Global ETFs: A simple way to invest around the world

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Global ETFs: A simple way to invest around the world

Investing doesn’t have to be complicated. Instead of investing in individual companies or countries you could balance risk more broadly. It won’t eliminate market swings, but it can help smooth them.

Think of your portfolio like a sailing boat: if you rely on just one sail, the entire boat depends on it. When the wind picks up, you feel every gust immediately – the boat becomes unstable more quickly. But if you raise several sails, the wind is distributed across different surfaces, and the boat can sit more steadily in the water. The same idea applies to investing: with just one or two ETFs, you can spread your money across many companies, regions and sectors. That could help cushion market swings and make long-term investing feel a bit more calmer.

In short: Which course for which investment style?

Three different options for investing with global ETFs:

An MSCI World ETF or an MSCI World IMI could be core building blocks.

A mix of one of the MSCI World ETFs and MSCI Emerging Markets ETFs could be an option.

The FTSE All-World ETF could potentially be the right choice.

At a glance

Focus	Good to know	Considerations	ETF
MSCI World or MSCI World IMI
Large and mid‑sized companies from 23 developed countries. The MSCI World IMI also includes smaller companies from developed markets, known as small caps.	Do not include emerging markets. Despite offering a broad investment universe, they may have a high concentration by country and/or sector.	”Is focusing on developed‑markets enough?“	MSCI World UCITS ETF 1C MSCI World IMI UCITS ETF 1C
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MSCI Emerging Markets
Large and mid‑sized companies from 24 emerging markets.	Only includes emerging markets, which may be subject to higher risks. Better suited as base for a complementary investment rather than a standalone core holding.	”Would you want to broaden the MSCI World investment with an emerging markets ETF – and choose the allocation yourself?“	MSCI Emerging Markets UCITS ETF 1C

Focus	Good to know	Considerations	ETF
FTSE All-World
Large and mid‑sized companies from 48 developed and emerging markets.	Includes developed and emerging markets. Despite offering a broad investment universe, they may have a high concentration by country and/or sector.	„Is broad global coverage preferred with the emerging markets allocation already set?“	FTSE All-World UCITS ETF 1C

Want to learn more about how to build a broadly diversified portfolio? Then take a look at the following sections.

The MSCI World – the core of many ETF portfolios

The MSCI World is one of the best‑known equity indices globally and is included in many portfolios through ETFs.

What does the MSCI World include?

More than 1,300 large and mid‑sized companies
Companies from 23 developed markets; it does not include emerging markets
Weighted clearly by market capitalization
Covers around 85% of the free‑float market capitalization of these countries

Good to know:

The MSCI World captures a large share of global market capitalization and reflects international economic developments. As it is weighted by market value, regions and companies with greater market strength automatically receive more weight. The United States plays a particularly prominent role: first, more companies are listed there than in any other country, making the U.S. the largest equity market in the world. Second, U.S. companies account for more than half of total global market capitalization.

Today, the U.S. market dominates with more than 70 percent, as the United States has a strong economy and is a leading hub of innovation, especially in the technology sector. Many U.S. companies tend to grow faster and achieve higher valuations, which thereby increases their index weight. If other markets were to grow more strongly in the future, the index composition would adjust accordingly. The MSCI World is reviewed every quarter, meaning that its concentration reflects true market capitalization while also offering broad diversification and access to global growth leaders.

The MSCI World IMI – investing with broader market coverage

Alongside the well-known MSCI World ETFs, the MSCI World IMI includes large, mid- and small-sized companies from developed markets, offering wider market coverage.

What does the MSCI World IMI include?

More than 5,100 large, mid‑ and small-sized companies
Companies from 23 developed markets; it does not include emerging markets
Weighted clearly by market capitalization
Covers around 99% of the free‑float market capitalization of these countries

Good to know:

‘IMI’ stands for Investable Market Index. An IMI covers large and mid-sized companies, as well as small caps – companies with lower market capitalization, typically below around USD 2 billion. This means smaller companies are included in the index too. The aim is to give a more complete picture of the investable equity market.

