What is the MSCI ACWI and Frontier Markets Index ETF?
The MSCI ACWI + Frontier Markets (FM) Index captures large and mid cap representation across 23 Developed, 24 Emerging and 29 Frontier Markets countries*. With 3,130 constituents, the index covers approximately 85% of the global equity investment opportunity set.
The MSCI ACWI is a stock index that tracks nearly 3,000 stocks in 47 developed and emerging market countries. The MSCI ACWI index is used as a benchmark for global equity funds and as a guide to asset allocation. Individual investors can gain access to the index through ETFs that replicate its performance.
The MSCI Frontier Markets Investable Market Index (IMI) captures large, mid and small cap representation across 29 Frontier Markets countries*. The index includes 538 constituents, covering about 99% of the free float-adjusted market capitalization in each country.
The ND and GD versions of the MSCI World Index and the MSCI EAFE Index differ in that ND returns reflect the impact of the maximum withholding taxes on reinvested dividends while the GD version does not reflect the impact of withholding taxes on reinvested dividends.
* Frontier Markets countries include: Bahrain, Bangladesh, Benin, Burkina Faso, Croatia, Estonia, Guinea-Bissau, Iceland, Ivory Coast, Jordan, Kazakhstan, Kenya, Latvia, Lithuania, Mauritius, Morocco, Mali, Niger, Nigeria, Oman, Pakistan, Romania, Senegal, Serbia, Slovenia, Sri Lanka, Togo ,Tunisia and Vietnam.
S&P 500 Index is an unmanaged, market value-weighted index of 500 stocks generally representative of the broad stock market. The MSCI ACWI Index is a free float-adjusted market capitalization weighted index that is designed to measure the equity market performance of developed and emerging markets.
Whereas MSCI World includes stocks from only developed markets, the MSCI All Country World index (ACWI) also invests in emerging markets.
The largest Frontier Markets ETF is the VanEck Vietnam ETF VNM with $550.89M in assets. In the last trailing year, the best-performing Frontier Markets ETF was ARGT at 49.37%. The most recent ETF launched in the Frontier Markets space was the X-Square Municipal Income Tax Free ETF ZTAX on 05/19/23.
The MSCI World Index captures large and mid-cap representation across 23 Developed Markets (DM) countries*. With 1,479 constituents, the index covers approximately 85% of the free float-adjusted market capitalization in each country.
MSCI stands for the investment research firm Morgan Stanley Capital International, now MSCI Inc., which has been a fully independent, stand-alone public company since 2009. There are more than 200,000 MSCI indexes that are used to track the performance of industries, sectors, and regions.
How many stocks are in the MSCI ACWI?
Summary. The MSCI All Country World Index (ACWI) measures the equity performance of more than 3,000 stocks from both developed and emerging markets. The MSCI ACWI can be used as a benchmark to evaluate the performance of a global equity portfolio.
With 2,919 constituents, the index covers approximately 85% of the global investable equity opportunity set.
The MSCI ACWI ex USA Index captures large and mid cap representation across 22 of 23 Developed Markets (DM) countries (excluding the US) and 24 Emerging Markets (EM) countries*. With 2,310 constituents, the index covers approximately 85% of the global equity opportunity set outside the US.
Among them are Myanmar, Mozambique, Vietnam, and Rwanda. Many are home to the world's largest untapped sources of minerals and metals, and despite the current soft commodity prices, global investment in developing these resources will continue to boost income and growth.
The iShares MSCI World ETF seeks to track the investment results of an index composed of developed market equities.
The MSCI Frontier Markets 100 10/40 Index is designed to measure the performance of the large and mid cap segments. The index includes approximately 100 of the largest and most liquid constituents of the parent index.
Which is the better index to invest in long-term, the S&P 500 or the MSCI World? In my view, the better investment is MSCI World because it offers instant diversification whereas an investment into the S&P500 is a concentrated bet - all your investment eggs are in the USA basket.
MSCI Inc. (MSCI) has a higher volatility of 6.11% compared to SPDR S&P 500 ETF (SPY) at 2.66%. This indicates that MSCI's price experiences larger fluctuations and is considered to be riskier than SPY based on this measure. The chart below showcases a comparison of their rolling one-month volatility.
The MSCI All Country World Index (MSCI ACWI) Factsheet
However, emerging markets stocks are weighted with 9.96%, whereas stocks from developed markets account for 90.04%. With 2,920 constituents (as of 31/01/2024), the index covers approximately 85% of the free float-adjusted global market capitalization.
The committee that manages the index deliberately only selects shares from countries that have a stable economy. Therefore, an MSCI World ETF gives you a relatively safe way to invest in the global economy with a single investment product.
Should I invest in MSCI?
If you have a sufficiently long investment horizon then broadly diversified global indices such as the MSCI World are an excellent choice. Historically, equities have delivered the highest returns of any asset class over the medium and long term.
Companies use our comprehensive ESG and climate data, measures and analytical tools to benchmark performance, sharpen decision-making and position for capital. We help hedge funds more easily spot the drivers of risk and return within dynamic markets to protect and maximize unique source of alpha.
Even though frontier markets carry quite a bit of risk, they are actually less volatile than emerging markets and about the same as developed markets.
Understanding Frontier Markets
They are considered desirable by investors looking for substantial long-term returns because these markets have the potential to become much more stable and established over the course of decades.
Because listed frontier market companies remain hidden to many investors, bargains abound. Frontier markets account for 25% of the world's population and 12% of the global economy but less than 3% of the market value of all companies trading on world stock markets.
