The ACWU (Lyxor) UCITS ETF created in 09/2011 replicates the MSCI World all countries index, which is composed of 2795 representative US securities from more than 50 countries, while the stocks are selected according to the size of their market capitalization.
This ETF is quoted in USD on LSE and ETF fees are 0.45% for assets under management of $ 522bn. Replication is indirect (via swap) and there is a dividend capitalization policy.
Alternative ETFS: ISAC (iShares in USD), ACWI (Lyxor in EUR)
Latest developments
After rising 23.8% in 2017, the MSCI World index rose by only 2.3% in 2018, mainly due to the strong momentum of the US and India stocks.
Emerging stocks are under strong pressure, which is linked to the trade war and are now in a strong downward trend while Europe is losing momentum due to fears over Brexit and Italy. Index participation to the positive momentum is becoming weaker, which weakens the index.
However, the economic outlook is strong in all regions of the world except for South America which is penalized by the collapse of currencies in Argentina, Venezuela and to a lesser extent in Brazil. The resolution of the trade dispute between the US and China is key to the recovery of the index, however an agreement is difficult to expect before the mid-term elections in November.
Index & components
The interest of this index is primarily its depth which allows it to be a good proxy for the world economy, but with a strong US weighting (54%) while China is under-represented at 4.5% if we include Hong Kong. All emerging countries represent around 12% of the index's capitalization, compared to 88% for developed countries, including 7% for Japan and 22% for Europe. The top 10 stocks of the MSCI World are major American stocks (Apple, Amazon, Microsoft, JP Morgan, Exxon ...), which represent 18% of the index.
Sector weighting further favors growth sectors, as do technology stocks that account for about 20% of the weighting. Financials represent 18% of the index and energy stocks 6%, which are well balanced by defensive sectors such as health (about 12%) and consumer discretionary (12%).
The index has enjoyed strong momentum for two years, thanks to the very strong momentum of the US market which has accelerated after the election of D.Trump because of its policy of lower taxes and deregulation.
However, in recent months, the dynamism of the US markets has become more difficult to drag the rest of the world because of the downward trend of the emerging-country indices (Latin America and Asia), which began in the spring with the decline in foreign currencies of some countries (Brazil, South Africa) following the rise of the USdollar and US long-term rates, and is accelerating as a result of the economic war triggered by D.Trump ,. The US is currently the only area to pull the index up, despite global GDP growth estimated at nearly 4%.
