How to Choose a World ETF (MSCI World vs FTSE All-World)

A world ETF is the default “one fund” backbone for long-term investors. This guide shows how to pick the right index (MSCI World vs FTSE All-World), avoid common traps, and use a simple checklist that survives years.

How to choose a world ETF hero banner showing a checklist of key factors such as index tracked (MSCI ACWI or FTSE All-World), fees and costs, accumulating vs distributing, hedged vs unhedged currency risk, and fund provider reputation, with globe and ETF icons, coins, and market charts in the background.
    If you want a “set-and-keep” global ETF plan, the biggest decision is index coverage, not the broker. Buy a UCITS world ETF you can keep for years, minimize friction, and stop tinkering.

    Fast decision

    • Want one fund that includes Emerging Markets: prefer FTSE All-World (or MSCI ACWI-style coverage).
    • Happy with Developed Markets only: MSCI World is fine (add Emerging Markets later if you want).
    • Don’t want decisions: pick a broad “All-World/ACWI” UCITS ETF, accumulate, and automate contributions.
    Open with IBKR → Best broker for UCITS ETFs (Europe) → Quote page guide →

    Disclosure: We may earn a commission if you open an account using our links. You do not pay extra.

    Educational content only. Not personalized investment advice.

    TL;DR

    • MSCI World = Developed Markets only. It’s “global-ish”, not truly global.
    • FTSE All-World = Developed + Emerging Markets in one fund (more “one-fund global”).
    • Most people should optimize: (1) coverage, (2) costs in reality (tracking difference), (3) trading friction (spreads), (4) behavior.
    • Ignore noise: fund currency ≠ currency risk; TER ≠ real drag; “best ETF” lists expire.

    ETF CHECKLIST

    World ETF checklist: pick in 10 minutes

    STEP 1

    Choose the index family

    • MSCI World: developed markets only
    • FTSE All-World: developed + emerging
    • Decision: do you want EM included by default?

    STEP 2

    Pick the practical wrapper + structure

    • UCITS (default for EU/UK retail)
    • Accumulating vs distributing (tax/admin preference)
    • Replication method you understand (physical/synthetic)

    STEP 3

    Minimize total drag (not just TER)

    • Prefer low tracking difference over marketing
    • Buy the most liquid listing you can access
    • Control FX churn if your workflow involves USD

    STEP 4

    Execution rules

    • Use limit orders if spreads are wide
    • Avoid first/last minutes of the session
    • Pick one fund and keep buying (behavior beats optimization)

    Supporting: Tracking difference vs TER · Liquidity & spreads · Fees really matter

    What “world ETF” actually means

    A “world ETF” usually tracks a broad equity index that holds hundreds or thousands of stocks across countries. The index label matters because it defines what you own (Developed only vs Developed + Emerging).

    MSCI World

    • Developed Markets only.
    • Common “simple global” default in Europe.
    • If you want Emerging Markets, you add them separately.

    FTSE All-World

    • Developed + Emerging Markets in one fund.
    • Cleaner “one-fund” global exposure.
    • Often closer to “own the world” in one line.

    If you want the simplest long-run setup, “All-World/ACWI-style coverage” reduces decisions. If you want control, MSCI World + separate EM can be fine — but it adds a second fund and rebalancing decisions.

    The world ETF checklist (use this, ignore everything else)

    1. Coverage: decide “Developed only” (MSCI World) vs “Developed + Emerging” (FTSE All-World / ACWI-style).
    2. UCITS compliance: if you’re EU/UK retail, assume UCITS ETFs are the default route. Read UCITS vs US ETFs.
    3. Accumulating vs distributing: pick the share class that matches your tax/workflow. Read accumulating vs distributing.
    4. Real cost: don’t worship TER — track tracking difference and friction. Read Tracking difference vs TER.
    5. Liquidity: prefer large funds with tight spreads; trade during liquid hours; use limit orders. Read liquidity & spreads.
    6. Replication: physical vs synthetic is usually a second-order decision for broad world equity, but know what you own. Read Synthetic vs physical.

    MSCI World vs FTSE All-World: the only difference that matters

    The practical difference is whether Emerging Markets are included by default. Everything else is details.

