All-World Indexes

Best All-World ETFs for Irish Investors

All-World ETFs allow you to invest in the global equity markets with one convenient and cost-effective investment. You’ll gain exposure to companies operating in developed markets like the United States and Western Europe along with companies in Emerging Markets such as China, India and Taiwan. 

Our top pick for the best overall All-World ETF is the Amundi Prime All Country World UCITS ETF, a physical, accumulating ETF domiciled in Ireland with a TER of 0.07%. Its ISIN is IE0003XJA0J9.

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Written by:
Dan Malone

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Why we picked this ETF

The Amundi Prime All Country World UCITS ETF (Acc) strikes the optimal balance between cost, coverage and structure. It has the lowest TER (0.07%) of any Irish-domiciled All-World ETF that offers exposure to both developed and emerging markets using a full replication strategy. It’s an accumulating, unhedged share class with a positive annualised tracking difference since inception.

Why we picked this ETF

The Amundi Prime All Country World UCITS ETF (Dist) strikes the optimal balance between cost, coverage and structure. It has the lowest TER (0.07%) of any Irish-domiciled All-World ETF that offers exposure to both developed and emerging markets using a full replication strategy. It’s a distributing, unhedged share class with a positive annualised tracking difference since inception.

Why we picked this ETF

The BNP Paribas Easy MSCI ACWI UCITS ETF EUR (Acc) offers the lowest TER (0.06%) of any synthetic All-World ETF that offers exposure to both developed and emerging markets. It’s a Luxembourg-domiciled fund with an accumulating, unhedged share class that uses a total return swap strategy. It has a positive annualised tracking difference since inception.

Why we picked this ETF

The State Street SPDR MSCI All Country World EUR Hdg UCITS ETF (Acc) offers the lowest TER (0.17%) of any euro-hedged All-World ETF that offers exposure to both developed and emerging markets. It's an Irish-domiciled fund with an accumulating, euro-hedged share class that uses an optimised sampling strategy. It has a negative annualised tracking difference since inception.

Why we picked this ETF

The State Street SPDR MSCI All Country World Investable Market UCITS ETF (Acc) provides exposure to the MSCI ACWI IMI index – one of the most comprehensive benchmarks for global stocks, with 99% universe coverage. The fund has a TER of 0.17%. It’s Irish-domiciled with an accumulating, unhedged share class that uses an optimised sampling strategy. It has a positive annualised tracking difference since inception.

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    All-World Indexes

    There are seven main indexes which are regarded as being representative of the All-World market:

    MSCI All Country World Index (ACWI)

    The MSCI All Country World Index (ACWI) is made up of over 2,500 companies spanning 23 developed markets and 24 emerging markets. It covers 85% of the total value of the global equity market.

    MSCI ACWI Investable Market Index (ACWI IMI)

    The MSCI ACWI Investable Market Index (ACWI IMI) is made up of over 8,200 companies covering 23 developed markets and 24 emerging markets. It covers 99% of the total value of the global equity market.

    MSCI World Index

    The MSCI World Index comprises over 1,300 companies in 23 developed markets. It covers 85% of the total value of each developed market, but not the emerging markets.

    MSCI World IMI

    The MSCI World Investable Market Index (IMI) consists of more than 5,100 companies. It covers 99% of the total value of each developed market, but not the emerging markets.

    FTSE Developed Index

    The FTSE Developed Index is made up of over 1,900 companies across developed markets. It covers 90% of the developed markets' investable market capitalisation.

    FTSE All-World Index

    The FTSE All-World Index consists of over 4,200 companies across both developed and emerging markets. It covers 90% of the world’s investable market capitalisation.

    Solactive GBS Global Markets Large & Mid Cap Index

    The Solactive GBS Global Markets Large & Mid Cap Index is made up of over 3,500 companies spanning 49 countries. It covers 85% of the total value of the global equity market.

    Key Insight:

    The biggest difference between these indexes is size and coverage. The MSCI ACWI IMI is the most comprehensive All-World index. With over 8,200 companies, it accounts for 99% of the global stock market. Comparatively, the MSCI ACWI Index covers 85% of the global stock market, but with ‘only’ 2,500 companies. Both are considered ‘All-World’, but with very different coverage profiles.

    Comparing All-World Indexes

    There can be trillions of dollars in the difference between the value of companies covered by one All-World index versus another. An index may choose to include or exclude a company depending on its size, geographic location, or another factor. This is referred to as the index methodology.

    Index methodology is important for investors because it directly impacts what an All-World ETF will invest in. You should ensure that your ETF is tracking an index that is measuring the companies that you wish to gain exposure to. 

    Key Insight:

    The S&P Global Broad Market Index (BMI) and S&P Global 1200 Index are another two well-known All-World indices. The former includes over 15,000 companies while the latter has over 1,200.

    However, there are no readily available UCITS-compliant ETFs that provide Irish investors with their respective returns. For that reason, they’ve been omitted from the table above. 

    Physical All-World ETFs

    Due to the sheer size of an All-World index and the number of companies included, many physical All-World ETFs will use what’s known as optimised sampling to provide investors with the index return. 

    This is, for example, different to an S&P 500 ETF which will typically use ‘full replication’ to provide investors with the return of the S&P 500 index. Full replication is where the ETF owns every stock in the exact same proportions as the index itself. This is what you’d expect from an index fund. However, when it comes to All-World replication, this isn’t always possible or desirable.

