Stoxx600 (MEUD) : End of the correction?

Lyxor stoxx 600 Net Return (MEUD) - 09/07/2018

Short Term strategy: Positive (70%) / Trend =
Long Term strategy: Positive (90%) / Trend =

Characteristics of the ETF

The MEUD ETF (Lyxor) created in 04/2013 replicates the STOXX600 Net Return index which is composed of the 600 largest European stocks representative of the main sectors, while the stocks ​​of the Euro zone represent approximately 53% of the index, there is therefore a significant exposure to other European currencies, in particular the British Pound and the Swiss Franc.

The fees of the ETF MEUD are quite low at 0.07% and the AUM is €1353M. Replication is direct (physical) and there is a dividend capitalization policy.

Alternative ETFs: C6E (Amundi in Euro), ETZ (BNP Theam in Euro), EXSA (iShares in Euro)


Latest developments

The Stoxx600NR finished the year 2017 on a rise of 10.6% justified by the double-digit corporate profits growth.

The year 2018 translates for the moment by a stability of the index (+ 0.3%), which reflects the fears of commercial war provoked by the United States and which could impact key sectors like automotive.

Political uncertainties remain, with a German coalition very weakened by the migrant crisis, a populist government in Italy and an ever more uncertain Brexit. However, the economic cycle remains well oriented and corporate earnings are once again expected to rise by 8 to 10% this year while valuations remain reasonable at around 15x current earnings.

The downside potential seems limited but volatility could increase depending on events, particularly related to the trade war that is now on between China and the US.


Index & components

The MEUD (Lyxor) tracker replicates the European benchmark, which enjoys a very important depth with 600 holdings ​​and a great diversity by its exposure to the main sectors and countries of the European Union, including outside of the eurozone.

This index is a benchmark for the European markets, and we analyze its stock market behavior with great attention because the evolution of this index partly conditions our sectoral and geographic strategy.

The index is fairly balanced in its weighting with 4 major sectors that represent two thirds of the capitalization. In the first position is the cyclical and sustainable consumer goods sector (23.6%), which includes food giants such as Nestlé or AB-Inbev, as well as luxury, cosmetics and ready-to-wear brands like LVMH or Inditex as well as the automotive sector; financial (19.8%) industry (13.8%) and health (12.8%). In this index, energy-related values ​​represent only 7.1% and raw materials 8.2%.

In addition, it should be noted that there is a certain level of currency risk in this index consisting of 24.8% of British securities and 12.8% of Swiss securities, even if the securities concerned are international and fairly exposed to the dollar.

The STOXX600 is very representative of the European economy because of its sector weighting, which is less favorable to oil than in some national indices (like the CAC40), while the financial sector (banks + insurance) remains a key compartment with c.20% of the weighting but without reaching the weight of the Italian or Spanish indices (c.33%). This balanced weighting allows MEUD to have lower volatility than the national indices, as this index is much more diversified and without sector bias.

The ETF MEUD has the advantage of replicating a broader index than the Eurostoxx50 and which also incorporates smaller capitalizations, but with a more dynamic path. The European economic cycle is currently being strengthened, which is validated both by the PMIs datas and also the results of companies above expectations. The ECB remains a factor of stabilization and the monetary normalization should be very progressive in the absence of inflation and despite the Bundesbank which would like a more restrictive policy, and the pressure linked to the rise in US long-term rates.

Weekly data

The weekly chart shows a positive trend over the medium term, but within a correction phase. The correction is currently contained by the EMA20 at 787 pts which is a pivot level. The rise can be restarted from this level, or conversely in case of a downward crossing, initiate a bearish movement up to the EMA100 located at 760pts. The events related to the trade war between China and the US, as well as the results of the companies should decide this direction.

Daily data

On the daily chart we can notice the current attempt of the index to end the current correction. The positive crossing of the MACD is a positive factor, but it will be necessary to cross the EMA20 upward to validate the recovery and terminate the corrective pattern. More generally, a return above the 800 pts level would validate the end of the correction in the short term.

ETF Objective

MEUD is a UCITS ETF, listed in EUR, and which seeks to replicate the STOXX Europe 600 (Net Return) EUR index


Inception date 03/04/2013
Issuer Lyxor
Expense ratio 0,07%
Benchmark STOXX Europe 600 (Net Return) EUR
Ticker MEUD
ISIN LU0908500753
EU-SD Status Out of scope
Exchange Euronext Paris
Asset Under Management 1353 M€
Replication Method Direct (Physical)
Dividend Capitalization
Currency risk Yes
Number of Holdings 600
Risk 3/5

Country Breakdown

United Kingdom 25%
France 17%
Germany 15%
Switzerland 13%
Netherlands 6%
Spain 5%
Sweden 4%
Others 15%

Sector Breakdown

Financials 20%
Industrials 14%
Consumer staples 13%
Health Care 13%
Consumer discretionary 11%
Materials 8%
Energy 7%
Others 15%

Top Ten Holdings

Nestlé 2%
Novartis 2%
Royal Dutch Shell 2%
Total 2%
Roche Holding 2%
BP 2%
British American Tobacco 1%
SAP 1%
Siemens 1%