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MSCI All Country World Index (ACWI) Definition

Written by The Anand Market

Updated on:

What is the MSCI All Country World Index?

The MSCI All Country World Index (ACWI) is a stock index designed to track broader global equity-market performance. Maintained by Morgan Stanley Capital International (MSCI), the index comprises stocks of approximately 3,000 companies from 23 developed countries and 25 emerging markets.

Fund managers use the MSCI ACWI as a guide to asset allocation and a benchmark for the performance of global equity funds. Indexes are also used as the basis for creating investment products such as exchange-traded funds (ETFs).

MSCI All Country World Index

Investors can diversify their portfolio in a number of ways. A portfolio manager or investor may purchase a series of individual stocks that have a low or negative correlation with each other.

On the other hand, a less expensive and more efficient way to invest may be to own an ETF that replicates the performance of an index such as the Dow Jones Industrial Average (DJIA) or the S&P 500 Index. For investors who want to invest in global stocks, the MSCI ACWI Index can be a good option.

Institutional investors managing mutual funds and pension funds can use the MSCI ACWI as a benchmark to measure the performance of their portfolios and as a guide to geographic diversification. Individual investors can also use the ACWI as a benchmark to compare which funds have the best risk-adjusted returns.

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MSCI ACWI Index vs iShares ACWI ETF

In general, investors cannot directly buy an index such as the MSCI ACWI, as it is designed to represent a measure of the performance and characteristics of various sectors, countries and equity holdings.

Instead, investors can purchase an ETF that tracks or mirrors the structure and performance of the index. Below is a comparison between the MSCI ACWI Index and BlackRock’s iShares MSCI ACWI ETF, which includes some of the top country, sector, and portfolio holdings.

msci all country world index
MSCI All Country World Index

MSCI All Country World Index and Sector Weighting

The countries that represent the highest total market cap for the MSCI ACWI Index are the United States (61.31%), Japan (5.54%), China (3.62%), the United Kingdom (3.6%), and Canada (2.9%). Below are the weightings for each region as of December 31, 2021.

  • Information Technology: 23.58%
  • Financials: 13.86%
  • Consumer discretionary: 12.4%
  • Health care: 11.69%
  • Industrialists: 9.64%
  • Communication Services: 8.58%
  • Consumer Staples: 6.8%
  • Content: 4.67%
  • Energy: 3.4%
  • Utilities: 2.7%
  • Real Estate: 2.7%

MSCI All Country World Index Top Holdings

Below are the top ten holdings, based on their portfolio weighting, within the index as of December 31, 2021:

  • Apple Inc.: 4.18%
  • Microsoft Corp.: 3.42%
  • 2.16%
  • Tesla: 1.27%
  • Alphabet A: 1.24%
  • Alphabet C: 1.19%
  • Meta Platform A: 1.14%
  • Nvidia: 1.05%
  • Taiwan Semiconductor MFG: 0.78%
  • UnitedHealth Group: 0.67%

The top ten holdings represent 17.10% of the index’s weighting.

iShares MSCI All Country World Index ETF

One of the ETFs that track and invest in the MSCI ACWI Index is Blackrock’s iShares MSCI ACWI ETF, which has approximately $17.5 billion in assets under management (AUM) as of January 21, 2022.

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The ETF owns 2,332 holdings of shares from the index and has an expense ratio of .33% as of January 20, 2022. The expense ratio represents the cost to investors for BlackRock to manage the fund.

The iShares ETF has the same sectors and top ten holdings, with roughly the same portfolio weighting as the MSCI ACWI Index as of January 20, 2022. Below is the fund’s performance versus the MSCI ACWI Index as of December 31, 2021.

MSCI All Country World Index Index vs iShares MSCI All Country World Index ETF Performance
one year18.38%18.54%
three years20.41%20.38%
five years14.55%14.40%

Source: BlackRock Inc.

Alternatives to MSCI ACWI for Global Equities

An investor who wants to diversify their portfolio geographically can invest a portion of their funds in an ETF that tracks the MSCI ACWI All Cap Index, which contains over 15,000 equities from 23 developed markets and 25 emerging markets. There are holdings. It will provide exposure to a wide range of global stocks but will include many more small and mid-cap stocks.

It is important to note that investors should be aware that indexes containing foreign equities can also contain US stocks. As a result, investors should keep an eye on whether they would be overexposed to US equities if they have already allocated a significant portion of their portfolio to US stocks. Please consult a qualified financial advisor to determine the best asset allocation strategy for your investment needs and long-term financial goals.

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