S&P 500 vs MSCI World vs FTSE All-World:
20-year comparison
Three indexes dominate the passive-investing debate for European investors. The S&P 500 has delivered the highest raw returns. MSCI World spreads across 23 developed markets. FTSE All-World adds emerging economies on top. This study uses 20 years of index data (2004–2024) to compare returns, drawdowns, recovery times, and the UCITS ETFs that give you access to each.
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What 20 years of data shows
All figures USD total return (dividends reinvested), gross of fund costs and tax. EUR-based investors should account for currency effects separately — see the FX drag study.
- S&P 500 outperformed MSCI World by ~1.9% per year over 20 years.
- That gap is largely explained by US tech dominance post-2010 (FAANG, then Magnificent 7).
- The next 20 years may look very different if non-US markets catch up.
- All three indexes fell 33–56% in the GFC and COVID crashes.
- Global diversification only helped meaningfully in the 2022 bear market.
- Recovery speed varied: S&P 500 recovered GFC 12 months faster than MSCI World.
What each index actually tracks
Before comparing returns, it helps to be clear on the structural differences between the three. They are not equally diversified — despite the names.
500 of the largest US-listed companies, selected by a committee. Covers roughly 80% of total US market cap.
- Holdings: ~500
- Markets: USA only (100%)
- Weighting: Float-adjusted market cap
- Provider: S&P Dow Jones Indices
Large- and mid-cap stocks across 23 developed markets. Despite the name, it excludes all emerging markets.
- Holdings: ~1,460
- Markets: 23 developed (US ~70%)
- Weighting: Float-adjusted market cap
- Provider: MSCI Inc.
Large- and mid-cap stocks across both developed and emerging markets. The broadest of the three indexes.
- Holdings: ~4,200
- Markets: 49 (developed + emerging)
- Weighting: Float-adjusted market cap
- Provider: FTSE Russell
20-year annualised return (CAGR), USD total return
Jan 2004 – Dec 2024. Dividends reinvested. Gross of fund costs and tax. EUR-based investors: see the FX drag study to understand how currency conversion affects your actual result.
$10,000 invested in January 2004 to December 2024
Lump sum at start. USD total return. Gross of costs. The compounding effect of even a ~2% annual gap becomes dramatic over 20 years.
| Metric | S&P 500 | MSCI World | FTSE All-World |
|---|---|---|---|
| 20-yr CAGR (USD) | 10.5% | 8.6% | 8.4% |
| Annualised volatility | ~15.0% | ~14.5% | ~14.2% |
| Best calendar year | +32.4% (2013) | +27.7% (2019) | +26.8% (2019) |
| Worst calendar year | -38.5% (2008) | -40.3% (2008) | -41.5% (2008) |
| Positive years | 16 of 20 | 15 of 20 | 15 of 20 |
| $10k grown to (USD) | $73,700 | $52,400 | $50,800 |
Sources: MSCI index fact sheets, FTSE Russell, S&P Dow Jones Indices. Figures are illustrative; minor variations exist across data providers. All returns gross of fund costs and tax.
Major drawdowns: how far did each index fall?
Drawdown behaviour matters as much as headline returns — especially for investors drawing down a portfolio or approaching retirement. Here are the three significant bear markets in the 20-year window.
| Index | Peak-to-trough | Trough date | Recovery (ATH) |
|---|---|---|---|
| S&P 500 | -55.2% | Mar 2009 | Mar 2013 (~66 mo) |
| MSCI World | -54.3% | Mar 2009 | Jun 2014 (~78 mo) |
| FTSE All-World | -55.8% | Mar 2009 | Jul 2014 (~79 mo) |
All three indexes fell by roughly the same magnitude. Geographic diversification provided negligible downside protection: global equities fell in unison as financial contagion spread across all developed and emerging markets simultaneously.
