Set to launch on the Frankfurt stock exchange on the 21st of June, the bicycle industry will get its first stock exchange index, tracking 20 of the trade’s largest listed names.
This means that an investor could invest in this single index and know that they’ve just invested in a diversified portfolio of 20 major bicycle related companies.
In signs that the investment trend into the bicycle business is only gathering momentum, such indexes are used to track entire industries’ performance, giving investors who have faith in a particular topic a balanced and broad investment that is diversified across the range of companies, rather than into one stock. For example, the clean energy market has a handful of indexes tracking the biggest names in wind, solar and other technologies.
The index management will be handled by asset management firm Daubenthaler and the index will be called BeneFaktorIndex® Bike.
In an unusual but welcome twist, the World Bicycle Relief fund will be a beneficiary to the tune of 10% of the annual product fees charged to investors. The annual administration fee is pitched at 1.3%.
Thought the launch will not be official until June 21st, subscription in Germany is already available through Comdirect – a Commerzbank AG brand.
The index is weighted with a variety of stocks that tap into the bicycle, electric bike, e-mobility and even indoor fitness market with relative newbie Peloton included with its hefty US$30.75 billion (A$40 billion) market capitalisation, qualifying it for inclusion.
The full list of 20 will debut as below but may be readjusted periodically to reflect the market leaders, or to diversify the portfolio, in theory lowering the volatility of the index.
- Allegion (Kryptonite parent)
- Cheng Shin Rubber
- Fox Factory Holdings
- Kenda Rubber
- Merida Industries
- Michelin Rubber
- Vista Outdoor
- Yadea Group
The index may be problematic for some, however, with a handful of the firm’s listed having portfolios of their own that are diversified outside of the bike industry, for example Vista Outdoor, which famously has seen boycott calls in the past over its involvement in the arms trade.
If you’re wondering why major companies such as Trek, Specialized, SRAM and Bosch are not on the list, it’s because they are privately owned, so the index fund is unable to buy shares in them.
It is also fair to say that the bike industry represents a small (but growing) fraction of trade done by the likes of Samsung, among others on the list.
The bicycle industry’s listed companies have generally excelled through the pandemic after the initial fright in March of 2020 that spooked the markets as a whole. Since that time many companies’ share prices have multiplied and a fast accelerating trend of investment is seeing companies acquired at an abnormal rate for this industry.
“Trends that might have come into play over a five to ten year period have really been bunched up by the Coronavirus and the shifts have been seismic. Most notably, investment has accelerated in the active living segments, all sustainability driven markets and micromobility. There are a few areas that tick all of those interests and cycling fits the bill very well,” summarised Boris Partin of European investment firm Baird.
Most this article was first published in Cycle Industry News