Secondary stocks: The M-Dax is becoming more attractive

D.he Dax expansion in the coming year will cost the M-Dax ten of its values ​​and around a third of its market value. Nevertheless, the mean value index does not threaten to descend into insignificance. In the opinion of the fund manager Andreas Strobl from the private bank Berenberg, investors could be sure after the reform that their investment will actually flow into smaller, high-growth companies. “Big is nice, but if big doesn’t grow, it doesn’t do the investor much,” says Strobl of F.A.Z. Just because the market weight of an index gets smaller doesn’t make it any less attractive. On the contrary: “Without the heavyweights, the image of the M-Dax sharpens,” says the fund manager. In this way, the growth dynamics of medium-sized companies can be mapped more in the future.

The companies leaving the M-Dax include many “old economy” stocks, which the fund manager believes are making little contribution to current growth. According to the current status, these are Airbus, Brenntag, Hannover Re, Hello Fresh, LEG Immobilien, Qiagen, Sartorius, Siemens Healthineers and Symrise, which are moving up into the leading index. Only Hello Fresh and Zalando belong to the “New Economy” in the narrower sense. Siemens Energy, which was split off from the industrial giant Siemens at the end of September, will, as Deutsche Börse announced on Thursday, move up to the M-Dax at the end of December. In Strobl’s view, the energy company is also one of the traditional companies and will therefore bring little growth to the M-Dax. For Siemens Energy, Grenke will leave the index.

“It is presented as a major DAX reform, but in reality it is more of an evolution and not a revolution,” says Strobl. That doesn’t make the Dax any more attractive. The fund manager expects that the M-Dax will grow faster after the reform and generate higher returns – while volatility will decrease at the same time. Despite Corona, the latter is similar or lower than that in the Dax. Because unlike the leading index, the M-Dax contains many stocks from future industries such as IT companies or trading platforms. These show a higher structural growth than the “old economy” stocks in the Dax, and they are less cyclical. The loss of importance is therefore limited.

With the changed composition, the industry weights in the M-Dax will also shift in the future. The rise of Airbus alone will increase the relative weight of the IT sector by 7 to 8 percent, forecasts Strobl. The health sector, on the other hand, will lose shares if, for example, Sartorius and Siemens Healthineers leave the index in the coming year. So far, the M-Dax has been driven strongly by the development of the heavyweights, says the fund manager and finds particularly clear words for a company: “In my eyes, Airbus never had anything to look for in the M-Dax.” With a market capitalization of 71 billion euros and about 15 percent weight, the group has long given the direction in the M-Dax. Since the bulk of the stock exchange turnover runs on the Paris stock exchange, the European aircraft manufacturer has so far been denied entry into the Dax.

From next year there will be no more heavyweights in the M-Dax. Then the largest companies according to the current status will achieve a market capitalization of less than 20 billion euros. “Half as dramatic,” says Strobl. After all, it was to be expected that some of the large companies would rise to the Dax.


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