What is the 'MSCI ACWI - All Country World Index'

The MSCI ACWI is a market capitalization weighted index designed to provide a broad measure of equity-market performance throughout the world. The MSCI ACWI is maintained by Morgan Stanley Capital International (MSCI), and is comprised of stocks from both developed and emerging markets.

ACWI is an abbreviation for All Country World Index.

BREAKING DOWN 'MSCI ACWI - All Country World Index'

There are a number of ways that investors can diversify their portfolio holdings. A portfolio manager or investor can purchase individual stocks that have a low or negative correlation with each other. But to fully reap the benefits of diversification, most investors look to ETFs, since purchasing numerous stocks from multiple sectors and countries could prove costly. An exchange-traded fund (ETF) tracks and replicates the performance of an index like the Dow Jones, S&P 500, Nasdaq 100, etc. An index that has the broadest selection of publicly traded stocks is the MSCI ACWI, short for ACWI.

The ACWI (All Country World Index) is an index that was created by MSCI Inc (Morgan Stanley Capital International). The ACWI represents the performance of small- to large-cap stocks from 23 developed and 24 emerging markets. The index covers approximately 85% of the global investable equity opportunity set, tracking 2,491 stocks of which the top 10 by market capitalization are Apple, Microsoft, Facebook, Amazon, Johnson & Johnson, Exxon Mobil, JP Morgan Chase & Co., Alphabet, Wells Fargo & Co., and Bank of America. The top 10 companies account for a total free float adjusted market cap of over $4 trillion, or about 10% of the total market cap of the index.

As of September 2017, the top 5 countries with the highest market cap by stock allocation are the US, Japan, UK, France, and China with 52.06%, 7.64%, 5.91%, 3.57%, and 3.42% of the total index market cap, respectively. The other 42 countries with stocks in the MSCI ACWI make up 27.4% of the market cap.

By global sector, the weighting is as follows:

Sector

Weight

Financials

18.73%

Information Technology

17.55%

Consumer Discretionary

11.9%

Healthcare

11.17%

Industrials

10.82%

Consumer Staples

8.78%

Energy

6.36%

Materials

5.34%

Telecommunication Services

3.17%

Real Estate

3.11%

Utilities

3.07%

Total Weight

100%

 

The annual performance of the index since 2005 is presented in the table below:

Year

ACWI Annual Performance (%)

2016

8.48

2015

-1.84

2014

4.71

2013

23.44

2012

16.80

2011

-6.86

2010

13.21

2009

35.41

2008

-41.85

2007

12.18

2006

21.53

 

Institutional investors, such as pension funds and hedge funds, use the MSCI ACWI as a benchmark to measure the performance of their portfolios. A portfolio manager may compare his holdings to the ACWI to determine how well diversified his portfolio is. Individual investors may also use ACWI as a benchmark to compare which funds have the best risk-adjusted returns.

The easiest way for investors to gain exposure to the ACWI is through ETFs. A number of ETFs tracks the MSCI ACWI, including the iShares MSCI ACWI ETF (ACWI) which tracks the results of the ACWI and provides access to the global markets through its single offering. Investors who are looking to diversify past their national borders and who are seeking long-term growth in their portfolios may opt for this ETF. The ETF consists of 1,353 holdings, as of October 25, 2017, with net assets of almost $8 billion. Two other ETFs that seek to closely match the returns and performance of the ACWI are the iShares MSCI ACWI ex-US Index Fund (ACWX) and the SPDR MSCI ACWI ex-US ETF (CWI).

 

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