Deutsche Börse to launch new index variant without weighting caps
Deutsche Börse has developed a Dax index without upper limits for share weightings, and will launch it in the first quarter.
„For investors who want to track the largest German companies but do not have to comply with the Ucits or Dax benchmark framework, Stoxx is developing a version of the DAX 40 without upper limits, which is to be published in the first quarter of 2025,“ said ISS Stoxx, a subsidiary of Deutsche Börse. „However, the Dax benchmark framework remains subject to the capping rules, and will continue to be relevant for financial products aligned accordingly.“
The differences between the Dax with a cap of 15% for a single share and the new, second Dax without a cap have not been significant so far. However, it should be noted that the volatility potential of the uncapped version could be higher due to the higher dependence on individual shares.
Stock exchange wants to keep SAP at all costs
With the Dax 2.0, the stock exchange is reacting to the fact that SAP recently rose to a weighting of more than 15% after a massive price increase, so had to be subjected to the cap. Deutsche Börse wants to keep SAP in the Dax at all costs, after Linde left the Dax in 2023 due to the cap, which was still set at 10% at the time.
The cap limit was then raised to 15% in March 2024, due to SAP. However, the SAP share has performed so strongly above average in the past year that the new cap of 15% has already been exceeded.
According to the European fund directive Ucits, active funds may only invest a maximum of 10% in a single stock, while equity ETFs may invest up to 20%. Deutsche Börse is calling for the Ucits threshold for actively managed funds be raised to 20%, arguing that this is urgently needed to keep the EU capital markets ecosystem globally competitive.
„For us, the planned Dax without a cap is not an issue – of course all market participants are free to use the new index,“ said Benjardin Gärtner, Head of Equity Portfolio Management at Union Investment. "For us, however, the equal treatment of actively managed funds and ETFs is crucial. We need identical rules for ETFs, which can currently also track indices in which values can have a share of more than 10%. We are bound to the 10% limit with actively managed funds.”
A spokesman for the German Investment Funds Association (BVI) commented that "the BVI will campaign for an increase in the issuer limit from 10 to 15% when the next review of the Ucits Directive is due.“
