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MSCI ACWI vs MSCI World: Key Differences and Performance Data (2024)

Minho Investment Association| Updated January 8th, 2024

With financial markets becoming increasingly globalised, you, as an investor, may be looking for opportunities beyond the borders of your home countries. When investing in indexes, choosing options that offer the right mix of diversification, market exposure, and efficient costs is essential. 

The MSCI (Morgan Stanley Capital International) indexes are widely used as a benchmark for evaluating the performance of stock markets worldwide. When considering these indices, due to their globality, it is essential to consider currencies and currency fluctuations such as the EUR, GBP, and USD, as these currencies can have a significant impact on investment returns.

In short, the difference between MSCI ACWI and MSCI World is that the MSCI ACWI tracks the performance of companies from developed and emerging markets. In contrast, the MSCI World Index only tracks the performance of companies from developed markets/countries. 

MSCI ACWI is the best fit to gain exposure to emerging markets. If you prefer to gain exposure to developed markets only, MSCI World could be a good fit.

In this article, we’ll explore the differences between these ETFs and examine the implications that currencies can have on the results of investors interested in diversifying their portfolios globally.

MSCI ACWI vs MSCI World compared in a nutshell

We have assembled all the information discussed throughout the article in this table so that you can make an informed decision.

 ETF MSCI ACWI MSCI World
Inception date Jan, 2001 Mar, 1986
Markets Developed and emerging Developed
Number of Holdings 2921 1480
Top 5 countries US, Japan, UK, France, Canada US, Japan, UK, France, Canada
Top 5 sectors Information Technology, Financials, Health care, Consumer Discretionary and Industrials Information Technology, Financials, Health care, Consumer Discretionary and Industrials
Top 5 constituents Apple, Microsoft Corp, Amazon.com, Nvidia, Alphabet A Apple, Microsoft Corp, Amazon.com, Nvidia, Alphabet A

Overview of the MSCI ACWI vs MSCI World

The MSCI ACWI is a more comprehensive index that includes stocks from both developed and emerging markets. In addition to the countries covered by MSCI World, MSCI ACWI includes stocks from emerging markets such as China, India, Brazil, and many others. So, MSCI ACWI offers a complete view of global equity markets, reflecting economic diversity and growth opportunities worldwide.

The MSCI World is an index covering stocks from approximately 23 developed countries. Importantly, the composition of MSCI World is weighted by market capitalisation ( more importance to companies with a greater market value), which means that the influence of US companies is significantly greater compared to other countries.

Performance

The chosen ETFs to measure the performance of each index are the iShares MSCI ACWI UCITS ETF (SSAC) and the iShares Core MSCI World UCITS ETF USD (SWDA).

Our team has collected the historical performances of these two ETFs since 2011 to showcase the performance of each index. When comparing the performance of both indices (the underlying assets of each ETF), it is evident that the MSCI World outperforms the MSCI ACWI index.

In red, it is possible to observe the evolution of the iShares MSCI ACWI UCITS ETF (SSAC), while in blue, it is possible to observe the trend of the iShares Core MSCI World UCITS ETF USD (SWDA).

SSAC vs IWDA

Nevertheless, it is important to acknowledge that historical performance is not indicative of future returns, and there is no guarantee that the same results will persist in the future.

Geographic Diversification

When it comes to global exposure across different countries, the indexes present variances in their country composition.

MSCI ACWI MSCI World
Country Weight  Country Weight 
USA 62.57% USA 69.91%
Japan 5.40% Japan 6.03%
UK 3.55% UK 3.96%
France 2.90% France 3.24%
Canada 2.87% Canada 3.21%
Other 22.71% Other 13.64%

Data as at 29 December 2023 | Source: MSCI

Overall, the MSCI ACWI Index aims to provide a more comprehensive representation of global equity markets by including stocks from 47 countries, covering both developed and emerging markets. This results in a higher weighting of “other” countries, which reflects its broader coverage, encompassing a larger number of countries, including emerging markets. 

In contrast, the MSCI World Index primarily comprises stocks from developed markets, encompassing 23 countries. With a focus on these established economies, the MSCI World Index may offer a more concentrated country diversification than the MSCI ACWI Index.

Sector Diversification

The sector composition between MSCI ACWI and MSCI World is very similar, with slight variations in specific sector allocations. Besides that, Information Technology is the dominant sector in both indexes, indicating the importance of technology companies in the global economy.

Sector allocation MSCI ACWI

Sectors Weight
Information Technology 22.93%
Financials 15.92%
Health Care 11.24%
Consumer Discretionary 11.08%
Industrials 10.65%
Communication Services 7.34%
Consumer Staples 6.76%
Energy 4.54%
Materials 4.53%
Utilities 2.62%
Real Estate 2.38%

Data as of December 29, 2023 | Source: MSCI

Sector allocation MSCI World

Sectors Weight
Information Technology 23.02%
Financials 15.17%
Health Care 12.12%
Industrials 11.11%
Consumer Discretionary 10.88%
Consumer Services 7.17%
Communication Staples 6.84%
Energy 4.47%
Materials 4.14%
Utilities 2.61%
Real Estate 2.47%

Data as of December 29, 2023 | Source: MSCI

The MSCI ACWI Index and the MSCI World Index prioritise diversification by incorporating a broad range of sectors. This approach ensures that investors have well-balanced exposure to different industries, minimising concentration risk and bolstering portfolio diversification.

Number of Holdings

The MSCI World Index comprises a diverse set of 1,480 constituents, consisting of large and mid-cap stocks from 23 Developed Markets (DM) countries. This comprehensive coverage represents approximately 85% of the market value within each country, providing investors with a broad representation of the developed markets globally.

