Small Cap Europe (MMS) : Stronger than the Stoxx600

Lyxor Small Cap Europe (MMS) - 20/09/2017

Short term strategy : Positive (60%) / Trend +
Long term strategy : Positive (95%) / Trend +

Characteristics of the ETF


The ETF MMS, 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 indirect (via swaps), with a reasonable AUM of approximately 307M€. Dividends are distributed.

Alternatives ETFs : IEIS (iShares, USD), SMAE (Lyxor, EUR)


Index & components

The index replicated by the ETF includes 465 companies with wide sectoral and geographic diversification which makes it a broad and very diversified index.

The value risk is low because the first 10 lines represent approximately 10.6% of the fund, or about 1.6% for the most important line, including iconic growth stocks such as Teleperformance, Wirecard, Orpea or MTU. The major economies (Germany, France and Italy) account for 58% 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 14% 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 23% 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 as the economic recovery is confirmed (+1.6% in 2017th), supported by historically low interest rates and energy costs, while the political cycle is nearing completion . Although valuations of growth stocks are now fairly demanding, and a temporary return to "value" can not 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.


Latest developments


The MMS ETF has increased by 17.9% since the beginning of the year, which is more than twice the performance of the stoxx600 (+ 8.2%).

Medium-sized companies are growing at a faster pace than larger companies, particularly in the technology, services and health sectors, whose themes are far from exhausted.

Concerning the industrial sector, the margin cycle is very favorable because companies margins are still far from 2007 levels before the financial crisis and the operational leverage is very important. The growth acceleration in the Eurozone will have a very favorable impact on this sector, which represents approximately 31% of the weighting (Industry and Materials).

Monthly data

The monthly chart shows a well established long term trend since 2013, and which has since been subject to regular but relatively limited corrections, as the M26E often acts as a resistance to the most serious corrections. Prices are currently accelerating again after a 3-months break.

New highs are expected to be recorded shortly, while prices show no signs of weakness.

Weekly data

The weekly chart shows a flat correction during the summer, which was less severe than that recorded on the Stoxx600 or the national indices. But an upturn is in progress and the highs of last May are about to be crossed shortly.

The MACD should soon give a bullish signal and validate the new bullish phase.

ETF Objective

MMS is a UCITS compliant ETF that aims to track the benchmark index MSCI EMU Small Cap Net Total Return.


Inception date 01/04/2005
Expense ratio 0,40%
Benchmark Euro Stoxx 50 Net Return
Issuer Lyxor
Ticker MMS
ISIN LU1598689153
EU-SD status Out of Scope
Exchange Euronext Paris
Assets Under Management 307 M€
Replication method Indirect (via a swap)
Dividend Distribution
PEA (France) Yes
SRD (France) Yes
Currency risk No
Number of holdings 465
Risk 3/5

Country Breakdown

Allemagne 25%
France 17%
Italie 16%
Espagne 9%
Pays-Bas 9%
Belgique 7%
Finlande 6%
Irlande 4%
Autriche 4%
Autres 3%

Sector Breakdown

Industrials 23%
Financials 14%
Consumer Discretionary 13%
Information technology 11%
Real Estate 9%
Materials 8%
Health Care 8%
Others 15%

Top Ten Holdings

Wirecard 2%
Teleperformance 1%
MTU Aero Engines 1%
Smurfit Kappa Group 1%
LEG Immobilien 1%
Kingspan Group 1%
Banco BPM 1%
Orpea 1%
Rubis 1%
Faurecia 1%