What is Germany's DAX 30 Index?
A Look at Germany's Version of the Dow Jones
The DAX 30 - or Deutscher Aktien indeX - is a Germany blue chip stock market index similar to the Dow Jones Industrial Average (DJIA) in the United States. The index consists of the 30 largest German companies trading on the Frankfurt Stock Exchange. Given Germany's status as the largest eurozone economy, the DAX is considered one of the most important indices for European investors.
Many DAX components are large multinational companies that have a high level of significance to the global economy in addition to Germany's domestic market. Some estimates have indicated that nearly 75% of sales generated by DAX-listed companies are earned abroad, which makes the index important for international, as well as domestic, investors to watch.
What Companies are in the DAX?
The DAX is the most popular benchmark for both the German and European markets. It consists of the 30 largest German companies trading on the Frankfurt Stock Exchange by market capitalization and liquidity. These component equities are subject to review each quarter by an independent committee that may add or remove any components based on changes to market capitalization.
The DAX is filled with globally recognizable companies like:
- Adidas AG (ETR: ADS) - Adidas AG is a designer and developer of athletic and sports lifestyle products, including its infamous line of shoes.
- BASF SE (ETR: BAS) (Pink Sheets: BASFY) - BASF SE is one of the largest chemical companies in the world operating across several different segments.
- Bayer AG (ETR: BAYN) (Pink Sheets: BAYRY) - Bayer AG has developed one of the most popular pain relief drugs in the industry and remains a leading healthcare giant.
- BMW AG (ETR: BMW) - BMW AG is an automobile manufacturer with a strong line-up of award-winning brands that are recognized around the world.
- Deutsche Bank AG (ETR: DBK) (NYSE: DB) - Deutsche Bank AG is one of the world's largest banks with products and services targeting individuals and businesses worldwide.
- Infineon Technologies (ETR: IFXA) (Pink Sheets: IFNNY) - Infineon Technologies is a semiconductor and complete solutions provider for microelectronic applications.
- MAN SE (ETR: MAN) - MAN SE is a manufacturer of commercial vehicles and equipment used around the world with operations in 150 countries.
- Merck KGaA (ETR: MRK) (NYSE: MRK) - Merck KGaA is one of the largest pharmaceutical and healthcare companies in the world.
- Siemens AG (ETR: SIE) (NYSE: SI) - Siemens AG is a provider of electronics and electrical engineering services aimed at a broad array of market sectors.
- Volkswagen AG (ETR: VOW) (Pink Sheets: VLKAY) - Volkswagon AG is an automobile manufacturer famous for its VW Bug style cars.
How to Invest in Germany's DAX
There are several ways for international investors to gain exposure to the DAX using a number of exchange-traded funds (ETFs) trading on European exchanges. Of course, investors may also purchase individual components of the index. While some of these components trade as American Depository Receipts (ADRs) in the U.S., many only trade on foreign exchanges. This means that international investors would need foreign or global brokerage accounts to purchase them.
Here are the five most popular DAX ETFs:
- iShares DAX 30 (BIT: EXS1)
- DB X-Trackers DAX ETF (FRA: DBXD)
- Comstage ETF-DAX (FRA: C001)
- Lyxor DAX Plus CC (EPA: CCD)
- ETFLab DAX ETF (FRA: EL4A)
These ETFs trade on other European exchanges, which makes it difficult for U.S. investors to purchase them without a global or foreign brokerage account. Fortunately, there are some alternatives to these DAX 30 ETFs that provide similar exposure with ETFs that trade on U.S. exchanges.
Some Alternatives to Germany's DAX
International investors seeking alternatives to the DAX have many different options. The most direct way to invest in Germany using a U.S. exchange is the iShares MSCI Germany Index Fund ETF (NYSE: EWG), but there are also many other funds with German exposure. Additionally, some Germany companies not listed on the DAX may trade as ADRs on U.S. exchanges and make for good investments.
Here are some popular ETFs with German exposure:
- iShares MSCI Germany Index Fund ETF (NYSE: EWG)
- Market Vectors Germany Small Cap ETF (NYSE: GERJ)
- MSCI European ETF (NYSE: VGK)
- SPDR DJ EURO Stoxx 50 ETF (NYSE: FEZ)
- iShares MSCI EMU Index ETF (NYSE: EZU)
When considering these ETFs, investors should look at how they are weighted and the expense ratios associated with the funds to make sure that they're the right fit for their portfolio.