BlackRock launches iShares MSCI Europe Mid Cap ETF

Jul 7th, 2017 | By | Category: Equities

The world’s largest asset manager BlackRock has rolled out the iShares MSCI Europe Mid Cap UCITS ETF (LON: EUMD), providing broad market exposure to the mid cap segment of the European equity market.

BlackRock launches iShares MSCI Europe Mid Cap ETF

BlackRock has launched the iShares MSCI Europe Mid Cap ETF.

Mid-cap equities may be attractive to investors seeking better growth prospects than large caps. While their greater sensitivity to market sentiment increases their volatility relative to large caps, mid cap equities are believed to be more likely to be trading at a discount to fair value. Mid-cap companies are also frequently the target for mergers and acquisitions with larger companies, and often enjoy substantial share price increases as news regarding a potential deal is released.

Mid caps are often referred to as the ‘sweet spot’ of investing based on a perceived combination of the financial strength of comparable large cap firms and the growth potential of small caps. Stronger balance sheets, more established markets and better access to financing reduce the risk of midcaps compared to smaller cap stocks while operating in less mature industries compared to large caps opens up the potential for higher relative growth.

The fund tracks the MSCI Europe Mid Cap Index which captures mid cap representation across the 15 developed markets countries in Europe. With 243 constituents, the index covers approximately 15% of the free float-adjusted market capitalization across the European developed markets equity universe.

The UK represents the largest country exposure in the index with a 30.1% weight, followed by France (15.0%), Germany (10.3%), Switzerland (10.1%) and Sweden (5.7%). The largest sector exposures are to industrials (22.4%), consumer discretionary (17.2%), financials (15.5%) and materials (13.6%).

The index has done exceptionally well thus far this year, gaining 17.9% up to the end of June. It has returned 12.1% per annum with an annualized standard deviation of 13.2% over the past five years.

The fund treats income generated within the fund as accumulating while a distributing share class is trading under the ticker EMID. Each share class is physically replicating using an optimisation approach and charges a total expense ratio of 0.15%.

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