Over the past few years, ETFs have gained in popularity among
sector-focused investors and those looking to do short-term trades.
Leveraged and niche ETFs have seen huge inflows as a result,
leaving many of their broader ETF counterparts in the dust.
Yet as markets have become shakier-and more correlated-- it
could be worth it to take a more global approach to some portion of
a portfolio. By doing this, and spreading risks around a host of
nations and sectors, overall volatility can be lowered while still
maintaining high levels of stock exposure (see more on ETFs at the
Furthermore, from a long-term perspective, an allocation to a
global ETF could be a very cost effective way to achieve access to
a variety of nations, both emerging and developed, and their
respective markets. By using this strategy and dollar cost
averaging, investors can make a broad bet on global growth without
having to worry about sector or national specifics.
For these more hands-off investors, or those looking to make the
broadest play possible, we have highlighted five of these global
ETFs below. These funds look to cheaply and easily provide
investors with complete exposure to equity markets around the
world, irrespective of sectors. While they all have a similar
focus, there are several key differences that investors need to be
aware of before considering making a purchase in any of these
'one-stop shop' ETFs:
iShares MSCI ACWI Index Fund (
This global ETF tracks the MSCI ACWI Index, a benchmark for
global stock performance that looks to capture at least 85% of the
total market capitalization in the world. With this focus, the fund
holds over 1,200 securities in its basket, charging investors 34
basis points a year in fees (read
Three Overlooked Emerging Market ETFs
In terms of sector exposure, the fund is tilted towards
financials (16%), and technology (13%), while energy and cyclical
consumer make up 11% each of the product as well. Country
allocations are heavily tilted towards the U.S.-47% of the
total-while a host of developed markets round out the rest of the
top seven nations, although developing countries do receive some
allocation as well.
The product is extremely popular among all stripes of investors
as it has over $2.6 billion in AUM despite being just a little over
four years old. The global ETF also has an impressive daily volume
of over 700,000 shares while the annual yield-at 2.2%-- is nothing
to sneeze at either.
Vanguard Total World Stock ETF (
Vanguard's entrant in the space is VT, a global ETF that follows
the FTSE Global All Cap Index. This benchmark provides investors
with exposure across a variety of markets, holding nearly 750
securities in total and charging a rock-bottom 22 basis points in
fees per year (see
Ten Biggest U.S. Equity Market ETFs
Financials are also the top sector in this fund followed by
tech, although industrials, energy, and consumer discretionary
firms each tie with about 11% each to round out the top five.
Country holdings are also comparable, as the U.S. dominates at
nearly half of the total although European stocks account for
one-fourth of assets and the Asia-Pacific region comprises another
20% of exposure.
This global ETF has also been a hit with investors having
amassed over $1.2 billion in AUM. Volume is also high in the ETF,
coming in close to 200,000 shares per day, an amount that produces
tight bid ask spreads. In addition to this, the product pays a
solid 2.2% yield much like its counterparts in the space.
iShares MSCI World Index Fund (
Tracking the MSCI World Index, URTH is a new choice for
investors looking to exposure their portfolio across a number of
markets. However, the ETF has a focus on developed nations,
allocating towards two dozen countries across North America,
Europe, Asia, and the Pacific Rim.
The fund is another low cost choice in the space although it
comes in slightly higher than VT at 24 basis points a year.
However, it is worth noting that URTH holds close to 1,400
securities in its basket, close to double what VT has in its
holdings profile (read
ETF Investors: Beware The Coming ETN Backlash
The fund has a similar focus as others on the list from a sector
perspective, giving financials, tech, and industrials the top three
spots. In terms of regions, North America accounts for nearly 60%
of assets although Europe does make up about 28% as well.
Possibly due to the newness of the fund, this ETF still has
light trading volume and a low AUM. Volume is still below 1,000
shares a day while assets are below $25 million. This suggests that
bid ask spreads will be quite loose for this product, at least
initially. Fortunately for the fund, its 30 Day SEC yield is quite
robust, coming at 2.5%, putting it among the highest in the
SPDR MSCI ACWI IMI Fund (
This product looks to be a new competitor to ACWI having debuted
at the end of February and tracking the MSCI ACWI IMI Index.
However, this global ETF holds about 740 securities in its
basket-far less than ACWI-although its expense ratio is quite
cheap, coming in at 25 basis points per year.
Unsurprisingly, the fund has a similar sector breakdown to its
iShares counterpart, although the sector exposure is slightly
different. In this fund, financials take the top spot at 16% and
are then followed by a 12% allocation to both industrials and
technology and then 11% in energy stocks. Large caps also comprise
the bulk of the global ETF, accounting for nearly 85% of total
In terms of national holdings, the U.S. accounts for about 47%
of the total, while a number of other developed nations round out
the top seven. Currency exposure follows a similar breakdown,
although American dollars receive a slightly bigger allocation than
one might expect due to ADRs (see
Three Great ETFs For Your IRA
While ACIM might be one of the cheaper products in the global
ETF category, the fund has had trouble accumulating assets. AUM is
below five million dollars while daily volume has trouble getting
through the 1,000 share per day mark. However, the product has only
been around for a very short time so one should give it a chance
before writing it off for the long term.
Accuvest Global Opportunities ETF (
For investors seeking a more active approach to global ETF
investing, ACCU could be an interesting choice. The product is
structured as a fund-of-funds and holds other ETFs in its basket in
order to give investors global exposure. However, this technique,
along with active management, produces a rather high expense ratio
coming in at 1.78%.
With that being said, it could be a quality pick for investors
who want to tap into Accuvest's multi-factor country ranking model.
This approach looks to identify countries whose markets may
outperform other equity markets on the world stage based on 40
different factors with a top-down method.
Currently, this produces a fund that has weights to many
emerging market nations. In fact, the exposure to the
iShares S&P 500 ETF (
is the only developed market in the product as of right now,
rounded out by holdings in Thailand, South Korea, Brazil, South
Africa, and China (see
Frontier Market ETF Investing 101
While this may be too heavy of an emerging market focus for
some, it is important to remember that the rankings can and do
change and that this list of nations will likely be different a
year from now.
Furthermore, the product has performed quite admirably when
compared to its counterparts on this list, especially over the past
month as markets have become shakier. Given this solid performance,
some investors who like active management principles could be well
served by looking at this global ETF from AdvisorShares for their
total market exposure.
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