Introduction
This article offers a factual comparison between “All World” ETFs—typically tracking FTSE All‑World or MSCI ACWI—and MSCI World ETFs. It covers objective characteristics such as geographic and sector coverage, index scope, ETF availability, cost considerations, and performance patterns.
Index Structure and Market Coverage
- MSCI World Index targets large- and mid-cap equities from 23 developed economies, capturing roughly 85% of each market’s free-float-adjusted capitalization.
- FTSE All‑World Index covers large- and mid-cap equities across both developed and emerging markets, with approximately 4,000 constituents, spanning over 50 countries. It captures a broader market segment, typically covering around 90% of global investable capitalization.
Country and Sector Composition
- FTSE All‑World assigns around 62% weight to the United States, while MSCI World allocates approximately 71%. The broader exposure of FTSE includes meaningful representation from emerging economies.
- Sector-wise, both indices are market-cap weighted with Information Technology as the largest sector—approximately 27% in FTSE and about 24% in MSCI. The rest of the sector distribution is broadly similar.
Number of Holdings
- MSCI World typically includes around 1,300 to 1,400 companies.
- FTSE All‑World includes around 4,200 to 4,300 companies, offering significantly higher diversification.
ETF Availability and Costs
- The MSCI World index has multiple ETFs available, including large offerings such as iShares Core MSCI World UCITS ETF. Expense ratios can be as low as approximately 0.06%, ranging up to around 0.20%.
- FTSE All‑World ETFs are also widely available, with typical expense ratios around 0.22%, though this varies by provider.
- For comprehensive global coverage, other options like MSCI ACWI also exist; these include both developed and emerging markets, with around 2,500 constituents.
Historical Performance
- In recent periods, MSCI World has generally outperformed FTSE All‑World, largely due to relatively weaker performance in emerging markets, which are included in the All World index but excluded from MSCI World.
- Performance differences are influenced by regional cycles. While developed markets have dominated recent returns, broader global exposure may benefit from growth in emerging economies over time.
Rebalancing Frequency
- MSCI World undergoes quarterly rebalancing, enabling more frequent alignment with market capitalization changes.
- FTSE All‑World typically rebalances twice a year, providing more stability but less frequent updates.
- This difference can affect index turnover and tracking characteristics depending on market volatility.
Summary Table
| Feature | MSCI World Index / ETFs | FTSE All‑World Index / ETFs |
|---|---|---|
| Market Coverage | Developed markets only | Developed + emerging markets |
| Countries Covered | 23 | Around 50 |
| Number of Constituents | ~1,300–1,400 | ~4,200–4,300 |
| U.S. Weight | ~71% | ~62% |
| Sector Concentration | IT ~24% | IT ~27% |
| Expense Ratios | ~0.06%–0.20% | ~0.22% (varies by provider) |
| Rebalancing Frequency | Quarterly | Biannually |
| Recent Performance | Slightly stronger | Broader exposure; affected by EM lag |
Conclusion
MSCI World and FTSE All‑World ETFs serve different strategic purposes. MSCI World focuses exclusively on developed markets, offering lower volatility, consistent performance, and slightly lower costs. FTSE All‑World includes emerging markets, resulting in broader diversification but with higher exposure to economic variability. MSCI ACWI represents a middle ground between the two. The decision between these options should be based on an investor’s global exposure objectives, cost sensitivity, and risk preferences.
