The name of this unique and eye-catching stock market index, the Stoxx Europe Football, will certainly catch the eye of many investors. But it's simply the select group of stock exchanges where all the football clubs that have opted for this business strategy are listed. You'll even find more than one football team vying for the coveted Champions League title this year . And in this case, they'll also help you generate returns in the equity markets, just like any other conventional stock.
The Stoxx Europe Football index is an alternative investment option, offering a different and somewhat unusual approach for those more familiar with this type of investment. It currently includes around 25 of the most representative teams in Europe. Want to know the names of some of the most well-known among sports fans? Well, some include Roma, Borussia Dortmund, Benfica, Sporting Lisbon, Galatasaray, Celtic, and Tottenham. As you can see, these are top-tier teams that are familiar to many football fans.
On the other hand, if you're looking to find one of the big Spanish teams, you're out of luck because none of them are included in the Stoxx Europe Football index. The reason is that they haven't taken the final step to go public. Therefore, FC Barcelona and Real Madrid won't be useful for your equity market investment goals. But don't worry, because you'll certainly never lack business opportunities to satisfy this particular investment need. Moreover, they're all represented in the same stock market index.
Stoxx Europe Football: how does it work?
This index, directly linked to the world of football, is characterized by covering all football clubs listed on a stock exchange in Europe, Eastern Europe, Turkey, or the European Union. The index accurately represents the breadth and depth of the European football industry, which until the late 90s was not integrated into European equities. From this general perspective, it functions like any other stock market index, with virtually no differences in its mechanism. Therefore, you will have little trouble trading its shares.
Its performance is quite different and doesn't necessarily mirror that of more traditional European stock market indices. Indeed, its values ​​are governed by different parameters, much more closely tied to results, titles won , and even player transfers in the international market. Consequently, it's not as exposed to economic events or news as classic stocks. It's even possible for stock markets to be depreciating while the Stoxx Europe Football index rises, or vice versa. This presents an additional investment alternative for you from this point forward.
Worst evolution in the stock market
In any case, the Stoxx Europe Football index has not performed any better over the last eight years. On the contrary, it has underperformed by almost five percentage points compared to other European equity indices. All of this has occurred within a clearly favorable environment where an upward trend has been the common denominator of its performance. Furthermore, this year it is also underperforming, for example, the Eurostoxx 50 , although not as significantly as in previous years. In any case, there are significant differences between the two approaches to stock market investment.
On the other hand, this European stock market index is far from its best. In fact, it's a long way from the all-time highs it reached before 2000. This is a sign that the sector has lost traction among small and medium-sized investors. Volatility is very high, as stock prices can rise 5% one day and fall by a similar amount the next. Any unusual event can cause prices to move sharply in either direction.
Traditional indexing on this index
In any case, traditional indexing doesn't work well for these kinds of specialized stock market indices. Not at all. As investors shift more towards bonds, ETF firms are struggling to develop better alternatives for investing in the securities that make up the Stoxx Europe Football index. Consequently, it's not very common to see other financial products with these investment propositions. Neither ETFs, investment funds , nor even warrants include any of the securities we're discussing in this article.
Don't forget that these special values ​​offer an opportunity to place bets with bookmakers to determine your preferences for one football team or another. To the point that you can now place these kinds of bets directly on the stock market, just like with other stocks such as ACS, Endesa, BBVA, or any other company listed on the financial markets. You can also improve your bank balance each year through football, perhaps in a more enjoyable and even fun way.
This year it leaves almost 20%
However, their performance this year has been anything but favorable for the members of the Stoxx Europe Football index. Indeed, this index has fallen by more than 17%, worse than the Ibex 35 or the Eurostoxx 50. This is not due to any particularly significant news affecting these stocks; rather, it is the way they are traded that has led to these serious divergences in their price formation. It is no coincidence that football clubs are traded on the financial markets independently, as some financial analysts have pointed out.
On the other hand, it also contrasts with the more positive trend shown in recent years by some of the most important European indices. From this perspective, there is no doubt that the Stoxx Europe Football index is less profitable , but the trend could change at any moment, and this would be the perfect opportunity for small and medium-sized investors to be present in this hub for football enthusiasts. Their goal is to generate above-average returns on their savings compared to the average stock market performance in Europe.
Uneven evolution in the markets
And how has the Europe Football Index performed in recent years? With significant fluctuations. In 2010 it rose 30%, in 2011 it fell 40%, and in 2012 it fell again, specifically by 10%. This demonstrates a lack of consistency in reflecting the valuation of sports clubs. Between one year and the next, there can be differences of more than 50% , something quite unusual in major traditional European stock market indices. In other words, it doesn't inspire much confidence among small and medium-sized investors. On the contrary, they harbor considerable doubts about whether their investments can be successfully profitable.
Another aspect that makes these atypical stocks stand out is that they are less influenced by global economic news. To the point that they sometimes simply go unnoticed by many financial intermediaries. This is a key differentiating feature of these investment opportunities, and one you should keep in mind if you wish to invest in them.
What do they depend on?
There are factors to which these values ​​are very sensitive and that generally do not have to do directly with the world of the stock market. As for example, the following that we are going to present to you at this precise moment.
- Sports results, including something as simple as chaining a good or bad streak of consecutive games won or lost.
- The achievement of sports titles most prestigious of the calendar of the beautiful sport.
- The losses of important footballers (due to injury, sanction, etc.) can give a very important turn to the prices at any time.
- The realization of dreamed signings that can add value to the soccer team.
- The television rights it is a very relevant source of income for these very special companies and therefore influences the conformation of their prices.
- La economic management of the club is also a determining factor to know what its real status is, although not at the same level as other classes of shares on the stock market. Although it will be very important for your fundamental analysis and that will lead to positions being opened or not.