Comparing the All-World ETFs

There are two total world exchange traded funds (ETFs) available now, but they’re not carbon copies. How do youknow which one is the right one for you?

Both funds are exactly alike in that they are all-world ETFs (including the United States) that give global exposure to world equities.

The iShares MSCI ACWI (ACWI) has $400 million in assets, and has 702 holdings. ACWI tracks the MSCI All Country World Index, which itself has 2,316 components. Its objective is to track the index by using a sampling technique, explains John Schloegel for Seeking Alpha.

The Vanguard Total Stock Market (VT) has a lower expense ratio than ACWI, with a lower record of tracking error. VT holds 2,748 securities, and tracks the FTSE All-World Index which itself has 2,757 components.

Both funds are equally comparable, however, Schloegel gives VT the nod. It has a lower expense ratio and lower potential for tracking error (because it holds a larger number of stocks).

Both all-world funds, however, can be a good core holding to round out a portfolio. They give exposure to equities around the world, giving nice exposure and diversification benefits at a low cost. For the “set it and forget it” type of investor, these funds can be an option. Watch the trend lines for opportunities.

• iShares MSCI ACWI Index Fund (ACWI): up 15.2% year-to-date

For more stories on ETFs around the world, visit our global ETFs category.