| Index | Peak-to-trough | Trough date | Recovery (ATH) |
|---|---|---|---|
| S&P 500 | -33.9% | Mar 2020 | Aug 2020 (~5 mo) |
| MSCI World | -33.5% | Mar 2020 | Aug 2020 (~5 mo) |
| FTSE All-World | -34.7% | Mar 2020 | Sep 2020 (~6 mo) |
The fastest bear market on record: all three fell roughly 34% in about 33 days, then recovered almost as quickly. FTSE All-World fell slightly more due to emerging market exposure adding to the initial selloff.
| Index | Peak-to-trough | Trough date | Recovery (ATH) |
|---|---|---|---|
| S&P 500 | -24.5% | Oct 2022 | Jan 2024 (~24 mo) |
| MSCI World | -18.2% | Oct 2022 | Nov 2023 (~22 mo) |
| FTSE All-World | -17.3% | Oct 2022 | Oct 2023 (~21 mo) |
The one scenario where global diversification provided meaningful downside protection. The S&P 500 fell roughly 6–7 percentage points more than global indexes, partly because US tech valuations were more stretched entering the rate cycle. MSCI World and FTSE All-World also recovered faster — their lower US tech weight worked in their favour during the rebound.
Geographic allocation breakdown
US concentration is the defining structural difference between these indexes. Despite their global branding, MSCI World and FTSE All-World are both still majority US equity funds.
Data approximate, based on index fact sheets as of Q1 2026. Market-cap weighting means the US allocation shifts as relative valuations change.
UCITS ETF options for European investors
None of the three indexes are directly investable — you need a fund. Here are the main UCITS ETFs available across European stock exchanges, all accessible through brokers like IBKR, DEGIRO, or Trading 212. All funds listed are Ireland-domiciled, which is important for EU tax treaty access and dividend withholding treatment.
Full breakdown in the S&P 500 UCITS ETF guide.
| ETF | Ticker | TER | Type | Exchange |
|---|---|---|---|---|
| iShares Core S&P 500 UCITS | CSPX / IUSA | 0.07% | Acc / Dist | LSE, Xetra |
| Vanguard S&P 500 UCITS | VUSD / VUSA | 0.07% | Acc / Dist | LSE, Euronext |
| Invesco S&P 500 UCITS | SPXS | 0.05% | Acc | LSE, Xetra |
| Amundi S&P 500 UCITS | SP5 / 500 | 0.07% | Acc / Dist | Euronext Paris |
Full breakdown in the MSCI World UCITS ETF guide.
| ETF | Ticker | TER | Type | Exchange |
|---|---|---|---|---|
| iShares Core MSCI World UCITS | IWDA / SWDA | 0.20% | Acc | LSE, Xetra |
| Xtrackers MSCI World UCITS | XDWD | 0.19% | Acc | LSE, Xetra |
| Amundi MSCI World UCITS | CW8 | 0.12% | Acc | Euronext Paris |
| HSBC MSCI World UCITS | HMWO / HGSD | 0.15% | Acc / Dist | LSE, Xetra |
| ETF | Ticker | TER | Type | Exchange |
|---|---|---|---|---|
| Vanguard FTSE All-World UCITS | VWCE / VWRL | 0.22% | Acc / Dist | Xetra, LSE, Euronext |
| iShares MSCI ACWI UCITS | SSAC / ISAC | 0.20% | Acc | LSE, Xetra |
| SPDR MSCI ACWI UCITS | ACWI | 0.12% | Acc | LSE, Xetra |
TERs accurate as of Q1 2026. Always verify on the fund provider’s official website before investing. Accumulating share classes (Acc) are generally more tax-efficient for investors in countries that do not tax unrealised gains annually — check the rules for your country.
Which index should you choose?
There is no universally correct answer. It depends on your investment philosophy, conviction about the future, and what other assets you hold. Here is how to think through the decision.
- You believe US market dominance continues long-term
- You want the lowest-cost UCITS option (0.05–0.07% TER)
- You already have non-US exposure elsewhere (pension, property, income)
- You can accept single-country concentration risk
- You want developed-market diversification without EM volatility
- You prefer a lower TER than FTSE All-World (Amundi CW8 at 0.12%)
- You want to add a separate EM fund at a custom allocation
- Your broker has strong availability for IWDA or SWDA
- You want the broadest possible global diversification in one fund
- You believe emerging markets will outperform over your horizon
- You want a true one-fund portfolio (VWCE is the Bogleheads default in Europe)
- You prefer simplicity over granular allocation control
Ready to invest in any of these indexes?
