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Linked to the MSCI World Index, one of the most commonly used benchmarks for global equity funds, the newly launched UBS-ETF MSCI World (USD) “A” (UC55) tracks the performance of large and mid-cap stocks across 23 developed markets countries.
With more than 1,600 constituents, the MSCI World Index covers approximately 85% of the free float-adjusted market capitalisation of each country represented in the index. The US, Japan, UK, Canada and France have the largest weights, constituting a combined 81% of the index.
The largest holdings are dominated by US companies, including Exxon, Apple, Microsoft, General Electric and Johnson & Johnson. The top-ranked non-US constituent is Switzerland-headquartered Nestle. The biggest sectors are Financials, Consumer Discretionary, Information Technology Health care and Industrials.
The index is reviewed quarterly – in February, May, August and November – with the objective of reflecting change in the underlying equity markets in a timely manner, while limiting undue index turnover. During the May and November semi-annual index reviews, the index is rebalanced and the large and mid capitalisation cut-off points are recalculated.
Commenting on the launch, Andrew Walsh, Head of UBS ETFs UK, said: “The UBS-ETF MSCI World (USD) “A” holds 1581 stocks of the 1605 included in the index. Thus, the ETF delivers virtually full replication despite the extensive number of constituents in the underlying MSCI World index. This helps to ensure that the ETF delivers minimal tracking error versus its benchmark. The ETF allows investors looking to benefit from movements in global equity markets a UCITS-IV compliant investment in a single transaction.”
UBS made its UK ETF debut on the LSE in July of last year, with the launch of 66 funds. Since then it has followed up with additional ETF launches on the exchange, including funds tracking Brazil, a range of commodity producers, commodities, and socially responsible companies.
Assets under management in UBS ETFs amount to more than £8 billion, with funds tracking more than 80 indices listed across the Borsa Italiana, Deutsche Börse, Nasdaq OMX, SIX Swiss Exchange, and Stuttgart Stock Exchange, in addition to the LSE.
The new fund is domiciled in Luxembourg and comes with a total expense ratio (TER) of 0.45%. It is based in USD and traded in GBp (pence).
A large number of ETF providers already offer access to the MSCI World Index, including iShares, db X-trackers, Lyxor, Source and Amundi. The cheapest, however, appears to be the HSBC MSCI World ETF (HMWD) from HSBC at just 0.35%.