Introduction
The MSCI All Country World Index (ACWI) is a paramount stock index that mirrors a broad spectrum of global equity-market performance. Governing around 3,000 companies across 23 developed and 24 emerging markets (as of December 29, 2023), the MSCI ACWI serves as a vital tool for asset managers to guide asset allocation and assess the performance of global equity funds.
Key Takeaways
- The MSCI ACWI encompasses around 3,000 stocks from 47 developed and emerging market nations.
- As of June 30, 2023, approximately $4.3 trillion in assets anchor to this index.
- It functions not only as a global equity benchmark but also as a key reference for asset allocators.
- Individual investors can participate via ETFs that emulate the index’s performance.
An Optimal Path to Global Diversification
Investors eyeing diversified portfolio holdings can gravitate towards the MSCI ACWI index, which opens doors to worldwide equities, minimizing the need for individually handpicked stocks. By investing in ETFs that follow this index’s performance, such as those mimicking the Dow Jones Industrial Average (DJIA) or the S&P 500, individual and institutional investors gain strategic exposure to a sundry of global stocks.
Current Country and Sector Allocations
As of December 29, 2023, the highest country caveats within the MSCI ACWI index include the U.S. (62.57%), Japan (5.4%), China (3.62%), the United Kingdom (3.55%), and France (2.9%). Sector allocations are substantially diversified:
- Information Technology: 22.93%
- Financials: 15.92%
- Healthcare: 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%
Leading Holdings of the Index
The top 10 holdings within the index, by portfolio weighting, as of December 29, 2023, are:
- Apple Inc: 4.47%
- Microsoft Corp: 3.95%
- Amazon.com: 2.10%
- Nvidia: 1.82%
- Alphabet A: 1.23%
- Meta Platforms A: 1.17%
- Alphabet C: 1.09%
- Tesla: 1.06%
- Broadcom: 0.74%
- JPMorgan Chase: 0.73%
Together, these ten holdings represent 18.36% of the MSCI ACWI index weight.
Investing Through ETFs: The iShares MSCI ACWI ETF
Direct purchases of the MSCI ACWI are impossible since the index is merely a measure of performance. Nonetheless, investors can acquire ETFs, like BlackRock’s iShares MSCI ACWI ETF managing about $18.3 billion in assets as of January 18, 2024.
This ETF replicates the index’s composition with 2,340 holdings, and an expense ratio of 0.32%, charging for fund management. Here’s a glimpse comparing the ETF performance and the MSCI ACWI index as of December 31, 2023:
| Metric | iShares MSCI ACWI ETF | MSCI ACWI Index |
|---|---|---|
| One Year | 22.22% | 22.20% |
| Three Years | 5.75% | 5.75% |
| Five Years | 11.76% | 11.72% |
Broader Alternatives for Global Equities
A comprehensive exposure to global equities can extend through an ETF tracking the MSCI ACWI All Cap Index, encompassing over 15,000 equity holdings including mid and small-cap stocks, from both developed and emerging markets. Ideal diversification includes determining if overexposure exists due to substantial U.S. equity investments and seeking professional guidance for tailored asset allocation strategies.
Bottom Line
For investors aspiring for a more holistic international market footprint, MSCI ACWI-tracking funds capably furnish extended diversification across nearly 50 nations globally, unifying developed and emerging markets into a single investment vehicle.
Related Terms: MSCI World Index, Dow Jones Industrial Average, S&P 500, iShares MSCI ACWI ETF, Asset Allocation.
References
- MSCI. “MSCI ACWI Index (USD), Fact Sheet”, Page 1.
- MSCI. “MSCI ACWI Index”.
- MSCI. “MSCI ACWI Index (USD), Fact Sheet”, Page 2.
- iShares. “iShares MSCI ACWI ETF”.
- MSCI. “MSCI ACWI All Cap Index, Fact Sheet”, Page 1.
- MSCI. “MSCI World Index, Fact Sheet”, Page 1.
- MSCI. “Investing in China”.
