What is the MSCI World Index and how can I buy it? (2024)

Learn all about the MSCI World Index and how you can invest in it. This comprehensive guide covers everything you need to know.

What is the MSCI World Index?

The MSCI World Index is a stock market index that tracks the performance of large and mid-cap stocks across 23 developed countries worldwide. It is a benchmark for global equity investors, and it provides a comprehensive view of the stock market performance of developed countries. The index is weighted by market capitalization, meaning that the largest companies have a greater impact on the index's performance. The MSCI World Index includes companies from a wide range of industries, including technology, healthcare, financials, and consumer goods.

History of the MSCI World Index

The MSCI World Index was first introduced in 1969, and it has since become one of the most widely recognized benchmarks for global equity investors. Over the years, the index has undergone several changes, including the addition of new countries and the removal of others.

How is the MSCI World Index constructed?

The MSCI World Index is constructed using a free float market capitalization methodology, which means that only the shares that are available for trading in the market are taken into account. The index is reviewed quarterly and rebalanced semi-annually to ensure that it accurately represents the stock market performance of developed countries worldwide.

How can I buy the MSCI World Index?

Investors can gain exposure to the MSCI World Index by investing in exchange-traded funds (ETFs) that track the index. There are several ETFs that track the MSCI World Index, and they are available through most online brokers. If you don't want to manage this yourself, Easyvest is a simple and inexpensive solution. Its index portfolios consist of a global equity ETF and a Eurozone bond ETF and offer remarkable long-term performance.

Advantages of investing in the MSCI World Index

Investing in the MSCI World Index provides investors with exposure to a broad range of developed countries worldwide. This diversification helps to reduce risk and can provide a more stable return over the long term. Additionally, because the index is weighted by market capitalization, investors are investing in the largest and most established companies in each country.

Historical performance of the MSCI World Index

The simulator below allows you to measure the historical performance of the MSCI World, and even more: taking into account your appetite for risk, the tool will give you the past performance of an index portfolio adapted to your profile, as suggested by Easyvest.

Risks of investing in the MSCI World Index

As with any investment, there are risks associated with investing in the MSCI World Index. Because the index is weighted by market capitalization, investors are exposed to a greater degree of risk in the largest companies. Additionally, because the index is composed of companies from developed countries, it may not provide exposure to emerging markets or smaller companies that may offer greater growth potential.

Conclusion

The MSCI World Index is a popular stock market index that provides investors with exposure to large and mid-cap stocks across developed countries worldwide. Investing in the index through ETFs is a simple and cost-effective way to gain exposure to a broad range of companies. As with any investment, there are risks associated with investing in the index, but its diversification and exposure to established companies make it an attractive option for many investors.

FAQs

What is the MSCI World Index?

The MSCI World Index is a stock market index that tracks the performance of large and mid-cap stocks across 23 developed countries worldwide.

How is the MSCI World Index constructed?

The MSCI World Index is constructed using a free float market capitalization methodology, which means that only the shares that are available for trading in the market are taken into account.

Can I invest in the MSCI World Index?

Yes, investors can gain exposure to the MSCI World Index by investing in exchange-traded funds (ETFs) that track the index.

What are the advantages of investing in the MSCI World Index?

Investing in the MSCI World Index provides investors with exposure to a broad range of developed countries worldwide. This diversification helps to reduce risk and can provide a more stable return over the long term.

What are the risks of investing in the MSCI World Index?

Because the index is weighted by market capitalization, investors are exposed to a greater degree of risk in the largest companies.