The DAX is Germany’s market index which comprises 40 of the biggest companies in Germany. If you’re bullish about Germany’s growth, you might want to consider holding a position in this index.
This article gives you an overview of the DAX, who should invest in it and how you can buy the DAX.
Here’s what we cover:
- What is the DAX Index?
- Who Should Invest In DAX?
- What are the Pros and Cons of investing in the DAX?
- How to invest in the DAX?
- Where can I get more information on the DAX?
What is the DAX Index?
DAX is a German stock market index made up of the 40 biggest companies in Germany by market capitalization. It is calculated using the ‘free-float methodology’, which means it’ll only consider liquid shares that can be traded in the market. Shares that cannot be bought and sold publicly (eg. treasury shares and shares held by the government) are not included in the calculation.
The DAX was started on 1 January 1985 with a base value of 1,000. It was originally also known as the DAX30 but has since been expanded to include 10 more companies on 20 September 2021.
According to exchange operator Deutsche Boerse, this change was made “in order to increase the quality of the DAX indices and provide a more comprehensive picture of Germany’s largest businesses.”
Which companies are in DAX?
The DAX Index components stocks are:
| Company | Ticker | Market Cap |
|---|---|---|
| Adidas | ADS.DE | 31.13B |
| Airbus Group | AIR.DE | 81.98B |
| Allianz | ALV.DE | 72.22B |
| BASF | BAS.DE | 39.43B |
| Bayer | BAYN.DE | 57.73B |
| Beiersdorf AG | BEI.DE | 23.19B |
| BMW ST | BMW.DE | 50.11B |
| Brenntag AG | BNR.DE | 10.53B |
| Continental AG | CON.DE | 14.16B |
| Covestro | 1COV.DEE | 6.46B |
| Daimler Truck Holding | DTG.DE | 22.59B |
| Deutsche Bank AG | DBK.DE | 17.41B |
| Deutsche Boerse | DB1.DE | 32.05B |
| Deutsche Post | DPW.DE | 47.85B |
| Deutsche Telekom AG | DTE.DE | 92.78B |
| E.ON SE | EOAN.DE | 18.83B |
| Fresenius Medical Care | FRE.DE | 10.67B |
| Fresenius SE | FME.DE | 13.45B |
| Hannover Rueckversicherung SE | HNR1.DE | 17.08B |
| Heidelbergcement | HEI.DE | 9.6B |
| HelloFresh | HFG.DE | 4.95B |
| Henkel VZO | HEN3.DE | 26.87B |
| Infineon | IFX.DE | 36.16B |
| Linde PLC | LIN.DE | 147.01B |
| Mercedes Benz Group AG (formerly Daimler) | MBG.DE | 62.83B |
| Merck | MRK.DE | 79.87B |
| MTU Aero | MTX.DE | 10.1B |
| Munich Re | MUV2.DE | 31.24B |
| Porsche | PAH3.DE | 22.11B |
| Puma SE | PUM.DE | 10.09B |
| Qiagen | QIA.DE | 11.15B |
| RWE AG ST | RWE.DE | 27.07B |
| SAP | SAP.DE | 107.45B |
| Sartorius AG VZO | SRT3.DE | 28.17B |
| Siemens AG | SIE.DE | 85.33B |
| Siemens Healthineers | SHL.DE | 54.96B |
| Symrise AG | SY1.DE | 15.34B |
| Volkswagen VZO | VOW3.DE | 88.06B |
| Vonovia | VNA.DE | 24.57B |
| Zalando SE | ZAL.DE | 7.09B |
10 new companies in the DAX40
As mentioned above, the DAX was expanded on 20 September 2021. These are the 10 companies that were added to the DAX index: (market cap accurate at the point of update)
| Company | Market Cap (in EUR) |
| Airbus SE (AIR.DE) | 81.98B |
| Siemens Healthineers AG (SHL.DE) | 54.96B |
| Sartorius AG (Pref. shares) (SRT3.DE) | 28.17B |
| Porsche SE (PAH3.DE) | 22.11B |
| Zalando SE (ZAL.DE) | 7.09B |
| Symrise AG (SY1.DE) | 15.34B |
| HelloFresh SE (HFG.DE) | 4.95B |
| Puma SE (PUM.DE) | 10.09B |
| Brenntag SE (BNR.DE) | 10.53B |
| Qiagen N.V. (QIA.DE) | 11.15B |
Who Should Invest In DAX?
Investing in the DAX gives you exposure to the 40 biggest companies in Germany. The DAX is considered to be an attractive investment for a range of investors, due to these reasons:
i) German Investors who want exposure to a home country market index
The value of the DAX index is often used as a barometer for the German economy. It’s quoted in euros.
ii) Investors who believe that Germany’s market would mirror the performance of the Eurozone
Given the German economy’s position in the EU, there are investors who believe that the DAX would mirror the economic activity in the rest of the Eurozone, or at least slightly outperform it.
iii) Investors who want to geographically diversify their portfolio
US stocks can be highly volatile. Holding positions in market indices beyond the US could help to stabilise the fluctuations in your overall portfolio while maintaining long term growth.
What are the Pros and Cons of investing in the DAX?
Indices are predetermined baskets of stocks. They are a suitable vehicle for certain investors but not others. Here’re the pros and cons for your consideration:
Pros
- Less expertise required
- Less time and effort required for research
- Lower cost of implementation
- Be able to grow your money at market return rates
Cons
- Growth is capped at market return rate
- Depending on the ETF you choose, cost may vary
- Exposure only to the biggest companies in Germany
- You do not get to customise the portfolio of stocks in the DAX
Does it make sense to invest in the DAX?
This depends on your preferred investing style.
If you want to grow your money faster than rates provided by saving accounts without having to spend hours researching on individual stocks, then yes the DAX would provide you with a relatively fuss-free investment vehicle.
However, if you prefer to beat market returns, then the DAX may not be something for you. Instead, you may find it more rewarding to pick profitable stocks. If you’re not sure how to start, we share how we use scientifically-backed factor-based investing to pick stocks in this free guide.
How to invest in the DAX?
You could either buy all 40 stocks in the DAX individually or own the entire index through an exchange-traded fund (ETF).
Which DAX ETF is the best?
There are several DAX ETFs listed in various exchanges, the best for you would depend on your own situation. That said, here’re the most popular ones:
iShares Core DAX UCITS ETF (EXS1) – EUR
Managed by BlackRock Asset Management, the iShares Core DAX is listed on the Frankfurt Stock Exchange and has an expense ratio of 0.16%. It was listed on 27 Dec 2000 and has since clocked a return of 102.04 and an asset size of EUR 5.2B.
Global DAX Germany ETF (DAX) – USD
Listed on NASDAQ, this DAX ETF is managed by GlobalxETFs and has an expense ratio of 0.2%. It was listed on 22 Oct 2014 and has since clocked a return of 11.26% and an asset size of USD24.5M.
Which broker offer DAX ETFs?
The following brokers provide access to DAX ETFs at the point of writing. Fees may vary.
Where can I get more information on the DAX?
You can find latest updates on the DAX Index here.
p.s. if you’re looking for more ideas, here’re the best UK ETFs.
