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The MERVAL index stands for the ‘MERcado de VALores’ and is the most widely-used indicator of the Buenos Aires Stock Exchange. It has been running since 1986 and provides investors with an insight into the overall health of the Argentinian economy.
On this page you’ll find a brief history of the MERVAL index, a summary of how the stocks that it tracks are selected, and information about how you can invest in its performance over time.
The MERVAL index began being calculated on 30th June 1986, at which point it was given a starting value of 0.01 Argentine pesos. The index was relatively constant throughout the 90s and early 2000s, and first broke the 1,000 mark in December of 2003. It continued into the low thousands until the early 2010s, at which point the MERVAL then saw a huge spike.
The index went from 3,316.25 at the start of 2013 to 41,796.36 in June of 2019. Since this meteoric rise, the MERVAL has been characterised by volatility, sometimes even falling 10,000s of index points in the space of just a month before climbing sharply again. Like many global indices, the MERVAL has been hit hard by the financial uncertainty around the coronavirus epidemic, and exactly how the index will respond in the long term is unclear.
The MERVAL is a price-weighted index made up of 20 of the most prominent stocks traded on the Buenos Aires Stock Exchange. Its component companies are reviewed every three months, and represent industries from all across the Argentinian economy – from finance to oil and gas.
In order to invest in an index, you need to use a financial instrument designed to track its performance over time. The two most common ways of doing this are ETFs (exchange-traded funds) and mutual funds. With a MERVAL ETF you’ll have a diversified investment that follows the MERVAL index, and you can also trade your investment at any time during trading hours on an exchange. A mutual fund gives you a similar form of diversification, but less flexibility as mutual funds can only be bought or sold at the end of each day’s trading.
An alternative way of investing in the MERVAL’s performance would be to buy shares in all 20 companies that make up the index. This method of investing will cost you more money in the form of transaction fees, and also take more time than investing using an ETF or a mutual fund. However, if you want to try it out, the MERVAL’s limited number of stocks compared to the larger indices make it an attractive option.