Buy MDAX ETF: Benefit from the potential of small caps
With ETFs on the MDAX, you as an investor can benefit particularly easily from the price development of “secret stock market stars”. In short, it works like this: Exchange-traded funds (ETFs), i.e. exchange-traded index funds, ideally replicate an index, for example the DAX, MDAX or MSCI World, 1: 1. If the underlying index increases by one percent, then your ETF (ideally) also increases by one percent.
But MDAX ETFs are not all MDAX ETFs; the performance of one small cap ETF to another can differ. In addition to the fees that cost performance, the following factors determine how exactly an ETF tracks the price development of the underlying index ‘:
First of all, there are differences in how an index is reproduced in detail. On the one hand there is physically replicating ETFs (direct replication)that buy and sell the original stocks listed in the underlying index. The so-called optimized sampling only the most important stocks in the index are bought from one Full replication all stocks are bought according to their weighting in the underlying stock index. At synthetic replicating ETFs (indirect replication) on the other hand, the issuers (ETF providers) do not buy the stocks that are contained in the underlying index – you can find out exactly how this works and more about the different replication methods in our advice articles Buy ETF, DAX ETF and ETF savings plan.
Important: As with all stock market investments, you should note that past price gains are no guarantee of price gains in the future. MDAX ETFs are also subject to market fluctuations. An MDAX ETF is not suitable as a basic investment, and neither is a DAX ETF. Experts advise against individual country indices as a basic investment. In a well diversified portfolio, however, one serves MDAX ETF as a powerful return catalyst.