Food for thought

Even though “World” suggests broad global diversification, market‑cap weighting in the index can lead to significant concentration — for example, a U.S. exposure (over 70% in the MSCI World and over 60% in the MSCI World IMI) or in the technology sector (around 25% in both cases).^[1] As a result, the performance of individual regions or sectors can have a stronger impact on the index. Consider how much of these weightings you want to carry in your portfolio.
With around 14% allocated to small caps, the MSCI World IMI includes smaller companies alongside large and established firms, without allowing them to dominate the overall picture. As a result, the IMI does not have a strong small‑cap focus, but instead comes closer to representing the overall market. Investors should consider how much small‑cap exposure they want in their portfolio.

Why are MSCI World ETFs so popular?^[2]

Broad diversification can help cushion fluctuations in a portfolio. The index includes developed markets that are considered economically stable, transparent and well regulated. According to MSCI’s definition, these are countries such as the United States, Germany, Japan, the United Kingdom, Canada and Australia, among others.

The MSCI World and the MSCI World IMI include many of the world’s leading companies in technology, industry, healthcare and consumer sectors. Typically, these are major technology firms, financial institutions and industrial giants.

Many global ETFs – such as those tracking the MSCI World and the MSCI World IMI – generally have low ongoing fees. These products are often large and well-established, meaning that cost savings can be passed on to investors, providing more potential for returns in the long run.

Xtrackers ETF	ISIN	Distribution Policy	Currency	TER p.a.
MSCI World UCITS ETF 1C	IE00BJ0KDQ92	Capitalizing	USD	0.12%
MSCI World IMI UCITS ETF 1C	IE000X1GW0A7	Capitalizing	USD	0.15%

Participate in the potential growth of a growing global economy – and with the MSCI World IMI, do so across all market capitalisation segments.

A relatively weak performance of U.S. equities or a depreciating U.S. dollar against the euro can impact the ETF’s overall performance. In addition, small caps tend to fluctuate more and can therefore experience sharper price declines than large caps and mid caps during periods of greater market turmoil.

The MSCI Emerging Markets – growth markets as a useful addition

If you want to broaden the geographic mix within a portfolio and reduce the high U.S. weighting found in the MSCI World, you could complement it with ETFs that track indices capturing the dynamics of emerging markets. One example is the MSCI Emerging Markets. A combination of ETFs tracking the MSCI World and the MSCI Emerging Markets covers the global economy almost completely and without overlap. The World index covers developed markets, while Emerging Markets cover developing economies. Among the most economically significant emerging markets are China, India, Taiwan, Brazil and South Korea^[3], but countries such as Mexico, the United Arab Emirates and South Africa are also included.

What does the MSCI Emerging Markets include?

More than 1,100 large and mid‑sized companies
Companies from 24 emerging markets
Clearly weighted by market capitalization
Covers around 85% of the free‑float market capitalization of these countries

Good to know:

Emerging markets offer opportunities but also come with higher risks, such as political uncertainty, greater volatility, currency risks and lower levels of market regulation. That’s why an MSCI Emerging Markets ETF can be particularly suitable as an additional investment rather than as the sole core ETF of your portfolio.

Food for thought

A mix of the MSCI World and MSCI Emerging Markets covers more than 2,400 large and mid‑sized companies across 47 countries and represents around 85–90% of the free‑float market capitalization of these markets. Common portfolio allocations include, for example, 70% MSCI World and 30% MSCI Emerging Markets, or 80% MSCI World and 20% MSCI Emerging Markets. These allocations are intended solely as guidance and can be adjusted to suit individual preferences.

Why can emerging markets be important?

Emerging markets can go through growth cycles that differ from those in developed markets. Growing middle classes, technological catch‑up and rapid digitalization offer significant potential.

Investing in emerging markets can enhance diversification by reducing reliance on individual economic regions, especially developed markets such as the United States. As the MSCI World does not include emerging markets, adding an Emerging Markets ETF can be a way to broaden a portfolio’s geographic exposure.

Emerging markets often follow different economic cycles compared to developed countries, as their economic and demographic structures, capital markets and political frameworks differ. This can reduce correlation and enhance diversification effects.

Xtrackers ETF	ISIN	Distribution Policy	Currency	TER p.a.
MSCI Emerging Markets UCITS ETF 1C	IE00BTJRMP35	Capitalizing	USD	0.18%

Participate in the potential growth of emerging‑markets equities.

