Stoxx600 Net Return (MEUD) : Corrective phase, minimum service?

Lyxor stoxx 600 Net Return (MEUD) - 17/07/2017

Short term strategy : Negative (40%) / Trend +
Long term strategy : Positive (95%) / Trend =

Characteristics of the ETF

The ETF MEUD allows to track the European benchmark index which benefits from a very large depth with 600 large caps and a great diversity by its exposure to the main sectors and countries of the European Union, and also outside the euro area.

We use this index mainly as a benchmark for our portfolios, and analyse its behavior with much attention because the evolution of this index determines our strategy by sector and geography.

The Index is fairly balanced in its weighting with 4 major sectors accounting for two-thirds of the capitalization, first with the consumer goods sector, discretionary and Staples (25%) with agrifood giants such as Nestlé or AB-Inbev and stocks of luxury, cosmetics and fashion such as LVMH, and Inditex ; Financials (21%), industrials (14%) and healthcare (13%), energy stocks represent only 5% and basic ressources 8% of the index.

Furthermore, it should be noted that there is a certain level of exchange rate risk in this index because it is constituted at 27% of UK stocks and 15% of Swiss, even if the securities concerned are international and fairly exposed to the dollar. The stoxx600 is very representative of the European economy thanks to its sector weighting, including oil which is less significant than in some national indexes (such as the CAC40), while the financial sector (banking and insurance) remains a key compartment with 20% of the weighting but without reaching the weight of the Italian or Spanish indexes (33%).

The ETF MEUD closely replicates the Stoxx600, with reasonable fees of 0.07%, recently divided by 2! The volatility of the stoxx600 is lower than that of national indexes, because this index is much more diversified and without sectoral bias. The Stoxx600 ended the year 2016 with a slight increase of 1.7%, thanks to a very good month of December and after having spent most of the year in the red. The year 2017 is so far more bullish (+9.2%) due to the decrease in the political risk premium after the elections in the Netherlands and especially in France, while the theme of the rising rates and reflation is now at the heart of the debate. The Q2 2017 company results are highly anticipated as they could validate the scenario of a cycle of upward revisions of corporate profits which should bear the index in the coming months. The rise in the Euro/USD is to be monitored, especially the level of 1.15 because exceeding it could weigh negatively on the Index, which seems rather likely if the normalisation of the monetary policy of the ECB is confirmed.

Monthly data

The analysis of the monthly Chartsshows that the upward trend remains very strong despite thenegative candlestick in june (-2.5%), a move that does not seem to be followed, on the contrary, in July (+ 2% half of the month) due to thestrong bullish reaction last week in the wake of the dovish FOMC. If it seems somewhat premature to signal the end of the correction, especially in a period of corporate results, anyway the magnitude of the movement should be fairly low given the lack of bearish momentum.

All long-term technical indicators are positive.

Weekly data

Analysis of the weekly Charts shows that the corrective momentum that began in mid-May and accelerated at the end of June, had a stopping point this week with a bullish candlestick of respectable amplitude forming a pattern likely to end this correction phase. A confirmation remains necessary on the continuity of the movement avoid a reversal movement this week is needed- and a bullish crossing of the MACD would be an additional positive factor.

The next resistance/target is the peak of last May at around 800 points,exceeding it would confirm the upturn and the rise of new highs.

ETF Objective

MEUD is a UCITS compliant ETF that aims to track the benchmark index Stoxx600 Net Return EUR

Stoxx600 Net Return represents large, mid and small cap capitalisation across the European region


Inception date 03/04/2013
Issuer Lyxor
Expenses 0,07%
Benchmark Stoxx 600
Ticker MEUD
ISIN LU0908500753
EU-SD status Out of scope
Exchange Euronext Paris
Assets Under Management 144 M€
Replication Method Direct (Physical)
Dividend Capitalisation
PEA (France) Yes
SRD (France) Yes
Currency Risk Yes
Number of Holdings 600
Risk 3/5

Country Breakdown

United Kingdom 25%
France 16%
Germany 15%
Switzerland 13%
Netherlands 5%
Spain 5%
Sweden 5%
Others 16%


Sector Breakdown

Financials 21%
Industrials 14%
Consumer Staples 13%
Health Care 13%
Consumer Discretionary 12%
Materials 8%
Energy 5%
Others 14%

Top Ten Holdings

Nestlé 3%
Novartis 2%
Roche 2%
Total 1%
Royal Dutch Shell 1%
BP 1%
British American Tobacco 1%
Siemens 1%
Sanofi 1%