If you’re invested in UK stocks and shares, then it’s likely you monitor the performance of the FTSE 100 and know that the UK’s largest share index is down by more than 5% since the start of 2022.
So, how does the current performance of the FTSE 100 compare to two other big European indexes? And is putting your faith in one country’s market a good idea? Let’s take a look.
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How has the FTSE 100 performed so far in 2022?
The FTSE 100 comprises the top 100 companies in the UK by market capitalisation. At the time of writing on 15 March, the share index is down 5.64% since the year began. Despite its struggling start to the year, the value of the index is still 4.93% higher than it was a year ago.
This year, the FTSE 100’s first major fall came between 20 and 24 January when it shed almost 300 points in the space of a few days. Despite the fall, the index recovered quickly, hitting a year-high of 7,672 on 10 February. However, since then, it’s been on a downward trajectory.
Russian tanks entering Ukraine sent the FTSE 100 plummeting roughly 300 points towards the end of February. By early March, the share index actually fell below 7,000 for the first time in five months.
By 15 March, the index recovered slightly to 7,100. Despite this, it’s still a long way off its year-high.
How does the FTSE 100 compare to other European indexes?
Aside from the FTSE 100, other major share indexes in Europe include Germany’s DAX 40 and France’s CAC 40. Let’s take a look at how these indexes have performed so far this year.
DAX 40
The DAX 40 consists of 40 large German companies that trade on the Frankfurt Stock Exchange. Big-name members include Adidas, Deutsche Bank and Volkswagen.
So far in 2022, the DAX 40 has fallen a massive 15%. This puts its performance pretty much on par with the UK’s FTSE 250, which has fallen by a similar amount since January.
It’s fair to say that the DAX 40 has consistently headed in a downward direction since the year began. At the turn of the year, the index sat at 16,020 points. By the beginning of February, it has fallen to 15,619. By 24 February, it had fallen further to 14,052, partly due to the war in Ukraine. Since then, the share index has slumped to 13,620.
CAC 40
The CAC 40 share index consists of 40 significant stocks listed on the Euronext Paris Stock Exchange. Big-name members include ArcelorMittal, Axa and Renault.
The CAC 40 has performed in a similar fashion to Germany’s DAX 40 since the year began. It is down a hefty 13%, shedding almost 1,000 points. Like the DAX, the French index has been on a steady downward slope since the start of 2022.
In January, the CAC 40 stood at 7,217. A month later, it stood at 7,099 and it droped to 6,521 by 24 February. Its value currently sits at 6,257.
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How can you invest in a European share index?
If you want to invest in any share index, European or otherwise, you’ll have to buy stocks in individual members of an index, or buy an exchange-traded fund (ETF) that tracks the value of a particular index.
To pursue either of these options, you’ll have to choose an investing platform. To find the right platform for you take a look at The Motley Fool’s list of top-rated share dealing accounts.
Is investing in one country a sensible idea?
Invest in a FTSE 100 ETF and your portfolio will be heavily weighted towards the UK economy. This isn’t necessarily a bad thing, especially if the UK economy happens to outperform other world economies.
However, if you’re keen to follow the adage that you shouldn’t put all of your eggs in one basket, then investing in other countries is certainly something to consider. If you are looking to diversify your portfolio, an international ETF is probably the easiest way to go.
Of course, if you do decide to pursue a global portfolio, do bear in mind that the performances of the world’s economies are often interlinked. We are living in the age of globalisation after all!