European investors can access UCITS versions of all three indexes through regulated brokers. IBKR offers the widest ETF selection across European exchanges, the lowest FX conversion costs, and multi-currency accounts — making it the practical default for most non-US investors. DEGIRO and Trading 212 are solid lower-cost alternatives for smaller regular contributions.
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Frequently asked questions
Is the S&P 500 better than MSCI World for European investors?
The S&P 500 has delivered higher returns over the past 20 years (~10.5% CAGR vs ~8.6% for MSCI World in USD), but it concentrates 100% of your exposure in the US market. MSCI World spreads risk across 23 developed countries. Neither is objectively better. The S&P 500 is a high-conviction bet on US dominance continuing; MSCI World is a broader diversification approach. Your choice should reflect your conviction about US outperformance, your time horizon, and whether you already have non-US exposure elsewhere in your life.
What is the difference between MSCI World and FTSE All-World?
MSCI World covers around 1,460 large- and mid-cap stocks across 23 developed markets only — it excludes all emerging markets. FTSE All-World covers around 4,200 stocks across 49 markets, including approximately 11% in emerging markets such as China, India, Taiwan, and Brazil. Historically their returns have been very similar because the EM sleeve has not dramatically outperformed or underperformed over 20 years. The practical difference comes down to which UCITS ETF you prefer: VWCE tracks FTSE All-World; IWDA tracks MSCI World.
Which UCITS ETF should I buy to track the MSCI World?
As of Q1 2026, the Amundi MSCI World UCITS ETF (ticker: CW8 on Euronext Paris) has a TER of 0.12% — the lowest available for MSCI World exposure. The Xtrackers MSCI World (XDWD) follows at 0.19%, and iShares Core MSCI World (IWDA/SWDA) at 0.20%. If you buy in EUR and your broker supports Euronext Paris, CW8 is the cost-optimal choice. All three are Ireland-domiciled accumulating funds, which is the most tax-efficient structure for most EU investors. Beyond TER, also compare tracking difference — see the tracking difference vs TER guide.
How long did it take the S&P 500 to recover from the 2008 crash?
The S&P 500 peaked in October 2007 and did not reach a new all-time high until March 2013 — approximately 66 months (5.5 years) from peak to recovery. If you had invested at the worst possible moment — the October 2007 peak — you would have been underwater for over five years. MSCI World and FTSE All-World took even longer, recovering around mid-2014 (roughly 78–80 months from the pre-crisis peak) because European and Japanese equities recovered more slowly than US equities.
Should I combine an MSCI World ETF with an Emerging Markets ETF?
This two-fund approach lets you replicate FTSE All-World-like exposure while controlling your EM allocation. A common split is 90% MSCI World (IWDA) plus 10% MSCI Emerging Markets. The advantage is flexibility — you can tilt EM higher or lower than the market-cap default. The trade-off is rebalancing complexity and possibly a higher combined TER depending on which EM fund you choose. VWCE (FTSE All-World at 0.22% TER) achieves similar diversification in one fund with no rebalancing required, which is why it is the default one-fund solution for most European investors.
QuantRoutine provides educational content only. Nothing on this page is an offer, solicitation, or recommendation to buy or sell any security or to open an account with any specific broker. Investments can lose value and past performance does not guarantee future results. You are responsible for your own investment, tax, and legal decisions. Always review each broker’s current terms, fees, and eligibility on their official website before opening or funding an account.
Return data: MSCI index fact sheets, FTSE Russell, S&P Dow Jones Indices. 20-year window: January 2004 – December 2024. All returns USD total return gross of fund costs and tax. Figures illustrative; minor variations exist across data providers. Geographic allocations approximate as of Q1 2026. Last updated: March 2026.