What is the difference between the MSCI World and the FTSE All-World?
The MSCI World and the FTSE All-World are the two indices most often used for "the global stock market", and both are tracked by many popular ETFs. The main difference is what they cover:
- The MSCI World includes large and mid-sized companies in 23 developed countries — around 1,400 companies.
- The FTSE All-World includes large and mid-sized companies in developed and emerging countries — around 50 countries and more than 4,000 companies.
The closest MSCI equivalent to the FTSE All-World is the MSCI ACWI (All Country World Index), which adds emerging markets to the MSCI World.
How they are weighted
Both indices are weighted by free-float market capitalization: each company's weight is its market value — counting only the shares available for public trading — divided by the total for all companies in the index:
The largest companies therefore dominate both indices, and the country weights follow the size of each country's stock market.
What the difference amounts to
| MSCI World | FTSE All-World | |
|---|---|---|
| Countries | developed only | developed and emerging |
| Number of companies | about 1,400 | more than 4,000 |
| Share of emerging markets | none | about 10% |
| Share of the United States | about 70% | about 60–65% |
Because emerging markets make up only around a tenth of the world's market value, the two indices move very similarly most of the time. Their returns differ mainly when emerging markets strongly out- or underperform: in the 2000s, when emerging markets boomed, the broader index did better; in the 2010s, when US stocks led, the MSCI World did.
A simple illustration
In a year in which developed markets return 10% and emerging markets 0%, an index with 90% developed and 10% emerging markets returns:
That is one percentage point less than the MSCI World. In a year in which emerging markets outperform by ten points, the difference reverses.
Which to choose
- A single fund for the whole world: the FTSE All-World or the MSCI ACWI, which already include emerging markets.
- Building blocks: an MSCI World ETF plus a separate emerging-markets ETF, often in a ratio of about 90 to 10 — more flexible, but two funds to rebalance.
- Costs and tracking differences of the specific ETFs usually matter less than the coverage decision, but they are worth comparing.
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