How can you invest in the AEX?
The AEX of Amsterdam Exchange Index is the largest Dutch stock exchange index. The index contains shares of the 25 largest Dutch companies. The AEX is often used as an indicator of the economic situation in the Netherlands. But how is the AEX composed, and how can you invest in the AEX yourself?
Investing in the AEX yourself
It is possible to invest in the AEX yourself. There are various ways in which you can invest in the AEX. These methods are briefly discussed below.
It is also possible to buy the individual AEX shares. You can choose to buy the shares within the index. In this way, the results of your investments are almost equal to the results of the AEX. By doing so you retain more flexibility as you can sell any share at any moment.
If you want to track the AEX by buying shares, you have to buy and sell shares on a regular basis. It is then important to choose a broker with low transaction fees. At eToro, you do not pay set commissions on the shares listed on the AEX, so that you can achieve good results even with a smaller amount. Use the button below to directly open an account with eToro:
Investing in the AEX with a tracker
You can invest in the AEX by means of an ETF or tracker. An ETF is a fund that tracks the stock market index as closely as possible by taking over the distribution of shares. A good party where you can trade ETFs on the AEX is DEGIRO. With DEGIRO, you invest for free in the selection that is included in the core funds. Use the button to directly open an account with DEGIRO:
How can you actively trade in the AEX?
If you want to trade actively in the AEX, you can use CFDs. CFDs are leveraged products with which you can speculate on prices to both rise and fall. This makes CFDs very suitable to respond to price fluctuations within the AEX.
Plus500 is a reliable party to try trading in the AEX. Within Plus500 the AEX is called Netherlands 25, which indicates that it is the fund with the 25 most traded shares. Plus500’s low trading fees make trading the AEX price developments accessible.
Would you like to try trading in the CFD AEX yourself? Use the button below to open a free demo on Plus500:
With which ETF can you invest in the AEX?
The best ETF with which you can invest in the AEX is the iShares AEX UCITS. This tracker follows the AEX index as closely as possible. The cost percentage of this index is only 0.3% on an annual basis, and you can invest entirely free of charge in this fund with DEGIRO.
Using options on the AEX
If you don’t mind taking greater risks, you can choose to invest in options on the AEX. Options give you the right (but not the obligation) to buy (call option) or sell (put option) the AEX at a certain price. Would you like to know exactly how investing in options works? Then read our manual on investing in options:
What is the AEX?
The AEX or Amsterdam Exchange Index in full is the best-known and most important Dutch stock exchange index. The index reflects the price development of the 25 shares with the largest market capitalization. The value of the index is calculated by taking the weighted average of the shares.
How is the AEX composed?
The AEX contains the 25 Dutch companies with the highest market capitalization. However, not every company has the same weight: the weight of a company is determined by the market capitalization of the individual shares. The market capitalization consists of the number of shares multiplied by the value of an individual share. One share may not have a weight greater than 15% and the index is revalued each year.
Within the AEX, certain companies are quite dominant. Examples include Royal Dutch Shell, Unilever and ASML, which together account for more than 40% of the weight of the index. When investing in the AEX, it is important to keep a close eye on the shares with a strong weight.
Where can you invest in the AEX?
Investing in the AEX is open to everyone. Most brokers simply trade the AEX as a contract. You can then speculate on both a falling and a rising AEX price. When the price rises, you can buy the fund. If you think that the price of the AEX is falling, you can choose to open a short position.
Would you like to know at which brokers you can invest most in the AEX? Then take a look at our overview of the best brokers:
Is investing in the AEX sensible?
Investing in a yardstick such as the AEX has several advantages and disadvantages. A major advantage of trading in the AEX is the fact that you automatically spread (limit) your risks. This is because you do not invest in one share, but in several shares. Nevertheless, the risk spread is limited to one economic region, namely the Netherlands. It is therefore advisable to invest in other indices in addition to the AEX, for example by using an ETF.
A major disadvantage of trading in the AEX is the fact that the return to be achieved is often lower. Because the price of the AEX is made up of the best and worst performing shares, it is never possible to achieve a better result than the best share in the index. As a result, you cannot beat the market by investing in an ETF on the AEX. Although beating the market is difficult, many investors like to try.
As an active investor, it may therefore be more interesting to select shares yourself. In this way, you can try to beat the stock market index and achieve a higher return. When you do this, it is important to conduct extensive research into the companies behind the share. You can do this by performing fundamental and technical analysis.
What is the current price of the AEX?
