FTSE All-World vs. MSCI ACWI Compared
FTSE All-World and MSCI ACWI solve the same problem — developed plus emerging markets in one index — and deliver near-identical long-run returns. The differences sit in the details: country classification, depth of coverage and above all the product level. That is where the decision of which one belongs in your portfolio is actually made.
Methodology: Korea, coverage and the small-cap cutoff
Three construction differences are worth knowing:
- The Korea question: FTSE classifies South Korea as developed, MSCI as emerging. For the all-country index it is irrelevant — both include Korea — but it matters once you mix world and EM ETFs from different index providers: Korea then shows up twice or not at all.
- Depth of coverage: the FTSE All-World holds roughly 4,000–4,300 stocks and reaches further into mid caps; the MSCI ACWI covers about 85% of market cap with roughly 2,500–2,800 stocks. If you want true small-cap coverage you need the MSCI ACWI IMI anyway.
- Weighting: both are free-float market-cap weighted — the US weight is around 60–65% in each, and the historical return gap amounts to a few basis points a year.
Add ETFs and stocks to your watchlist and never miss a move – free with MoneyPeak.
Product level: Vanguard versus iShares and SPDR
In practice you do not choose between indices but between products — and that is where the real differences lie:
| Criterion | Vanguard FTSE All-World | iShares MSCI ACWI | SPDR MSCI ACWI |
|---|---|---|---|
| TER (approx.) | 0.22% | 0.20% | 0.12% |
| Fund size | very large (tens of billions) | large | medium |
| Replication | Physical (sampling) | Physical (sampling) | Physical (sampling) |
| Income treatment | Accumulating & distributing | Accumulating | Accumulating & distributing |
| Domicile | Ireland | Ireland | Ireland |
The decision: tracking difference beats TER
All three products are Irish-domiciled and benefit from the reduced 15% US withholding rate — and all qualify for the 30% partial exemption as equity funds under German tax law. What matters is the multi-year tracking difference: Vanguard regularly offsets its higher TER through precise tracking and securities lending, while SPDR is the cheapest on paper. In reality a few basis points separate the products — more important than the product choice is not to stack world indices by accident: how the All-World fares against the developed-markets-only index is covered in the comparison with the MSCI World. And remember FIFO when switching: the oldest, highest-gain units are taxed first.
Frequently asked questions
Are FTSE All-World and MSCI ACWI practically interchangeable?
Largely yes: both market-cap weighted, around 60–65% US, near-identical long-term returns. Differences lie in stock count, the Korea classification and at product level.
Which index holds more stocks?
The FTSE All-World with roughly 4,000–4,300 stocks versus around 2,500–2,800 in the MSCI ACWI. True small caps are only in the MSCI ACWI IMI.
Why does the Irish fund domicile matter?
Irish funds pay only 15% US withholding tax on dividends instead of 30% thanks to the tax treaty — which noticeably improves the tracking difference.
Add ETFs and stocks to your watchlist and never miss a move – free with MoneyPeak.