Drilling down on performance

Which indices perform best for individual countries?

Contrasting the two popular benchmarks for Eurozone equities – the MSCI EMU and the EURO STOXX 50 – we can see they differ with respect to performance. Since January 1999, the MSCI EMU has outperformed the EURO STOXX 50 by 80 bps per annum.

Elsewhere, we explored how the different indices cover the market. As a broad market index, the MSCI EMU maintains a coverage of 85% of the total market capitalization, while the market coverage of the EURO STOXX 50 is only 54% of MSCI EMU.

But how do broad market indices fare against blue chips within individual European countries?

We evaluated return differentials across five major European markets. In most cases the broad market MSCI indices outperformed regional blue-chips.

Comparing the MSCI Switzerland to the SMI we see the largest country level return differential of 20 bps per annum from January 1999 to March 2017. The MSCI Spain also outperformed Ibex in that same period by 18 bps per annum. In Germany and the UK, the outperformance was less pronounced, and in France the CAC 40 outperformed the MSCI France by a small differential.

At the Eurozone level, the MSCI EMU has outperformed the blue-chip EURO STOXX 50 since 1999. This outperformance by the broad market MSCI indices is not the case in all countries, but they do fare well compared to blue chips for most markets.

Investors should be aware that past performance is not an indicator of future results.