Explain It To A Golden Retriever – A Review Of Global ETFs

The Definitive Guide to Equity Index Investing - PART 2

This article is Part 2 of our definitive guide to Equity Index Investing.

In 2019, I cycled 4,000+ km across Japan, from Hokkaido to Okinawa. A few typhoons forced me to leave, but one reason I will come back is architecture, especially the peaceful countryside and the Japanese gardens.

Japanese people love minimalism and simplicity. In a lot of fields, as Steve Jobs said, building Simple products is Hard. Making a product like the iPhone certainly was.

Yet, in investing, building Efficient portfolios is simple. 


  • Do You Understand Your Strategy? If you can’t explain it to a Golden Retriever, you don’t understand it.
  • Your Complicated Strategy Will Tested By The Market – like the 2008 value of Subprime Bonds was for German investors. That’s when most investors bail out.
  • A Global ETF – is likely what a lot of experienced Wall Street Professionals would choose if they had to opt for one fund to Hold On for Dear Life.
  • Why? Global ETFs cover all sectors and countries, follow the money, are cheap, hassle-free and unbiased.
  • Which One Is Best? Today, for most Europeans the best UCITS ETFs are from the ‘Big 3’ Asset Managers. However, Amundi’s newly launched Global ETF is now the cheapest and is quickly becoming a serious challenger. UK Investors have a couple of additional Mutual Funds to choose from. Swiss and Elective Professional Investors can choose even cheaper ETFs domiciled in the U.S., and French investors may need to use synthetic ETFs.
Here is the full analysis

What if you could only buy ONE single investment

I spent part of my career managing Asset Backed Securities. Yes, the ones that blew up in 2008. I actually went into this field only in 2009 – to ‘clean up’ the mess.

One thing that you quickly learn when running complex, multi-layered models, is to be alarmed when investments get complicated, and if you can’t explain it to a six-year-old, or a Golden Retriever.

Be alarmed if you can't explain it to a Golden Retriever

One of the biggest mistakes Investors made was taking things at face value, especially for very complex products, while being remote from the place where these products originated.

I look at you, German Investors in US Subprime Bonds.

It happened, for example, when an Investor bought Assets with the highest credit rating but didn’t quite understand and didn’t have the systems to analyse.

Most of us don’t have access to sophisticated products, but a lot of traps remain. Academic research and empirical evidence point to the fact that simple Investing Strategies like Index Investing usually work best, are easily understood and accessible to anyone.

What if you could only buy into ONE single investment and HODL?

Interestingly, when you speak to people that have been in the investment business for a long time and ask them the above question, which by definition makes them think about their true beliefs and long term risks they understand and leaves short term speculation off the table, with the idea that: 

  • They could only choose one passive investment for their personal portfolio
  • HODL (Hold On for Dear Life) so that they can only withdraw from it to fund their living expenses.

The answer often is... a World Equity ETF

Sure enough, if we assume you can’t swap investments and can only withdraw to fund your living expenses, we’re taking out the biggest investment risk out of the equation – yourself and your emotions.

And in fact, wise investors often move from complex portfolios to this simple strategy as they realize that the market almost always wins in the long run.

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The Simplest Investment - A World ETF

Do you need knowledge to invest?

You don’t need much knowledge to put your cash to work.

In fact, to get exposure to World Equities, you only need a single ETF. And this exposure evolves with the markets as certain markets grow or decline.

Current country weights in the World Equity Index

Currently, c. 60% of all World Stocks as measured by market capitalization are US Equities, but it wasn’t always that way.

It may not always remain so. While there are reasons for the current allocations, imagine if China or India accelerated opening up and transparency of their Capital Markets? China’s current weight is only c. 4% in the Global Stock Market, whereas its GDP is 65% of the US GDP. The mix of Emerging Market sectors, with more Tech, is changing interesting as well. And US Tech often doesn’t have access to those markets. 

Stock Market performance as measured by size

But how did the World ETFs perform?  Let’s look at the Benchmark with the longest track record – the MSCI ACWI Index. 



