mWIG40

The mWIG40 is a major stock market index of the Warsaw Stock Exchange (WSE), often referred to as the Polish mid-cap index. It tracks the performance of 40 medium-sized companies listed on the WSE's Main Market. Think of it as the younger, more domestically focused sibling of the famous WIG20, which tracks the 20 largest and most liquid Polish blue-chip stocks. The mWIG40 picks up where the WIG20 leaves off, encompassing the next 40 companies in line based on size and trading volume. This makes it a crucial barometer for the health of Poland’s mid-sized corporate sector, which is often seen as the engine room of the national economy. For investors, the index offers a snapshot of companies that have outgrown the small-cap stage but may still have significant room for expansion, potentially offering a blend of stability and growth.

The name itself is a neat little package of information. The 'm' stands for 'medium', signifying its focus on mid-cap companies. 'WIG' is an acronym for Warszawski Indeks Giełdowy, which simply means 'Warsaw Stock Exchange Index'. And the '40'? You guessed it—it represents the number of companies, or constituents, in the index.

Getting into the mWIG40 club isn't a matter of opinion. The WSE uses a clear, rules-based system. After the top 20 companies are selected for the WIG20, the WSE ranks the remaining companies by market capitalization adjusted for free float and trading turnover. The top 40 from this list form the mWIG40. This portfolio is reviewed and adjusted every quarter to ensure it accurately reflects the market's mid-tier.

It's vital to know that the standard mWIG40 is a price index. This means its value only reflects changes in the stock prices of its constituent companies. It does not account for income from dividend payments. If you want to see the full picture, including reinvested dividends, you should look at its total return counterpart, the mWIG40TR. For a value investor focused on long-term wealth compounding, the TR index is a much truer measure of performance.

While the WIG20 grabs the headlines, many savvy investors argue that the mWIG40 is a more authentic indicator of the Polish domestic economy. The WIG20 is heavily weighted with giant banks, state-controlled utilities, and resource companies whose fortunes are often tied to global commodity prices or government policy. The mWIG40, in contrast, is populated with a more diverse group of companies in sectors like retail, manufacturing, and technology that are more closely linked to the spending habits and economic health of Polish consumers and businesses.

The mid-cap space is often called the “sweet spot” for investing, and for good reason. Companies in the mWIG40 are typically:

• More established than small-caps, with proven business models and a track record of profitability.
• More agile and growth-oriented than the large-cap giants in the WIG20.

Because they receive less attention from analysts than their blue-chip cousins, there's a greater chance for a diligent investor to uncover a mispriced gem—a solid, growing business trading at a discount to its intrinsic value. This is the heart of value investing.

Of course, no investment is without risk. Mid-cap stocks can be more volatile than large-caps. They may also have lower liquidity, meaning it can sometimes be harder to buy or sell large quantities of shares without affecting the price. As always, the key is to do your own research on the individual companies within the index, rather than buying blindly.

You can't buy an index directly, but you can easily gain exposure to the performance of the mWIG40. The most common way for an individual investor to do this is through an Exchange-Traded Fund (ETF) or a mutual fund that is designed to track the index. Buying shares in such a fund is like instantly purchasing a small slice of all 40 companies, giving you broad diversification across the Polish mid-cap sector with a single transaction.