General information
The MDAX is the successor index to the DAX, which includes the 40 largest companies. The MDAX comprises the 50 largest companies/shares that come after the 40th DAX companies. These are mainly mid-cap companies. The index was introduced in 1996, but then recalculated to have a good comparison with the DAX.
The index is based on daily data from the Xetra electronic stock exchange, which is open from 9:00 to 17:30. The Dax family covers the DAX, MDAX and SDAX. Companies can therefore move up or down the MDAX, depending on their performance. Which companies then get in is decided by Deutsche Börse, which manages the index.
Calculation of the index
The index is updated twice a year, in March and September. This is when it is checked whether or not companies are still among the 50 largest according to the DAX. So if a company moves up or down based on market capitalization, this process is carried out in one of these months.
The MDAX is calculated as both a price index and a performance index. The performance index is usually used because dividend payments are reinvested here. This is not taken into account in the MDAX price index.
Index History Overview
As mentioned in the introduction, the MDAX was introduced in 1996, but was calculated back to December 30, 1987, to start one there at 1,000 points.
The index mathematically reached its low of 914 points on January 29, 1988. Later, the MDAX reached its then high of just over 5,000 points at the time of the dotcom bubble, which then collapsed by almost 50% as a result of the price losses. Today, the index stands at 33,400 points.
MDAX: Historical share price development
Over the last five years, the MDAX has significantly outperformed the DAX with a return of 43% compared to a return of 31%. This clearly shows that the MDAX is much more broadly diversified and at the same time includes more growth companies.
MDAX: Significance for private investors
Compared with European indices, the MDAX is doing quite well. Over the last 5 years, the index has returned 43%, whereas the Euro Stoxx has only returned 25% and the FTSE 100 5%. From a historical perspective, the MDAX is not a bad investment if you want to be invested in Europe or Germany.
On an international level, however, the German share index for mid cap companies cannot keep up. The very broadly diversified MSCI World has also performed significantly better over the last five years with a return of 66%. An investment in this index should therefore be carefully considered.