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World ETF Benchmark Performance

Doubling in 10 Years, 4x in 20 Years, 8x in 30 Years.

If you assume a 10-year investment horizon, by having invested $1,000 and kept it for the entire period it would have on average returned c. 7% per year (accounting for 0.3% fees but before 2-2.5% inflation) and your portfolio would have doubled, on average, during those first 10 years. 

Of course, if you held longer than for a decade,  the return would be closer to exponential over time given how compound interest works. Check out calculator.

World ETF Benchmark Total Return (1988-2020)

Now, the graph below shows the cumulative net profit for a 10-year holding period.

For instance, a portfolio worth $3,300 that is – the $1,000 initial investment and $2,300 profit, if sold in 2019 and invested 10 years earlier, in 2009.

Net profit from investing $1,000 over 10 years

Losses were Virtually Impossible

More importantly, as wise investors know, the likelihood of having a negative yielding portfolio was close to zero beyond a 10-15 year holding period.

In fact, from 1988 to 2020 the likelihood was below 3% if you kept the portfolio for the entire 10-year holding period. Essentially the only case was if you invested in 1999 and was forced to sell in 2009.

Simple doesn't mean the ride will be easy

Maximum loss from last market peak on $1,000

And yet, this is a hypothetical exercise and assumes the emotions are not part of the game.

If you watched your Investment Account at the end of every month, I don’t and managed to forget my broker account password recently, which I’m really proud of, there would have been cases where losses would be close to or even slightly exceeded 50%. This assumes that your reference point was the previous market peak.

It’s not how one should look like at a portfolio, but often investors do and that’s why portfolio protection is key.

Now, what are the practical arguments for such a radically simple Equity Portfolio?

5 Reasons Why You should consider a Global ETF

#1 - The World ETF covers all countries and sectors

#2 - The World ETF follows the Money

The benchmarks that these ETFs track are market capitalization Indices. It means that the larger a country, sector or company gets the bigger will be your exposure. You bet on the recent winners and follow how the best brains in Finance are allocating capital to the most productive companies, and this, worldwide.

#3 - The World ETF is unbiased

You wouldn’t be over-exposed to certain countries, e.g. your own because of your arbitrary preference. Or even companies you shouldn’t be. Again, you go with the flow.

#4 - The World ETF is hassle-free

If your portfolio has multiple ETFs you have more rebalancing work and potentially tax implications. You also have to rebalance your portfolio whenever it drifts from your desired allocation. You can focus on more interesting things in life than ETFs.

#5 - The World ETF is cheap

One ETF is cost-efficient and involves less transaction fees. There is no need to rebalance your Equity portfolio and incur trading costs.

6 Criteria that matter

What Should I Consider As A Long Term Investor?

Since, we’re in for the long haul, let’s keep simple selection criteria simple as well. If something below isn’t clear – look here at what matters when selecting an ETF and here how World Indices work.


Interactive Brokers




Our interactions with hundreds of investors revealed two trends: Index investing forms the backbone of their portfolios, and Interactive Brokers emerges as the go-to platform for a majority of investors.


As of 29/03/2024, Interactive Brokers offers rates up to 4.738% (GBP), 3.445% (EUR) and 4.83% (USD) on cash. 


As of 29/03/2024, Interactive Brokers offers rates up to 4.738% (GBP), 3.445% (EUR) and 4.83% (USD) on cash. 



While there are other alternatives, if we apply the above criteria of a long term investor, only 3 candidates really stand out:

  • Vanguard’s FTSE All-World UCITS ETF
  • BlackRock’s iShares MSCI ACWI UCITS ETF 
Here is a comparison of their characteristics and performance.


