Update: iShares FTSE MIB UCITS ETF

Italien-Aktien dürften zu den profiteuren der Jagd nach Renditen zählen. Auch wenn der Mailänder Leitindex im vergangenen Jahr deutlich hinter seinen europäischen Pendants blieb, sollten Anleger die fundamentalen Faktoren des Standorts Italien nicht ignorieren.

Hortense Bioy, CFA 23.01.2015

Rolle im Portfolio

The iShares FTSE MIB UCITS ETF provides broad exposure to Italian large-cap equities and can be used as a core building block for those looking to build a diversified Italian-centric portfolio. However, investors should be aware that the top four constituents account for about half of the total value of the FTSE MIB index. Financials are the top sector with a weight of 40-45%.

This fund can also serve as a tactical tool for those looking to place a bet on the near-to-medium-term prospects of the Italian stock market.

Fundamentale Analyse

Italian stocks still haven’t recovered from the financial crisis. In contrast with other European country benchmarks like the FTSE 100 or the DAX, the FTSE MIB index is still priced way below its pre-crisis highs of 2007. To some extent, one can argue that this relative underperformance reflects the country’s lacklustre economic performance.

The Italian economy may be the third largest in the euro zone, but it has been in decline for years. GDP has dropped by 9% since 2007, while public debt and budget deficit have increased steadily. In 2012, the situation looked to be improving, especially after European Central Bank (ECB) president Mario Draghi pledged he would “do whatever it takes” to preserve the euro. But those hopes have faded. In 2013-14, economic growth and labour market conditions deteriorated, with unemployment rising to 13.2% --its highest rate on record-- in October 2014, with youth unemployment above 43%. GDP is expected to shrink again in 2014 before stagnating in 2015.

The government needs to accelerate the pace of economic reform in order to regain competitiveness against the Eurozone peripherals, such as Spain and Portugal, which are now outpacing Italy in the recovery.

Meanwhile, the Italian banking system remains the most vulnerable within the Eurozone. Although the two largest banks Unicredit and Intesa Sanpaolo passed the 2014 ECB asset quality test very comfortably, smaller banks, including Monte dei Paschi di Siena, failed and still must raise capital. Most are also still reluctant to lend due to weak profitability and an increasing number of bad loans.

On a more positive note, the stimulus policies introduced by the ECB in H2-2014 --followed perhaps by full-blown QE in 2015-- should help to improve credit conditions and encourage lending.

The ECB’s accommodative measures should also help to combat deflation. Deflation, or even a period of very low inflation, would add to the problems of lacklustre growth by raising real levels of debt and by delaying spending and investment decisions.


The FTSE/MIB is the benchmark stock market index for the Italian equity market. Capturing approximately 80% of the domestic market’s capitalisation, the FTSE/MIB Index measures the performance of the 40 most liquid and best capitalised Italian shares and seeks to replicate the broad sector weights of the Italian stock market. The index was administered by Standard & Poor's from its inception until June 2009, when this responsibility was passed to FTSE Group, which is 50% owned by the Borsa Italiana's parent company London Stock Exchange Group. The index is fairly top-heavy with the top 10 stocks comprising 67- 70% of its weighting. The index’s top sector exposures include financials (40-45%), oil & gas (15-20%) and utilities (16-18%). The index’s largest constituent is ENI with a 12-16% weighting, followed by Intesa Sanpaolo, Enel and Unicredit, with a 9-12% weighting each.


The fund uses full replication method to track the performance of the FTSE MIB net total return index. The fund buys all the securities within the index in the same weightings stipulated by the index. The fund engages in securities lending to help improve tracking performance. Gross lending revenue is split 62.5/37.5 between the fund and lending agent BlackRock, with the latter covering all the operational costs. Although this activity may help to offset part of the fund's holding costs, it potentially exposes investors to counterparty risk. To protect the fund, borrowers are requested to post collateral greater than the loan value. Collateral levels vary from 102.5% to 112% of the value of the securities on loan, depending on the assets provided by the borrower as collateral. The website reveals that for the year ended September 2014, 10.4% of the fund's assets were lent out on average, while the maximum on-loan level on any single day was 47.5%. The net return to the fund was 0.09%. As a general rule, the amount of assets that iShares ETFs are allowed by BlackRock to lend out at any one point in time is capped at 50%. As an additional safeguard, BlackRock provides a guarantee for its ETFs in the event of a borrower default – if a shortfall existed between the collateral and the cost to repurchase a loaned security, BlackRock would reimburse the fund in full.


The fund has a total expense ratio (TER) of 0.35%, which is at the high-end of the range for ETFs tracking the FTSE MIB. However, the total holding cost may be less than the TER, as the tracking difference (fund return - index return) over the last few years suggests. On top of holding costs, ETF investors will typically be charged trading costs, including bid-offer spreads and brokerage commissions, when buy and sell orders are placed for ETF shares.


There is no scarcity of alternatives for investors looking for exposure to Italian large cap equities. Providers including Lyxor, db X-trackers and Amundi offer their own FTSE MIB ETFs at TERs ranging from 0.18% to 0.35%. Amundi charges the lowest TER at 0.18%. Amundi also offers an ETF that tracks the MSCI Italy at a TER of 0.25%.

Über den Autor

Hortense Bioy, CFA

Hortense Bioy, CFA  is director of passive fund research in Europe.