    Why Optimised Sampling Can Be Beneficial

    A stock market index shows the stock performance of a collection of company stocks over a period of time, without any consideration for the realities of buying those stocks. Crucially, trading expenses aren’t accounted for in the final return of the index. So, if an ETF is to provide investors with the index return, then the ETF needs to minimise trading costs as much as possible. 

    Consider the smallest of companies in markets like Indonesia, which are included in the All-World index. They’re so small that even their bankruptcy would have a negligible effect on the index itself. Shares in these companies wouldn’t be very liquid, meaning there wouldn’t be a lot of trading activity. This can make the shares expensive to buy. The ETF needs to decide whether the cost associated with buying the shares is worth the additional tracking accuracy to the index. 

    In many cases it’s not, and the ETF will either exclude the stock or replace it with a highly correlated but cheaper alternative. The goal here is to minimise expenses, while also accurately reflecting the proportionate return delivered by each stock in the index, so that the ETF ends up delivering more accurate tracking than ‘full replication’. That’s optimised sampling.

    In short, full replication for an All-World ETF may come at a high cost, which in turn can result in returns that deviate from the index.

    Synthetic All-World ETFs

    Given the nature of synthetic All-World ETFs and how they operate, they can provide investors with a more accurate index return than their physical counterparts. That’s because synthetic ETFs use financial contracts known as swaps to provide investors with the index return, a method which can reduce index tracking errors.

    Synthetic All-World ETFs have tax advantages over physical All-World ETFs too. The main advantage being an exemption from U.S. dividend withholding tax. This means that a synthetic All-World ETF will retain 100% of the dividends it receives from the U.S. companies that it invests in. Further exemptions from taxes in regions like the UK, France and Italy will apply too.

    Key Insight:

    U.S. companies account for over 60% of most All-World indexes while UK companies account for over 3%. This means that the tax advantages available to synthetic All-World ETFs in these regions can result in meaningful improvements in returns for investors.

    The question is whether the tax advantages and higher tracking accuracy of synthetic ETFs outweigh any additional costs of ownership, be it a higher total expense ratio (TER) or swap fees.

    All-World ETF Total Expense Ratios (TERs)

    All-World ETFs are best suited to investors who want to own as much of the global equity market as possible with one single investment. But there’s a balance to be struck between coverage and cost. The Total Expense Ratio (TER) is the fee deducted from a fund’s assets to cover operational and management costs.

    Take an ETF that tracks the MSCI ACWI IMI for a TER of 0.17% and an ETF that tracks the MSCI ACWI for a TER of 0.06%. The former will provide exposure to over 5,700 more companies and trillions in additional market capitalisation than the latter, but at a higher cost - the TER.

    The question is whether that higher cost is worth the additional exposure. It’s important to remember that each of the additional companies in the ACWI IMI will be proportionately tiny relative to the largest companies in the index. Their individual share performance will have a negligible impact on ETF returns. Plus, due to optimised sampling, the extent to which you have exposure to each of those additional companies will vary in practice.

    Here are some hypothetical challenges you may encounter when considering All-World ETF TERs:

    • An All-World ETF with a low TER tracking an index that doesn’t include the emerging markets
    • An All-World ETF with a low TER that’s structured as a synthetic ETF, necessitating further research and understanding before investing
    • An All-World ETF with a low TER that offers exposure to a lot of the global equities market, but not as much as another ETF with a slightly higher TER

    An Alternative To All-World ETFs

    Some investors may choose to not own an All-World ETF. Instead, they’ll separately own a North American ETF, an Emerging Markets ETF and a Developed Europe ETF, which offers more flexibility than owning a single All-World ETF.

    By owning an ETF that covers each region separately, you can control how much money is allocated to each market at any given time. For example, for most All-World ETFs, anywhere between 60% and 65% of the fund’s value will be accounted for by S&P 500 company stocks. So, when you invest in an All-World ETF, most of your invested cash is allocated towards the U.S.

    Key Insight:

    It’s possible to purchase ETFs that track an ‘All-World ex-US’ index. These are subset indexes that measure the performance of global equities, with the exception of the U.S.

    Frequently Asked Questions

    Yes, All-World ETFs invest in thousands of companies denominated in a wide range of foreign currencies. As an Irish investor using the euro, your investment returns will be heavily influenced by the performance of these foreign currencies. One way to mitigate this risk is by purchasing a Euro-hedged share class of an All-World ETF.

    Accumulating All-World ETFs will automatically reinvest any dividends they receive from the companies that they invest in on your behalf. Distributing All-World ETFs will pay a dividend directly to your investment account, usually quarterly, semi-annually or annually.

    The best All-World ETFs track indexes that are weighted by free-float market capitalisation. That means that the companies with the most valuable publicly available shares will make up the greatest percentage of the index. U.S. companies are among the most valuable in the world and typically make up over 60% of the index.

    You should look at the number of index constituents and countries, whether emerging markets are included or excluded, the percentage of total market capitalisation covered and the returns versus comparable indexes.

    Yes, synthetic All-World ETFs are a safe and tax-efficient way to invest in global equities with high tracking accuracy. That said, beginners should take the time to learn more about how synthetic ETFs work under the hood.

    While 99% coverage sounds superior, in practice, the extra 14 percentage points are made up of thousands of smaller companies whose individual performance will have a negligible impact on the index. Greater coverage often comes at the cost of a higher TER, and lower TERs will nearly always be more beneficial to long-term wealth.

    Compare ETFs Side by Side

    Ready to choose an ETF? Compare the most popular ETFs available to Irish investors by index, fees, dividends, and more to find the right investment for your portfolio.