DAX (Deutscher Aktienindex)

Stock Market Indices
beginner
4 min read
Updated Feb 20, 2025

What Is the DAX?

The DAX (Deutscher Aktienindex) is a blue-chip stock market index consisting of the 40 major German blue-chip companies trading on the Frankfurt Stock Exchange. It is the German equivalent of the Dow Jones Industrial Average or the FTSE 100.

The DAX is the benchmark index for the German equity market and one of the most important indices in Europe. Often referred to simply as "the DAX," it represents approximately 80% of the market capitalization of listed stock corporations in Germany. Unlike most other major indices (like the S&P 500 or FTSE 100), the DAX is a performance index (total return index). This means that its calculation assumes that all cash dividends paid by the constituent companies are reinvested back into the index. This makes the DAX naturally drift higher over time compared to price indices that drop when dividends are paid. The index is calculated every second during trading hours (9:00 AM to 5:30 PM CET) using prices from the Xetra electronic trading platform. It serves as the underlying for massive volumes of futures and options trading on the Eurex exchange.

Key Takeaways

  • The DAX tracks the performance of the 40 largest and most liquid companies on the German stock market.
  • It was expanded from 30 to 40 companies in September 2021.
  • The index is capitalization-weighted (free-float market cap).
  • It is a total return index, meaning dividends are assumed to be reinvested.
  • Major constituents include SAP, Siemens, Allianz, and Deutsche Telekom.
  • Prices are taken from the Xetra electronic trading system.

History and Composition

Launched on July 1, 1988, with a base value of 1,163.52 points, the DAX started with 30 companies. In September 2021, Deutsche Börse expanded the index to 40 companies (DAX 40) to better reflect the modern German economy and align with international standards. To be included in the DAX, a company must: 1. Be listed on the Prime Standard segment of the Frankfurt Stock Exchange. 2. Have a continuous trading on Xetra. 3. Have a minimum free-float of 10%. 4. Rank among the top 40 by free-float market capitalization. 5. Maintain profitability (positive EBITDA for the two most recent fiscal years).

Sector Representation

The DAX is heavily weighted towards traditional industries that power the German economy: • Automotive: Volkswagen, Mercedes-Benz, BMW, Porsche. • Chemicals: BASF, Bayer. • Engineering/Industrial: Siemens. • Financials: Allianz, Deutsche Bank. • Technology: SAP (often the largest component), Infineon.

Real-World Example: Trading the DAX

A trader expects the German economy to rebound.

1Step 1: The trader buys an ETF tracking the DAX (e.g., iShares Core DAX UCITS ETF).
2Step 2: A major component, Siemens, reports strong earnings and raises its dividend.
3Step 3: Because the DAX is a total return index, the dividend payment does not cause the index to drop; instead, the reinvestment boosts the index value.
4Step 4: The ETF price rises in line with the index.
5Step 5: The trader sells for a profit, capturing both the price appreciation and the reinvested dividends.
Result: Investing in the DAX provides exposure to the "German Economic Engine".

FAQs

DAX stands for Deutscher Aktienindex, which translates to "German Stock Index".

The primary DAX index that is quoted in the media is a Total Return Index (dividends reinvested). However, a price index version (DAX Kursindex) is also calculated but less commonly referenced.

Xetra trading hours are 09:00 to 17:30 CET (Central European Time). However, DAX futures trade on Eurex almost 24 hours a day, and "Late DAX" prices are calculated until 22:00 CET.

The composition is reviewed quarterly (March, June, September, December). Changes are based on the "Fast Entry" and "Fast Exit" rules regarding market cap rankings.

You cannot buy the index directly. You can buy ETFs that track it, futures (FDAX), options, or CFDs offered by brokers.

The Bottom Line

The DAX is the heartbeat of the German economy and a key barometer for European market sentiment. As a total return index of 40 blue-chip powerhouses like SAP, Siemens, and VW, it offers a unique blend of industrial strength and dividend growth. For global investors, the DAX is the primary vehicle for gaining exposure to Europe's largest economy.

Related Terms

Ftse 100Cac 40Blue Chip Stock

More in Stock Market Indices

All-Country World Index Ex-U.S. (ACWI Ex-US)ASX 200Broad-Based IndexComponentsCOMPXDAX 40DAX IndexDow Jones Industrial Average (DJIA)Equity IndexESTX50 (Euro Stoxx 50)
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At a Glance

Difficultybeginner
Reading Time4 min
CategoryStock Market Indices

Key Takeaways

  • The DAX tracks the performance of the 40 largest and most liquid companies on the German stock market.
  • It was expanded from 30 to 40 companies in September 2021.
  • The index is capitalization-weighted (free-float market cap).
  • It is a total return index, meaning dividends are assumed to be reinvested.

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