On the other hand, the MSCI ACWI Index boasts an extensive collection of holdings, encompassing 2,921 constituents. This index incorporates large and mid-cap stocks, offering comprehensive coverage of approximately 85% of the total market value across global markets.

Top 10 Holdings

Comparing the top 10 holdings between the MSCI ACWI Index and the MSCI World Index, we can observe that the lists are quite similar. However, there are variations in the weights assigned to each stock within their respective indexes.

Top 10 Holdings MSCI ACWI

Data as of December 29, 2023 | Source: MSCI

Top 10 Holdings MSCI World

Data as of December 29, 2023 | Source: MSCI

Upon analysing the top 10 holdings, a noticeable pattern emerges where most of the companies in the list are from the United States, with one exception Taiwan Semiconductor Manufacturing.

Impact of Currencies

Currency fluctuations play a crucial role when investing in global indexes such as MSCI ACWI and MSCI World. When investors hold assets denominated in different currencies, changes in exchange rates can affect the returns on their investments. In the case of the EUR, GBP, and USD, these three currencies are widely used in international transactions and are relevant for globally diversified investors.

When the euro appreciates against the US dollar and the pound, investors holding euro-denominated stocks on the MSCI ACWI and MSCI World indexes can earn more favourable returns when converted to other currencies. On the other hand, if the euro depreciates against other currencies, investors may suffer currency losses.

To mitigate currency risk, investors may consider diversifying currencies in their portfolios. This can be achieved through financial products such as exchange funds or index funds that offer exposure to different currencies. Currency diversification can help balance currency fluctuations against global investment.

Availability of ETFs

As you may be aware, investing directly in an index is not possible. Instead, investors can gain exposure to an index by investing in financial instruments designed to track its performance. Two commonly used investment vehicles for this purpose are exchange-traded funds (ETFs) and index funds.

Here is a selection of ETFs replicating both indexes:

MSCI ACWI

Name ISIN Ticker*1 TER AUM Replication method Use of income
iShares MSCI ACWI UCITS ETF IE00B6R52259 SSAC 0.20% + USD 8 M  Physical Accumulating
Lyxor MSCI All Country World UCITS ETF – Acc (EUR) LU1829220216 ACWI 0.45% + EUR 910 M Physical Accumulating
Lyxor MSCI All Country World UCITS ETF – Acc (USD) LU1829220133 LYAC 0.45% + USD 1,000 M  Physical Accumulating
SPDR MSCI ACWI UCITS ETF IE00B44Z5B48 SPYY 0.40% + EUR 2,100 M Physical Accumulating

*1: The same ETFs can be found on other exchanges with different tickers.

MSCI World

Name ISIN Ticker*1 TER AUM Replication method Use of income
iShares Core MSCI World UCITS ETF USD IE00B4L5Y983 SWDA 0.20% + EUR 49,00 M Physical Accumulating
HSBC MSCI World UCITS ETF USD (Acc) IE000UQND7H4 HMWA 0.15% + EUR 18,00 M Physical Accumulating
iShares MSCI World UCITS ETF (Dist) IE00B0M62Q58 IWRD 0.50% + EUR 5,40 M  Physical Distributing
HSBC MSCI World UCITS ETF USD IE00B4X9L533 HMWD 0.15% + EUR 5,00 M Physical Distributing
Invesco MSCI World UCITS ETF IE00B60SX394 SMSWLD 0.19% + EUR 3,30 M Synthetic Accumulating

*1: The same ETFs can be found on other exchanges with different tickers.

Cheapest brokers to invest in MSCI ACWI and MSCI World

Now that we’ve gone through the differences between the two ETFs, it’s time to investigate which broker is best to invest in. We have already done that work by analysing the most important features of different ETF brokers and putting together a list of 4 ETF brokers. 

Here you have the list of the 4 ETF brokers and the advantages of each one of them:

  1. eToro: Best for social trading and commission-free investing
  2. Interactive Brokers: Best for the largest ETF offering
  3. Public.com: Best for commission-free investing and access to an investor community
  4. DEGIRO: Best for low-cost ETF trading (External fees apply)

Disclaimer: eToro is a multi-asset investment platform. The value of your investments may go up or down. Your capital is at risk. Other fees apply. For more information, visit etoro.com/trading/fees.

Broker ETF fees Minimum Deposit Number of ETFs Regulators
eToro $0 (other fees apply) $10 (varies between countries) 260+ FCA, CySEC, ASIC
Interactive Brokers Free for US investors; Up to $0.0035 per stock (min: $0.35) for international investors €/$/£0 13,000+ FINRA, SIPC, SEC, CFTC, IIROC, FCA, CBI, AFSL, SFC, SEBI, MAS, MNB
Public.com $0 for US-listed stocks and ETFs during regular market hours; $2.99 per trade during extended hours for non-premium members $0 200+ SEC and FINRA
DEGIRO €/£0 (in some ETFs, + a €/£1 handling fee), plus an annual €/£2.50 connectivity fee €/£1 200+ DNB and AFM

Conclusion

In conclusion, the MSCI ACWI Index and the MSCI World Index serve as valuable tools for investors seeking broad exposure to global equity markets. While the MSCI ACWI Index includes developed and emerging markets, the MSCI World Index concentrates on developed markets. This difference in country composition allows investors to choose their desired level of exposure to different regions and market development stages.

Both indexes prioritise sector diversification, ensuring a well-balanced representation across various industries. This emphasis on sector diversification promotes portfolio diversification and helps mitigate the risk of overexposure to specific sectors, enhancing overall risk management.

Minho Investment Association
Contributor

The Minho Investment Association (MIA) is a junior initiative from the University of Minho (Portugal), which aims to promote financial literacy among young people.

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