The funds linked to Eurostoxx allow the investor to be representing in European equities without being directly exposed on the stock market and, where they do not have to bet on a specific security either. Not in vain, you will invest your money in the most representative companies in the euro zone, although with the disadvantage of not fully collecting the possible capital gains that the European stock market may generate. In addition to entailing expenses and commissions higher than those of the stock market, which can sometimes rise up to 3%.
They are fundamentally distinguished by the need for less knowledge of the operations carried out that derive from investing in a market index. no currency risk, that is, whose currency is the euro, such as the Eurostoxx-50. And also because they are companies strongly consolidated in the business panorama of the old continent.
The minimum investment to enter these funds depends on the characteristics of each one of them, but currently there are products that You can subscribe your shares from only 500 euros. Although for the investment to produce the desired effects in terms of its profitability it is necessary that you make much more demanding contributions. In principle, starting at 5.000 euros and making the movements of this financial market more profitable.
Eurostoxx: composition
One of the alternatives for small and medium investors to invest their money in equities without assuming too many risks is through investment funds based on this stock index. It can lead to the benefit of the best economic results that the European economies should show this year, and that in the opinion of some stock market analysts will be the ones that best evolve in the stock markets and, therefore, is reflected in the price of stocks. securities listed on this selective European index.
The Eurostoxx-50 index is made up of the 50 most relevant stocks in the euro zone. The companies that can be included in this index come from the following countries: Austria, Belgium, Finland, France, Germany, Italy, Luxembourg, the Netherlands and Spain. In this sense, the securities listed on it and that come from the Ibex-35 are its main heavyweights: Santander, BBVA, Endesa, Iberdrola and Telefónica.
The securities are weighted according to the capitalization criterion, taking into account the level of free float, which is an English term that means floating capital and that is applied to part of the capital stock of a company or company that is freely traded on the stock market and that is not controlled by shareholders in a stable way. It should also be noted that this benchmark of the old continent is reviewed annually taking into account the number of shares and the level of floating capital of these with respect to the total.
Advantages of your hiring
The main advantages of investing through funds based on Eurostoxx, with respect to the direct purchase of shares are very clear, especially for a type of investor with a rather conservative profile, as it may be in your case, who has certain reluctance to take positions in equities for fear of losing part of the capital invested, and especially after the sharp falls in equities at the beginning of this year.
Fundamentally because you need a less knowledge From the market which is derived from investing in a market index without currency risk (that is, whose currency is the euro). If you invest in sector funds or funds from emerging countries or with currency risk, for example, you must have a good knowledge of them in order to somehow assess the market you are entering.
If you want to invest in the stock market but do not have the necessary knowledge to do so, you will have less problems entering a fund referenced to the Eurostoxx-50 than buying shares without any criteria or defined strategy. Another additional advantage that this investment option entails is that you will not have to define yourself by a specific value. In addition, the companies that make up this index belong to very different sectors of the economy, managing to diversify investment.
Strategies in operations
However, you may find funds linked to Eurostoxx that are characterized by assuming high volatility ratios and higher risk compared to other low risk ones. Also are offered under the format of guaranteed funds, which provide to have the entire deposited capital safe, although in exchange for the announced profitability is linked to the fulfillment of certain requirements, in some of the cases very difficult to fulfill.
Another aspect that you should take into account is the commissions and expenses that these investment funds entail: subscription, deposit, refund and management that generally oscillate between 0,5% and 5%. The recommended term of permanence is another parameter that characterizes them because it is generally very high, above other financial products, between 3 and 5 years. They are aimed at a rather conservative investor profile that has its sights on the medium and long term.
Characteristics of these funds
Despite keeping many similarities with most funds that can be found in the financial market, it is not surprising that there are some differences that are important for you to detect in order to determine the advantages of taking positions in these products. And that would basically be the following:
- They are company-based with higher specific weight of European equities.
- They can subscribe from very affordable contributions for everyone, and from funds with high volatility to others with lower risk.
- They allow to subscribe products of a guaranteed nature for safeguard capital deposited by the saver.
- You need a less knowledge derived from investing in a market index without currency risk.
- They give the option to benefit from the probable revaluations of European securities without having to be exposed to the bag directly.
- On the contrary, they are exposed to a series of disadvantages that will also be necessary for you to know, so that you can determine their possible hiring. And in any case, it can carry certain risks.
- It is an equity market less known by middle investors.
- Expenses and commissions are significantly higher to those derived from the contracting of other financial products, which in some cases can reach up to 5%.
- In the guaranteed ones, to obtain the maximum profitability a series of requirements must be met, sometimes quite difficult to fulfill.
- In certain situations you should assume high volatility and a high risk in investment.
- The terms of permanence in most of the proposals offered are excessively high for the interests of the most aggressive investors, since they are intended for the medium or long term.
What models can they subscribe?
Under this global scenario, the management companies have developed in recent months various proposals so that their clients can subscribe a product of these characteristics and from different investment modalities and perspectives. Their main difference lies in the composition of their portfolios, and in the type of profile these products are aimed at. Some of them even with very innovative elements who propose a new incentive for their hiring.
As a consequence of this trend, it is very difficult to abstract from the current offer, and therefore, not include any of these investment funds in the selection that you develop from now on. Proposals of course you will not miss, made with all kinds of strategies. And even incorporate investment funds, where you can make your savings profitable in the most adverse scenarios of this variable income market. In other words, if this index falls in its price, you will get significant capital gains.
Now you just need to choose the fund format that best suits your conditions as a small investor. It may take some time, but in the end you will reap the reward of having channeled the investment correctly. And that of course can (and should) go complemented by other fund models, unrelated to Eurostoxx. As a formula to protect the invested assets, and take as few surprises as possible.
Diversify investment
One of the objectives that you must consider with this strategy is none other than maintain as much diversification as possible. The higher it is, the better for your interests. One of the greatest attractions of these investment funds, with regard to their contracting, is that they allow you to have the capital invested in small baskets of securities that are listed in the European benchmark index, without having to risk a single euro in a single stock proposal.
The first effect that this action will have is the neutralization of any negative trend that affects a specific value of this stock index. It also means being in buyer positions in companies with high economic solvency that will be the ones that better behavior develop in the most expansive moments of the international economy, and especially the European one.
However, it will ultimately be yourself who will have to opt for the composition of the portfolios that the managers have previously prepared, either through defensive proposals without excessive risk. Or through that they suppose a greater commitment for your interests. But with the compensation that will also offer greater possibilities of revaluation for the coming months, in the event that European equities return to an upward path. And it can even rise to the highest of the year.
In any case, it is another alternative that you currently have to open positions in equities. And you do not have to limit yourself to national markets, as you probably had until a few days ago. The solution, finally, may be to open new scenarios for your money.