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A Fin24 user wants to know about a good benchmark for general global equity funds. He writes:
Which one is a better benchmark for general global equity funds: MSCI World or the MSCI All World Index?
Raul Jorge CFP®, of PSG Tyger Waterfront, responds:
This all depends on the asset and geographic allocation of the general global equity fund to which you are referring.
The MSCI World Index captures mid and large cap stocks across 23 developed markets, whereas the MSCI All Country World Index captures mid and large cap stocks across 23 developed markets and 21 emerging markets.
The composition of these benchmarks differ and can, therefore, not be compared directly as the MSCI All Country World Index includes exposure to emerging markets.
If the general global equity fund has exposure to mid and large cap stocks in developed markets, then the MSCI World Index would be a fair benchmark to utilize.
However the MSCI All Country World Index would be more suitable if the general global equity fund has exposure to mid and large cap stocks across both developed and emerging markets.
Make use of the benchmark index that is the closest aligned to the asset and geographic allocation of the fund in question.
Which one is a better benchmark for general global equity funds: MSCI World or the MSCI All World Index?
Raul Jorge CFP®, of PSG Tyger Waterfront, responds:
This all depends on the asset and geographic allocation of the general global equity fund to which you are referring.
The MSCI World Index captures mid and large cap stocks across 23 developed markets, whereas the MSCI All Country World Index captures mid and large cap stocks across 23 developed markets and 21 emerging markets.
The composition of these benchmarks differ and can, therefore, not be compared directly as the MSCI All Country World Index includes exposure to emerging markets.
If the general global equity fund has exposure to mid and large cap stocks in developed markets, then the MSCI World Index would be a fair benchmark to utilize.
However the MSCI All Country World Index would be more suitable if the general global equity fund has exposure to mid and large cap stocks across both developed and emerging markets.
Make use of the benchmark index that is the closest aligned to the asset and geographic allocation of the fund in question.
- Fin24
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