RankGlobal(World) ETF3Y TDTERAcc.Dist.ReplicationSizeInceptionDomicileBenchmarkAcc ISINDist ISINRank Category
1Vanguard FTSE ALL-World UCITS ETF0.0%0.22%
Physical2005/2012IrelandFTSE All World Net Total Return IndexIE00BK5BQT80IE00B3RBWM25Large & Mid Caps
2iShares MSCI ACWI UCITS ETF-0.1%0.20%
Physical1010/2011IrelandMSCI All Country World Net Total Return IndexIE00B6R52259
Large & Mid Caps
Physical1.205/2011IrelandMSCI ACWI IMI Net Total Return IndexIE00B3YLTY66
With Small Caps
Source: Bloomberg, Bankeronwheels.com. Size data as of May 2024 (combined Share Classes). Definitions: 3Y TD - Annualised 3-year Tracking Difference as of Q2'23. It is the ETF outperformance vs. a Total Return Net Index. Net Index represents the worst case tax treatment e.g. 30% for US Dividends. TER - Total Expense Ratio. Acc - Accumulating Share Class. Dist. - Distributing Share Class.  Acc/Dist Cumulative size in € billion .

What Benchmarks Do World ETFs Track?

BlackRock’s iShares tracks the MSCI All-Country World Index, Vanguard tracks its FTSE equivalent, the FTSE All-World Index and the SPDR ETF the MSCI ACWI IMI.

Do they differ?

  • The FTSE All-World Index – tracks c. 90% of the Investable Universe.
  • MSCI All-Country World (ACWI) Index – tracks about 85% of the Investable Universe. In practice, the difference between them is marginal, as both are very highly correlated.
  • MSCI All Country World IMI (ACWI IMI) Index – aims to track 99% of the Investable Universe. It has the additional benefit of tracking Small Caps (hence the IMI that stands for Investable Market Indexes in its name). 

How Do Asset Managers Achieve This Goal?

  • In practice, Asset Managers like State Street use Optimised Sampling technique (or common risk factors) to replicate the performance of the Index because investing in over 9,000 Stocks is not easy and cost-efficient for small, illiquid stocks. 
  • For example, the SPDR ETF does that with only c. 1,800 Stocks. And based on the Tracking Difference, it does the job well.
  • The iShares ETF holds about 2,300 Stocks, while Vanguard invests in almost 3,900 Stocks.

How Did I compare Their Performance?

  • I have assessed the ETFs based on Tracking Differences. Understand why it’s key in ranking ETFs.
  • Calculations were based on data from Bloomberg and TrackInsight, two very reputable sources. 
  • The comparison is made over a 3-year period, to avoid any short-term tracking errors.

What are the Tax Implications?

All ETFs are domiciled in Ireland. For most Europeans, Ireland may have the advantage of lower withholding taxes for US Assets that represent over half of the Index.

Our Verdict

Remember, the ranking is just a guidance based on the above criteria. However, investing is individual and you should assess your own requirements. The U.S. “BIG 3” Asset Managers all have strong reasons to invest with them. But until 2021, Vanguard stood out. However, with the recent drop in TER, BlackRock will be a serious challenger in the years ahead.

The Winner

Vanguard FTSE All-World UCITS ETF

  • The Boglehead’s favourite ranks consistently at the forefront in terms of Tracking Difference. In fact, over the past 36 months, it hardly incurred any net costs (0% TD compared to a Net Tax Index).
  • Vanguard FTSE All-World ETF is also cheap using the forward-looking TER metric, with ongoing cost of 0.2%.
  • Vanguard manages the largest fund in this category. It attracted most capital and across all share classes, manages c. $14 bn.
  • Vanguard gives the flexibility of reinvesting and distributing dividends.
  • Vanguard tracks the FTSE All-World Index, which covers a larger universe than the MSCI ACWI.

The Best Alternatives


  • BlackRock has the strongest Brand Name among Institutional Investors and the biggest Asset Manager in the World in terms of Assets Under management.
  • The iShares ETF is leading in TER. Up until 2021, this ETF was the most expensive in terms of TER and didn’t rank that well in terms of Tracking Difference. As of February 2021, the TER decreased from 0.6% to 0.2%. This change is expected to bring Tracking Difference on par with Vanguard. 


