MSCI World vs. FTSE All-World
It is the most frequently asked ETF question of all: an MSCI World or a FTSE All-World as the foundation of your portfolio? The decisive difference is the emerging markets. We compare both indices head-to-head — diversification, costs, returns — and say clearly which one suits whom.
The one decisive difference: emerging markets
Both are broadly diversified world ETFs — but the MSCI World contains only developed markets (23 developed countries, no emerging markets). The FTSE All-World additionally includes the emerging markets (countries like China, India, Taiwan and Brazil), which make up around 10 %. That is the heart of the whole decision.
MSCI World vs. FTSE All-World head-to-head
| Criterion | MSCI World | FTSE All-World |
|---|---|---|
| Region covered | 23 developed countries | Developed + emerging markets |
| Number of stocks | ~1,400 | ~3,700 |
| Emerging markets | no | yes (~10 %) |
| US share | ~70 % | ~60 % |
| Lowest TER | ~0.12 % | ~0.15 % |
| One-ETF solution | no (EM missing) | yes |
The concrete ETFs with ISIN
MSCI World ETFs
| ETF | ISIN | TER p.a. |
|---|---|---|
| iShares Core MSCI World | IE00B4L5Y983 | 0.20 % |
| Xtrackers MSCI World | IE00BJ0KDQ92 | 0.12 % |
| SPDR MSCI World | IE00BFY0GT14 | 0.12 % |
FTSE All-World ETFs
| ETF | ISIN | TER p.a. |
|---|---|---|
| Vanguard FTSE All-World (Acc) | IE00BK5BQT80 | 0.22 % |
| Vanguard FTSE All-World (Dist) | IE00B3RBWM25 | 0.22 % |
| Invesco FTSE All-World | IE000716YHJ7 | 0.15 % |
What about returns?
Over the long run the two are very close to one another. In recent years the MSCI World has often been slightly ahead thanks to its higher US and tech weighting, while the emerging markets lagged. That can reverse — historically there have been phases in which emerging markets clearly outperformed. Anyone who chooses the FTSE All-World is buying that diversification without having to bet on a single region.
Which one should you take?
- FTSE All-World — if you want it simple: a single position that covers almost the entire world market including emerging markets. The most convenient “buy-and-forget” solution.
- MSCI World — if you want to minimise costs or steer it yourself: marginally cheaper; many combine it 70/30 with an emerging-markets ETF to set the EM weighting themselves.
- Holding both at once makes no sense — the overlap is huge. Pick one as your core.
MSCI World and FTSE All-World overlap by around 90 %. Holding both only complicates your portfolio without any real diversification benefit. One world ETF as the core is enough — at most supplemented by a separate emerging-markets or small-cap ETF.
🌍 Tax: identical for both
Both are equity ETFs, so they are treated identically for tax purposes. In Germany, for instance, both qualify for the 30 % partial exemption on income, and the rest of the tax treatment (capital gains tax, advance lump sum, tax-free allowance) is the same for MSCI World and FTSE All-World. Rules vary by country — but because both are broad equity ETFs, the choice is purely a question of diversification, not tax.
FAQ — MSCI World vs. FTSE All-World
Which is better: MSCI World or FTSE All-World?
There is no objective “better”. The FTSE All-World is the more convenient one-ETF solution because it already includes emerging markets. The MSCI World is marginally cheaper but covers only developed markets — you would have to add emerging markets separately. For most investors who want it simple, the FTSE All-World is the obvious choice.
What is the difference between MSCI World and FTSE All-World?
The MSCI World contains around 1,400 stocks from 23 developed countries, with no emerging markets. The FTSE All-World contains around 3,700 stocks and additionally includes the emerging markets (around 10 %). As a result the FTSE is more broadly diversified, while the MSCI World has a somewhat higher US share.
Is the FTSE All-World enough as a single ETF?
Yes. With around 3,700 stocks the FTSE All-World covers roughly 90 % of the world’s investable market capitalisation — including both developed and emerging markets. As the sole foundation of a portfolio it is a complete, broadly diversified solution.
Should I combine MSCI World and FTSE All-World?
No. The two overlap by around 90 %. Combining them brings no diversification benefit, only unnecessary complexity. Choose one as your core and supplement it selectively if needed, for example with an emerging-markets or small-cap ETF.