Below you can find a graph with the current stock price of the AEX. The price changes every moment of the day. With Plus500 the CFD AEX is tradable between 8am and 9pm. With the buttons, you open an investment position on the AEX:
How is the AEX calculated?
Before investing in the AEX, you must understand exactly how the index is calculated. Within the AEX, the 25 shares are listed with the highest trading volume: this volume is calculated by multiplying the average price of the share by the traded volume.
The weighting is then determined by looking at the market capitalization. Only the free float shares are taken into account, which are the freely tradable shares. One company will never receive a weighting higher than 15% to prevent one fund from exerting too much influence on price movements.
The index is revalued twice a year: when another company has earned a place in the index, it is replaced. With each revision, the weighting factor is re-determined, which should not change the value of the index. The index is 1/100 of the value of the basket of shares in euros.
Criticism of the AEX index
The AEX is not a holy house and the importance of the index is declining more and more. The index is no longer a good indicator of the Dutch economy. The distribution of funds within the index is rather skewed and some companies in the index have almost no connection with the Netherlands: a good example of this is the company ArcelorMittal.
Due to the fact that the business community is operating more and more internationally, international indices such as the Euro Stoxx 50 are becoming more popular. Because of the name recognition you still hear a lot about the AEX in the news.
What other indexes are there in the Netherlands?
In the Netherlands, in addition to the AEX, we also have the AMX and AScX index. The AMX Index (Amsterdam Midkap Index) contains the 25 medium-sized shares that did not make it into the AEX. The AScX Index (Amsterdam Small-Cap Index) is the third index and contains the numbers 51-75. When you want to invest in smaller companies, these indices can be more interesting.
Investing in AEX futures
It is also possible to invest in the AEX with a future. An index future is always 200 times the size of the index. When the index stands at 600 and rises to 610, your profit is 10 X 200 = €2000. As you can see your profits and losses quickly increase with futures. Investing in the AEX with futures is therefore only recommended if you have sufficient experience and capital.
Price developments of the AEX
The AEX is a relatively small index compared to, for example, the Dow Jones or S&P 500. Because of this, the price of the index can sometimes make strange jumps. Large parties can manipulate the price somewhat and at least temporarily allow it to move upwards. You often see this during lunch or 5 minutes after closing when the professionals can still place orders.
It is also important to note that dividends paid out are not included in the stock exchange chart. The price of the AEX therefore drops when dividends are paid out.
The price development of the AEX between 1993 and 2010
The role of world news
The price of the AEX is mainly influenced by world news. Surprisingly enough, news relating to the Dutch economy has hardly any influence on the development of the AEX’s price. This is because the large multinationals included in the index mainly operate internationally. Many foreign parties also invest in the AEX index. As a result, you see that the AEX often moves along with the stock market development of the S&P500.
The importance of a few companies
When investing in the AEX, it is important to remember that only a handful of companies has any real influence on the share price. Shell and Unilever are so large that many other, smaller funds only have influence on the AEX behind the decimal point. Therefore, pay particular attention to the large parties within the index: they ultimately make the difference!
How do you achieve better results with investments in the AEX?
You probably want to invest in the AEX to achieve good results! With these tips, you will ensure that you achieve the highest possible return with your investment in the AEX.
Analyse the index
The composition of the AEX index can change regularly. During the dot com crisis, for example, you saw that the index consisted of many overvalued internet companies. At that time, you mainly invested in internet companies when you bought an ETF on the AEX. Just before the credit crisis, this was very different: the index consisted mainly of banks.
Because the composition is constantly changing, you are also investing in other sectors. Therefore, keep an eye on whether the index is still sufficiently spread across different sectors.
Follow the news
When actively speculating on the price of the index, it is important to keep an eye on the world news. The largest Dutch companies are heavily dependent on economic developments in the world. If the world economy is doing well, the AEX will probably also put down green numbers.
Also look at other options
Buying an ETF on the AEX is certainly not a bad investment strategy. However, it is important to invest money in other markets as well. The AEX on its own does not provide sufficient diversification to achieve lasting, stable results.
Buying individual AEX shares can work out well, at least if you know how to select the best shares. We have a special page on trading.info with all interesting Dutch stocks. Do you want to know how to invest in Dutch AEX shares? Then visit our special:
When I was 16, I secretly bought my first stock. Since that ‘proud moment’ I have been managing trading.info for over 10 years. It is my goal to educate people about financial freedom. After my studies business administration and psychology, I decided to put all my time in developing this website. Since I love to travel, I work from all over the world. Click here to read more about trading.info! Don’t hesitate to leave a comment under this article.