A relatively weak performance of emerging‑markets equities could impact the overall development of ETFs. Currencies in emerging markets are considered volatile and sensitive to U.S. interest‑rate movements, which adds another layer of uncertainty for euro‑based investors.

The FTSE All-World – an all-round ETF

If you’re looking for an “all in one” solution that covers both developed and emerging markets in a single investment, an ETF tracking the FTSE All-World Index could be an option. With this approach, you don’t need to decide yourself how much to allocate to developed markets versus emerging markets — the index does that automatically.

What does the FTSE All-World include?

More than 4,200 large and mid‑sized companies
Companies from 48 developed countries and emerging markets
Clearly weighted by market capitalization, covers around 90% of the investable stock market value in these countries

Good to know:

Like the MSCI World, the FTSE All‑World is market‑capitalisation weighted, free‑float adjusted and rules‑based. It represents a large share of global market capitalisation and reflects worldwide economic development. As it is weighted by market value, regions and companies with greater market influence automatically receive a higher weighting. The U.S. plays a major role here as well, just as it does in the MSCI World.

Food for thought

In addition to the FTSE All‑World, an ex‑U.S. version is also available. The FTSE All‑World ex U.S. offers broad diversification across mid‑ and large‑cap equities from 47 developed and emerging markets, excluding U.S. stocks. As a result, the index is less influenced by movements in the U.S. equity market, but may fluctuate more, for example due to political uncertainties, as emerging markets have a higher weighting. To achieve a more balanced global mix, U.S. exposure can be added separately, for example, through a broad country index.

Xtrackers FTSE All-World ex US ETF

Why can an ETF tracking the FTSE All-World be a simple solution?

A single product that covers both developed and emerging markets.

The index reflects market capitalization. Developed markets therefore carry a larger weight, while emerging markets have a smaller share — typically around 85–90% developed markets and 10–15% emerging markets.

One ETF, one savings plan — without the need for regular rebalancing.

Xtrackers ETF	ISIN	Distribution Policy	Currency	TER p.a.
FTSE All-World UCITS ETF 1C	IE000L6ZMMC4	Capitalizing	USD	0.07%

Participate in the potential growth from U.S. and emerging‑markets equities as well as from a strong U.S. dollar.

A relatively weak performance of U.S. equities, emerging‑markets equities, or a U.S. dollar that depreciates against the euro can affect the overall performance of the ETFs. Currencies in emerging markets tend to be volatile and sensitive to U.S. interest‑rate movements, which adds another layer of uncertainty for euro‑based investors.

Conclusion: ETFs can offer a simple way to invest globally

Whether used as a core holding through an MSCI World ETF, with broader market coverage via an MSCI World IMI ETF, by adding specific regions such as an MSCI Emerging Markets ETF, or as a “single‑ETF solution” based on an FTSE All‑World ET, all options provide broad diversification across thousands of companies, dozens of countries and many different sectors, as well as low costs, long‑term growth potential and easy access.
Over time, ETFs can help build your wealth step-by-step.

Risks

Just like sailing on open water, the same holds true for investing: even when conditions seem clear, currents, shifting winds and unexpected weather can influence your course — and it’s important to be prepared for that.

Past performance is not a reliable indicator of future results. Global investments are exposed to currency risks. Foreign‑exchange markets can be volatile. Sharp exchange‑rate fluctuations can occur within very short periods and may lead to losses.Indices linked to economically less developed countries (emerging markets) carry higher risks than those focused on developed economies. Political instability and economic downturns may occur more frequently and can affect the value of your investment.

Looking for other global ETF options?

Scalable MSCI All Country World

The Scalable MSCI AC World Xtrackers UCITS ETF 1C is an innovative ETF with a hybrid replication approach and broad diversification^[4]. By tracking the MSCI All Country World Index, you invest in nearly 90% of the globally investable markets across 23 developed and 24 emerging countries. What makes this ETF different is the way that it tracks the index. It uses a hybrid approach to follow the index using a combination of direct holdings and additional techniques, rather than buying every share itself. The goal is to follow the index efficiently while maintaining broad diversification.

Scalable MSCI All Country World