Small Cap Europe (MMS) : Positive trend but bearish gap

Lyxor Small Cap Europe (MMS) - 13/05/19

Short Term trend: Positive (80/100)
Long Term trend: Positive (95/100)

Scores computed by our proprietary algorithms - cf methodology

Characteristics of the ETF

The ETF MMS (Lyxor), listed in Euro, replicates the UCIT Small Cap Europe Index, which targets Eurozone companies whose market capitalization is between € 200 and € 1500m, ie companies that are ultimately more medium in size than microstructures.

The ETF charges are 0.4%, and the replication mode is direct, with AUM of approximately 219M€. The dividend distribution policy is carried out by distribution.

Alternative ETF: IEIS (iShares USD) SMAE (Lyxor EUR)


Index profile

The index replicated by the ETF includes 460 companies with wide sectoral and geographic diversification which makes it a broad and very diversified index.

The specific risk is low because the first 10 lines represent approximately 10% of the fund, or about 1% for the most important lines, including iconic growth stocks such as Rubis, Rheinmetall or Orpea.

The major economies (Germany, France and Italy) account for 52% of the selection, leaving a significant share for the Nordic economies such as Finland or the Benelux.

The Small Cap ETF represents an opportunity to play the growth of the euro area with a risk even below the benchmark index (stoxx600) - due to the absence of large banks - a policy of dividend distribution and with a much more assumed growth profile. Indeed, sectors considered defensive-telecoms, basic consumption, utilities and energy represent only 15% of the MSCI Small caps index, while growth sectors (Technology / Hardware, Consumer Discretionary , health) represent about 1/3 of the index, the first sector remains the industry with nearly 20% of the capitalization. It should also be noted that unlike the Stoxx600, the United Kingdom is not part of the selection, MMS is therefore only focused on continental Europe and therefore there is no currency problem.

We believe that the Eurozone is attractive in the medium term if the economic recovery is confirmed supported by rather low interest rates and energy costs, while the political cycle is completed. Although valuations of growth stocks are still fairly demanding, and a temporary return to "value" cannot be ruled out, new technologies and new economic models, particularly those resulting from digitization, make this theme a " megatrend ".

The long-term potential is clearly in favor of growth stocks ​​and MMS which also includes industrial stocks ​​seems to us to represent an excellent risk / reward ratio in a long-term perspective with a positioning more advantageous than the stoxx600.

Monthly data

The monthly chart shows the uptrend of the index, which although chaotic, has not been challenged for more than 5 years. The MACD has been installed above the zero line since 2013 and the sharp correction of late 2018 has failed to dislodge it. However, the MACD is negatively oriented while the index pulls back by returning to its moving averages. A bullish reversal of the MACD would validate the start of a new bullish phase.

Weekly data

On the weekly chart we see the medium-term trend change validated in April by the crossing of the EMAs12 and 26 and the passage of the zero line by the MACD. A fairly abrupt return on the moving averages does not question the trend, while the EMA100 (at the same level as the EMA26) represents the major support and the pivot point of the trend. However the bearish gap opened this week should have a negative influence in the coming weeks.


MMS is a UCITS ETF, listed in EUR, which seeks to replicate the MSCI EMU Small Cap Net Return EUR Index (460 european companies)


Inception date 01/04/2005
Expense ratio 0,40%
Benchmark MSCI EMU Small Cap Net Return EUR Index
Issuer Lyxor
Ticker MMS
ISIN LU1598689153
EU-SD Status Out of scope
Exchange Euronext Paris
Assets Under Management 219 M€
Replication Method Physical
Dividend Distribution
PEA (France) Yes
SRD (France) Yes
Currency risk No
Number of Holdings 460
Risk 3/5

Country breakdown

Germany 24%
Italy 16%
France 13%
Netherlands 13%
Spain 11%
Belgium 8%
Finland 6%
Austria 4%
Ireland 2%
Others 2%

Sector Breakdown

Industrials 20%
Financials 16%
Information Technology 10%
Real Estate 10%
Health Care 9%
Communication Services 8%
Consumer Discretionary 8%
Others 19%

Top Ten Holdings

LEG Immobilien 1%
Cellnex Telecom 1%
ASR Nederland 1%
GB Mining Holding 1%
Orpéa 1%
Interxion Holding 1%
Galapagos 1%
Rheinmetall 1%
Merlin Properties Socimi 1%
Rubis 1%