France ETFs Explained (CAC 40)

Fact checked by Yarilet PerezReviewed by Chip Stapleton

The CAC 40 is a measure of the stocks on the Euronext Paris (formerly the Paris Bourse) and could be considered France’s equivalent of America’s Dow Jones Industrial Average (DJIA).

The index is made up of the largest 40 companies listed in France screened by market capitalization, trading activity, size of balance sheet, and liquidity. The multinational reach of the companies listed on the CAC 40 makes the index one of the most popular European indexes for foreign investors.

The CAC 40 started with a base value of 1,000 in December 1987 and continued to operate on the total market capitalization system until 2003 when it was changed to free float-adjusted market capitalization.

The CAC 40 not only acts as the prime benchmark for Euronext Paris but also serves as an underlying index for exchange-traded funds, structured products, funds, futures, and options.

Companies that comprise the CAC 40 index include TotalEnergies, BNP Paribas, LVMH, Sanofi, Airbus, L’Oreal, and Hermes.

Key Takeaways

• The CAC 40 is a market index generated by Euronext Paris, the main stock exchange in France.
• “CAC” stands for “Cotation Assistée en Continu,” which translates to “Continuous Assisted Quotation”; which was the name of the Paris Bourse’s automation system.
• The 40 companies listed in the CAC 40 are the largest and most liquid companies in France by market cap.
• Some of the most well-known companies are L’Oreal, LVMH, Hermes, TotalEnergies, and Sanofi.
• Investors can gain exposure to these companies and the French market via exchange-traded funds (ETFs) that track the CAC 40.
• The most popular CAC 40 ETFs are BNP Paribas Easy CAC 40 ETF, Amundi CAC 40 ETF, and Xtrackers CAC 40 ETF.

CAC 40 ETFs

Below are the main exchange-traded funds (ETFs) that follow the CAC 40.

BNP Paribas Easy CAC 40 ETF

The BNP Paribas Easy CAC 40 ETF launched in 2005 and aims to replicate the performance of the CAC 40 index. It holds about €310.7 million as of April 5, 2024, and carries an annual charge of 0.25%. Top holdings include LVMH, L’Oreal, Sanofi, and Schneider Electric. Its top three sector allocations are industrials (29.67%), consumer cyclical (19.41%), and consumer defensive (13.23%) as of April 8, 2024.

Important

When choosing an ETF, pay attention to the expense ratio, which is the cost you pay for investing in the fund. Expense ratios reduce your take-home returns.

Amundi CAC 40 ETF

The objective of the Amundi ETF CAC 40 is to mirror the performance of the CAC 40 index without regard to market trends. The fund has approximately €999.3 million under management as of April 5, 2024, and carries an expense ratio of 0.25%. The fund’s top holdings are LVMH, Schneider Electric, Sanofi, Airbus, and L’Oreal. The top three sector allocations are industrials (29.71%), consumer discretionary (19.95%), and financials (12.91%) as of April 3, 2024.

Xtrackers CAC 40 ETF

The investment objective of the Xtrackers CAC 40 is to track the 40 largest and most liquid companies on Euronext Paris. The fund has an AUM of €122.4 million as of April 5, 2024, and an expense ratio of 0.20%. The top fund holdings are LVMH, TotalEnergies, Schneider Electric, Airbus, and L’Oreal. The top three sector holdings are consumer discretionary (24.23%), industrials (23.55%), and healthcare (9.64%) as of Dec. 29, 2023.

What Companies Are in the CAC 40?

Companies in the CAC 40 include L’Oreal, LVMH, Hermes, TotalEnergies, Schneider Electric, BNP Paribas, Airbus, AXA, Credit Agricole, Renault, Sanofi, Michelin, and Pernod Ricard.

How to Invest in the CAC 40?

There are a few methods one can opt for to invest in the CAC 40 but the easiest would be to invest in funds that track the index. There are a few ETFs that investors can choose from, such as BNP Paribas Easy CAC 40 ETF, Amundi CAC 40 ETF, and Xtrackers CAC 40 ETF.

What Is the Dividend Yield of the CAC 40?

As of Dec. 31, 2023, the dividend yield of the CAC 40 was 2.98%.

The Bottom Line

The above ETFs will allow investors to gain exposure to the largest and most liquid blue-chip companies in France. Another option that can be explored by investors looking to invest in the same region is iShares MSCI France UCITS ETF. The fund tracks the MSCI French Index instead of the CAC 40, which has a slightly higher number of holdings: 62 versus 40.

Read the original article on Investopedia.