MSCI World, ACWI, ACWI IMI
or FTSE All-World —
what's the difference?

When you decide to invest passively in a broad global ETF, you inevitably encounter four names: MSCI World, MSCI ACWI, MSCI ACWI IMI and FTSE All-World. They are often lumped together as "the world index", but the differences are larger than the names suggest.

The choice between these indices determines which part of the global economy you actually own — and which part you consciously (or unconsciously) ignore. This article explains the differences clearly so you can make an informed choice.

Top country weights: United States (~72%), Japan (~5.5%), United Kingdom (~4%), France (~3%), Canada (~3%), Switzerland (~2.5%), Germany (~2%), Australia (~2%), Netherlands (~1.5%), Sweden (~1%).

Despite the absence of emerging markets, the MSCI World is the most widely used foundation for passive ETF portfolios in Europe. Popular ETFs such as IWDA and SWRD track this index and are available on European exchanges as UCITS funds.

Emerging markets (top 5): China (~3.2%), India (~2.2%), Taiwan (~2.0%), Brazil (~0.7%), Saudi Arabia (~0.7%). South Korea is classified as an emerging market by MSCI — see the comparison with FTSE below.

The ACWI is the most logical choice for investors who want a single fund covering both developed and emerging markets, without the complexity of a separate EM allocation.

The ACWI IMI is theoretically the "perfect" broad market index, but has a practical drawback: there are few liquid and cost-effective UCITS ETFs tracking it. The SPDR MSCI ACWI IMI (IMID) is the best-known option, but has a smaller AUM than VWCE or IWDA.

Academic research shows that small caps have historically offered a size premium — though this premium has become less pronounced in recent decades and the cost of small-cap exposure is typically higher.

The higher number of companies (~4,200 vs. ~2,900 for ACWI) is partly due to the South Korea classification, and partly because FTSE's methodology captures slightly more companies per market. In practice, the returns of FTSE All-World and MSCI ACWI have been virtually identical historically — the structural correlation exceeds 99%.

1. The South Korea question

This is the most well-known difference between MSCI and FTSE. Samsung Electronics, SK Hynix and Hyundai Motor — all major companies — sit in the emerging markets segment at MSCI, but in the developed segment at FTSE. MSCI has reviewed South Korea for an upgrade to developed market status multiple times, but has postponed it each time due to restrictions on the currency market and shareholder transparency.

2. Small cap — the overlooked segment

MSCI World, ACWI and FTSE All-World contain no small-cap stocks. That sounds like a detail, but small caps represent roughly 14–18% of total global market capitalisation. They are therefore structurally underweighted in the most widely used indices.

Only the MSCI ACWI IMI includes small caps. Those seeking maximum breadth have essentially no alternative to the ACWI IMI — or can combine a broad index with a separate small-cap ETF (e.g. iShares MSCI World Small Cap, IUSN, TER 0.35%).

3. US weight — 59% to 73%

The US weight varies significantly across indices. In the MSCI World, America accounts for approximately 72–73% of the total — every £/€100 invested puts nearly £/€73 into US companies. By adding emerging markets and small caps, this weight decreases: ACWI ~64%, FTSE All-World ~63%, ACWI IMI ~59%.

Whether that high US weight is a problem depends on your perspective. The US is by far the largest and most liquid stock market in the world, and many "American" companies generate a large share of their revenue outside the US. Still, a concentration of 72% in one country is relatively high for anyone genuinely seeking global diversification.

All ETFs below are UCITS-compliant, available on European exchanges (Euronext Amsterdam, Xetra, London Stock Exchange) and suitable for European investors. TER = Total Expense Ratio (annual cost).