  • State Street provides the option of investing in World’s small caps – the only provider to allow this under UCITS.
  • It has an impressive 0.1% Tracking Difference given its reliance on risk model replication.
  • But, there are a couple of potential problems with this ETF. First, you will be relying on a correct sampling by the manager, and less on a more mechanical replication like for the other ETFs listed above. In practice, this means the number of stocks is lower.
  • It carries a 0.17% TER, that was lowered from 0.4% in Q1 2023.

Note that SPDR also has a MSCI ACWI ETF, not tracking small caps, but it is much smaller than rivals and has a worse TD. 

The Rising Star

Amundi Prime All Country World UCITS ETF

In February 2024, AMUNDI launched the cheapest Global ETF domiciled in Ireland. The Amundi Prime All Country World UCITS ETF (WEBG) has a total expense ratio (TER) of 0.07%. It is only available in Distributing Share ClassIn just two months and as of May 2024, its assets are already over €700m, making it a promising candidate to challenge the leaders. 

⚠️ Should you consider Amundi? In case you need a distributing fund, it’s becoming a consideration, but we will wait until it has a year of track record to include it and compare performance. We also expect the TOP 3 to react to this new ETF and lower their fees which will make the comparison more meaningful.

The Geeky Section 🤓

Other providers also offer exposure to a Global Equity Index, but they do not fit our selection criteria. For example, Invesco FTSE-All World funds (0.15%) were launched in June 2023, but have collected just €250 over a year, compared with close to 3x this amount by Amundi in just a couple of months, which is half cheaper (0.07%). They will be reassessed should they become a real challenger to the market leaders. Other trackers exist, but they are either more expensive, synthetic or/and not tax efficient.

Exceptions to the rule

Countries where you may consider another Fund

In a few cases you may opt for other ETFs. These include:

In addition to above ETFs, UK Investors have the possibility to invest in Index Mutual Funds.

The two additional options are:

  • Vanguard FTSE Global All Cap Index Fund (TER 0.23% and domiciled in the UK)
  • HSBC FTSE All-World Index Fund – Class C (TER 0.13% and domiciled in the UK)

The first offers full diversification with over 7,000 Stocks and including Small Caps. Learn more about this Index.

Some investors have tax-efficient access to non-UCITS ETFs:

  • US Investors
  • Investors from Countries like Switzerland
  • Non-Professional Europeans that may be treated as professionals  

The iShares MSCI ACWI ETF and SPDR MSCI ACWI IMI ETF are the same as in UCITS Format, but with higher liquidity.

The best ETF is Vanguard Total World Stock ETF that tracks FTSE Global All Cap and also includes Small Caps. It has over 7,000 Stocks. All US ETFs are distributing.

French investors tend to invest through tax wrappers including Assurance Vie or the PEA. For these Global ETFs may not be available. You can assemble a Global ETFs using just two ETFs – one for Developed Markets and one for Emerging Markets. These ETFs are typically available in tax wrappers. Here is a guide on how to do it. It is very common for these ETFs within PEAs to be synthetic.

For Developed Markets only BlackRock within the big 3 has an ETF:

Otherwise you can also choose Amundi, but it’s more expensive:

Should your tax situation make ETF based in Luxembourg advantageous, Amundi does track Global Stocks via two other ETFs:

  • Amundi PRIME Global UCITS ETF (0.05% TER), Physical, Luxembourg-based tracks the Solactive GBS Developed Markets Large & Mid Cap USD Index (equivalent to the MSCI ACWI Index). It has an accumulating and a distributing share class. Combined, they have over €1bn AUM as of May 2024.
  • Amundi MSCI All Country World UCITS ETF (0.45% TER) – Synthetic, Luxembourg-based ETF. It has an accumulating share class.
Before buying, understand the implications of ETF taxes in Luxembourg.
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Next Steps

Of course, life is more complex than this simple strategy. Our Personal Finances are, well, by definition personalMost of us also want to ‘sin a little’ and overweight some markets, based on personal views or risk circumstances. 

Also, some local laws may not give access to Global ETFs. For instance, French investors don’t have easy access to them in their PEA Tax Wrapper. But they can get around the issue by understanding how portfolio managers divide the World and replicate through a Developed and Emerging exposure. 

Thank you for reading.
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