We compare the MSCI World, MSCI ACWI and FTSE Global All Cap indices
Thursday 14 Jul 2022 Author: Mark Gardner

Thousands of investors are looking for easy options to get exposure to stocks around the world. One route is to buy a tracker fund or an exchange-traded fund that mirrors the performance of a global index.

Two of the most popular indices used by global tracker funds are MSCI World and MSCI All Countries World (also known as ACWI), yet interestingly neither feature in a product by Vanguard, which has been growing in popularity in recent years.

Vanguard FTSE Global All Cap Index Fund (BD3RZ58) aims to replicate the performance of the FTSE Global All Cap index, which differs to the two MSCI global indices by providing exposure to smaller companies as well as large and mid-cap stocks.

MSCI World tracks the performance of approximately 1,500 large and mid-cap companies across 23 developed market countries. MSCI All Countries World does the same and adds 24 emerging market countries, resulting in coverage of nearly 3,000 companies.

FTSE Global All Cap goes even further and tracks a basket of approximately 9,400 companies. This is a market capitalisation weighted index which means companies with the largest market value will have a higher allocation than those with a smaller market value. As a result, larger companies still dominate its performance.

Exposure to more companies doesn’t necessarily lead to greater returns. Over five years to 7 July 2022, total return in sterling for the MSCI World was 57.7%. The FTSE Global All Cap returned 54% while the MSCI All Countries World was 52.5%.

On a 10-year basis, there is more of a difference, with the MSCI World again on top by delivering a 226.5% return. The FTSE Global All Cap was second with a 216.9% return and the MSCI All Countries World was third with 203.3%.

Ultimately, all three indices provide exposure to a large bucket of companies around the world, providing diversification in terms of geographies, sectors and economies. Any one of them should do the job for an investor seeking a simple way of tracking global stock market activity.

If you want to go down that route, it’s worth comparing the charges for each relevant tracker fund or exchange-traded fund as these can vary between fund providers.

For example, Vanguard FTSE Global All Cap Index Fund charges 0.23% a year versus 0.2% from  iShares Core MSCI World ETF (SWDA) and 0.4% from SPDR MSCI ACWI ETF (ACWI).

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