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The MSCI World is a global stock market index that tracks large and mid cap companies across developed countries. It is designed to represent the performance of equity markets in North America, Europe, and the Asia Pacific region. The index is widely used as a benchmark for international investing.
The MSCI World provides broad exposure to developed market equities.
The index includes companies from more than twenty developed countries and is weighted by market capitalization. This means larger companies have a greater influence on the index’s performance. It does not include emerging markets, which are covered by separate indices.
Many exchange traded funds and mutual funds aim to replicate the MSCI World, making it a popular choice for investors seeking global diversification in a single product. Because it covers multiple regions and sectors, its performance reflects overall trends in developed economies rather than the results of a single country.
Short example:
Suppose an investor wants global diversification without selecting individual stocks.
The investor chooses an ETF that tracks the MSCI World index.
By investing in this ETF, the investor gains exposure to hundreds of large and mid sized companies across developed countries. If global developed markets rise by 8 percent in a year, the ETF is expected to deliver a similar return, while also reflecting any downturns in those markets.
Disclaimer: Investing brings risks. Our analysts are not financial advisors. Always consult an advisor when making financial decisions. The information and tips provided on this website are based on our analysts' own insights and experiences. Therefore, they are for educational purposes only.
