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The Euro Stoxx 50 Index is commonly known as the SX5E index and was introduced in 1998 in order to track 50 of the largest stocks across the Eurozone. With the aim of measuring the performance of ‘Supersector leaders’ across the continent, the SX5E provides an indicator of the performance of Europe as a whole, and the futures and options related to the index are some of the most liquid products in the world.
This page will give you a brief insight into the history of the SX5E index, how the companies whose stocks are tracked by it are selected, and how you can invest in the index.
The SX5E index was founded on the 26th February 1998 after having been designed by STOXX, a Deutsche Börse Group-owned index provider. From its inception, the index has tracked the stocks of the largest supersector leaders in the Eurozone (measured by free-float market capitalisation).
The index saw a sharp rise from the moment it came into being, only to run head-long into the dotcom crash of the early 2000s, which saw the SX5E fall by nearly 50% between 2000 and 2002. Like many other indices it recovered strongly from this and was then hit hard again by the 2007-08 financial crash. Despite being founded at the start of a turbulent economic period, the SX5E has shown the ability of European economies to bounce back from adversity.
The 50 stocks that comprise the SX5E index are chosen by free-float market capitalisation, with the index tracking the 50 of the most liquid Supersector leaders across the Eurozone. The stocks that make up the SX5E index are reviewed every September to makes sure the index keeps in line with STOXX’s ambition “to provide a blue-chip representation of Supersector leaders in the Eurozone.”
If you want to invest in the SX5E index, your best option is to use and ETF (exchange-traded fund). These are products that peg themselves to the performance of a specific index, but can also be traded on an exchange.
This means they offer more flexibility than other investment options such as mutual funds and simply buying stocks in all 50 companies tracked by the SX5E index, while still ensuring your investment is diversified.