    Pick MSCI World if…

    • you want Developed Markets only (and you’re okay with that exposure).
    • you plan to add Emerging Markets separately (or you consciously skip them).
    • you prefer a simpler, more controlled two-fund approach later.

    Pick FTSE All-World if…

    • you want one ETF that includes Emerging Markets automatically.
    • you want fewer decisions and fewer moving parts.
    • you want a one-fund default that still looks “global” in 10 years.

    If you choose MSCI World and later add Emerging Markets, you’ve created a rebalancing job. If you choose FTSE All-World, you outsource that decision to the index.

    Common traps (the reasons people underperform)

    Trap #1: Fund currency confusion

    An ETF trading in EUR does not remove currency risk if the underlying holdings earn in USD/JPY/etc. The exposure comes from the companies and their revenues, not the trading currency.

    Trap #2: TER obsession

    TER is not the total cost you pay. Tracking difference, spreads, taxes, and your trading behavior often dominate.

    Trap #3: Over-optimizing index “purity”

    You don’t get paid for academic precision. You get paid for staying invested. A robust one-fund plan beats a fragile perfect plan.

    Trap #4: Buying the wrong wrapper

    EU/UK retail investors often can’t buy US-domiciled ETFs. Don’t fight that constraint — use UCITS equivalents.

    Implementation: how to buy without leaking returns

    • Automate contributions: calendar beats motivation. Recurring investing matters more than “which ETF”.
    • Trade like a professional: use limit orders when spreads matter; avoid illiquid hours.
    • Keep the ETF list small: one world ETF + (optional) bond ETF later is enough for most people.
    • Reduce FX repetition: if you must buy USD assets, convert less often and stop micro-converting.
    How to read a quote page → Spreads & limit orders → Best broker for recurring investing →

    CALCULATOR

    Spread Cost Calculator

    Turn bid/ask spreads into a real cost for your order. This is the “silent fee” that repeats every time you buy — especially painful for monthly investing and thin UCITS listings.

    • Entry cost: what you lose buying at ask vs mid.
    • Round-trip cost: what you lose buying at ask and selling at bid.
    • Decision: when a limit order matters, and when spreads dominate tiny TER differences.
    Open calculator →

    Educational content only. Not personalized investment advice.

    FAQ

    Is MSCI World “enough” as a one-fund portfolio? +
    It can be, but it excludes Emerging Markets. The decision is whether you want that exclusion by design or want a one-fund global index that includes EM.
    Is FTSE All-World more diversified than MSCI World? +
    Typically yes because it includes Emerging Markets in the index. The tradeoff is not “better”, it’s whether you want EM exposure automatically or as a separate decision.
    Should I pick accumulating or distributing? +
    It depends on your tax rules and workflow preference. Many long-term investors prefer accumulating for simplicity, but local tax treatment matters.
    Does an ETF trading in EUR remove currency risk? +
    No. Currency risk comes from the underlying holdings and their revenue/cost structure. The trading currency mainly affects convenience and FX when you buy/sell.
    Is the lowest TER always best? +
    No. Real drag includes tracking difference, spreads, taxes, and your behavior. TER is only one component.
    Do I need Small Caps too? +
    Not required. A broad world ETF already covers most of global public equity exposure. Small-cap tilts add complexity and tracking error you must tolerate.
    Can EU/UK retail investors buy US ETFs? +
    Often not. Many US-domiciled ETFs are restricted for EU/UK retail under local rules. UCITS ETFs are the standard workaround.
    What matters more: broker or ETF choice? +
    Coverage + consistency matter most. Broker matters mainly through friction: FX workflow, spreads, fees on your buying pattern, and whether you keep investing.

    Bottom line Choose coverage first (Developed-only vs Developed+Emerging), then pick a UCITS share class you can hold for years. Stop optimizing TER and start optimizing behavior and friction.

    Open with IBKR → Best broker for UCITS ETFs → UCITS vs US ETFs →

    Disclosure: We may earn a commission if you open an account using our links. You do not pay extra.

    Want to compare world ETF listings across exchanges? Use TradingView to compare tickers, listings, and long-run charts — then execute at your broker.

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    Educational content only. Not personalized investment advice.

    You are responsible for confirming current fund details, legal eligibility, and tax treatment in your country. Index methodologies, broker terms, and ETF documents can change.

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