-term potential of the index is high, as the corporate earnings momentum now seems to have really kicked in after several false starts since 2012 - earnings growth was 15% in 2017 and is expected at 8% in 2018.
Financials remains key, but seems to be delayed in time due to the ECB that will wait until 2019 to normalize its monetary policy, because linked to the gradual rise in long-term rates with the resumption of growth and inflation expectations, as it is already the case in the US, and a more favorable political context.
Weekly data
The weekly chart shows the new corrective wave underway that is rapidly moving towards the EMA100, which had already played its supporting role during the February’s correction. The MACD turned down as well as the RSI, which comes as a confirmation of the further correction. The whole question now rests on the ability of the EMA100 to contain a new bearish attack.
Daily data
On the daily chart, it can be seen that the current correction is occurring without much volatility, unlike the first quarter correction. The current short-term rebound towards moving averages should result in buyers failing. The return to the major support of the 5000 pts is to be favored in a context of widespread deterioration of global equity markets.
ETF Objective
CAC is a UCITS ETF, listed in Euro, which seeks to replicate the CAC 40 index (40 french companies)
Characteristics
| Inception date | 13/12/2000 |
| Expense ratio | 0,25% |
| Issuer | Lyxor |
| Benchmark | indice CAC 40 (PX1) |
| code/ticker | CAC |
| ISIN | FR0007052782 |
| UCITS | Yes |
| EU-SD status | Out of scope |
| Currency | EUR |
| Exchange | Euronext Paris |
| Assets Under Management | 4 507 M€ |
| Replication method | Direct (Physical) |
| PEA (France) | Yes |
| SRD (France) | Yes |
| Dividend | Distribution |
| Currency risk | No |
| Number of Holdings | 40 |
| Risk | 3/5 |
Country Breakdown
| France | 96% |
| Switzerland | 1% |
| Luxemburg | 1% |
| United Kingdom | 1% |
| Belgium | 1% |
Sector Breakdown
| Consumer discretionary | 20% |
| Industrials | 19% |
| Financials | 12% |
| Energy | 12% |
| Consumer staples | 11% |
| Health Care | 9% |
| Materials | 6% |
| Others | 11% |
Top Ten Holdings
| Total SA | 11% |
| LVMH | 7% |
| Sanofi | 7% |
| BNP Paribas | 5% |
| Airbus | 5% |
| L'Oréal | 5% |
| Air Liquide | 4% |
| AXA | 4% |
| Vinci | 4% |
| Danone | 4% |