MSCI ACWI reaches record high

Feb 23rd, 2017 | By | Category: ETF and Index News

Dive deeper into ESG & Impact investing at our upcoming breakfast briefing on Wednesday 28th March 2018 at The South Place Hotel, London, with presentations from Equileap, FTSE Russell, MSCI and UBS - REGISTER NOW

MSCI has announced that its flagship gauge of global equity markets, the MSCI ACWI Index, reached a record level of 866.4 on Wednesday 23 February 2017, the highest in its 23-year history. The strong performance, rising 5.9% since the start of the year, has been reflected in a wide range of ETFs tracking the index.

Global equity ETFs in play as MSCI ACWI Index reaches record high

On Wednesday 22 February 2017, the MSCI ACWI Index reached a record level of 866.4, its highest point in its 23-year history.

Comprising over 2,400 large and mid-cap stocks across developed and emerging markets, the index covers approximately 85% of the global investable equity market.

Approximately 90% of the total market capitalization of the MSCI ACWI is composed of equities listed on developed markets with the remaining 10% hailing from emerging markets. As of 31 January 2017, the largest country exposures are to the US (53.4%), Japan (7.9%), the UK (5.9%) and Canada (3.3%) and the largest sector exposures are financials (18.6%), information technology (15.9%), consumer discretionary (12.2%), health care (11.0%) and industrials (10.7%).

According to Raman Aylur Subramanian, MSCI’s Head of Equity Applied Research, the record reflects a surge in global stocks across sectors fuelled by investors’ expectations that tax cuts and other policies promised by the US administration will benefit business. While all segments of the market have benefitted, Subramanian notes that small-caps have outperformed large- and mid-caps since January 1st.

“Institutional investors are increasingly allocating strategically to the small-cap equity segment, taking an ‘all-cap’ approach to their core portfolios,” Subramanian said. “The MSCI ACWI IMI Index reaches beyond large and mid-cap stocks to capture small caps, which represent 14% of the global equity opportunity set.”

Reflecting the broad appreciation of global equity markets, MSCI has reported that their other indices individually targeting the developed or emerging markets portions of the global economy have climbed this year as well. The MSCI Emerging Markets IMI Index, which captures 99% of the free-float adjusted market capitalization across 23 emerging markets countries, has moved up 10.4% year-to-date. Similarly, MSCI’s World IMI Index, which captures large, mid and small-cap representation across 23 developed markets, is up 5.4% for the year.

The MSCI ACWI serves as the underlying index for several ETFs listed in Europe, including funds from Deutsche Asset Management, iShares, Lyxor, SPDR ETFs and UBS.

UBS offers a suite of ACWI-linked ETFs, listed on the Swiss exchange, with currency-hedging to US dollars, British pounds, euros or Swiss francs. Each has a total expense ratio (TER) of 0.31%, making them the cheapest option for investors among all Europe-listed ACWI ETFs.

Of the Europe-listed ETFs tracking the MSCI ACWI, the largest is the $670m SPDR MSCI ACWI UCITS ETF (LON: ACWI), which can be traded in British pounds or US dollars on the London Stock Exchange. It is also the next cheapest ETF after UBS with a TER of 0.40%.

In contrast to this, these funds are dwarfed by the largest US-listed ETF linked to the MSCI ACWI – the $6.5bn iShares MSCI ACWI ETF (Nasdaq: ACWI).

Tags: , , , , ,

Leave a Comment