I can't choose between world FTSE and MSCI
I can't choose between world FTSE and MSCI
I have finally reduced my dilemma to two options.
Vanguard all world FTSE (acc)
Or
IShares world + iShares EM (both acc)
And then there is the question on whether adding iShares world small cap.
If I make it a matter of simplicity I should just go for V, but if I'm looking for proper diversification the three iShares offer the closest combo I could get to a total world market, and including small cap in a portfolio is generally considered wise for young investors.
I'm torn.
Vanguard all world FTSE (acc)
Or
IShares world + iShares EM (both acc)
And then there is the question on whether adding iShares world small cap.
If I make it a matter of simplicity I should just go for V, but if I'm looking for proper diversification the three iShares offer the closest combo I could get to a total world market, and including small cap in a portfolio is generally considered wise for young investors.
I'm torn.
Re: I can't choose between world FTSE and MSCI
MSCI or FTSE the return Will be the same +-0.5%.
Time Will tell,...
Time Will tell,...
Re: I can't choose between world FTSE and MSCI
KISS & STC. Use one fund.
It's easier and cheaper. The 2 fund combo LOOKS cheaper. But as soon as you rebalance them (and you will) the savings go "poof".
It's easier and cheaper. The 2 fund combo LOOKS cheaper. But as soon as you rebalance them (and you will) the savings go "poof".
KISS & STC.
Re: I can't choose between world FTSE and MSCI
I was in the same boat, I wasn't sure whether to choose FTSE or MSCI.
I ended up choosing FTSE to get exposure to countries like China
The difference between them is not really huge or (noticeable)
In some years FTSE overcomes MSCI and in some years it's the opposite.
Basically, you have to decide whether you want to get exposure to these countries or not in order to choose which one to hold.
Take a look into this topic, it's great to help you decide
https://investmentmoats.com/passive-inv ... fferences/
I ended up choosing FTSE to get exposure to countries like China
The difference between them is not really huge or (noticeable)
In some years FTSE overcomes MSCI and in some years it's the opposite.
Basically, you have to decide whether you want to get exposure to these countries or not in order to choose which one to hold.
Take a look into this topic, it's great to help you decide
https://investmentmoats.com/passive-inv ... fferences/
Re: I can't choose between world FTSE and MSCI
Thanks.mohd wrote: ↑Sun May 09, 2021 8:18 am I was in the same boat, I wasn't sure whether to choose FTSE or MSCI.
I ended up choosing FTSE to get exposure to countries like China
The difference between them is not really huge or (noticeable)
In some years FTSE overcomes MSCI and in some years it's the opposite.
Basically, you have to decide whether you want to get exposure to these countries or not in order to choose which one to hold.
Take a look into this topic, it's great to help you decide
https://investmentmoats.com/passive-inv ... fferences/
In order to compare apples with apples, we need to add iShares MSCI emerging markets to the MSCI world. Otherwise we're comparing a developed country ETF with an all world ETF.
Re: I can't choose between world FTSE and MSCI
Oh I missed EM on your post, my badAstones wrote: ↑Sun May 09, 2021 9:51 amThanks.mohd wrote: ↑Sun May 09, 2021 8:18 am I was in the same boat, I wasn't sure whether to choose FTSE or MSCI.
I ended up choosing FTSE to get exposure to countries like China
The difference between them is not really huge or (noticeable)
In some years FTSE overcomes MSCI and in some years it's the opposite.
Basically, you have to decide whether you want to get exposure to these countries or not in order to choose which one to hold.
Take a look into this topic, it's great to help you decide
https://investmentmoats.com/passive-inv ... fferences/
In order to compare apples with apples, we need to add iShares MSCI emerging markets to the MSCI world. Otherwise we're comparing a developed country ETF with an all world ETF.
Anyway, in term of performance both of the options will give you almost if not same performance. Perhaps FTSE will give you a slightly better performance because you will save a bit cost from rebalancing, but that difference is not huge? So I would say both have same performance.
So, now it comes to simplicity and flexibility
The one fund ETF has better simplicity in terms of distribution and rebalancing. The other two funds have more flexibility in terms of changing the weight % between the two funds.
The questions that I would ask here before selecting funds:
1. Do you prefer simplicity over flexibility?
2. Would you ever change the weighting of emerging to add or remove more %?
For me it's 1. Yes 2. No. I don't wanna bother with rebalancing and calculating how much should go to each fund. So I go to FTSE all world option.
Re: I can't choose between world FTSE and MSCI
These are fair points.
So, the best solution for Americans is VT, that has companies from everywhere of large, medium, and small cap for a total of about 9k holdings. Vanguard FTSE is a compromise for Europeans, with about 3500 holdings of large and medium cap. Then, if we really want to hold the whole market, an addition is required to add small cap and get a bit closer to the VT etf.
Many people believe that the change would be insignificant, and perhaps they're right. I dunno.
Re: I can't choose between world FTSE and MSCI
Why not buy 2 (or 3) funds and just not do any rebalancing? That would be equivalent to buying only 1 fund.mohd wrote: ↑Sun May 09, 2021 11:07 amOh I missed EM on your post, my badAstones wrote: ↑Sun May 09, 2021 9:51 amThanks.mohd wrote: ↑Sun May 09, 2021 8:18 am I was in the same boat, I wasn't sure whether to choose FTSE or MSCI.
I ended up choosing FTSE to get exposure to countries like China
The difference between them is not really huge or (noticeable)
In some years FTSE overcomes MSCI and in some years it's the opposite.
Basically, you have to decide whether you want to get exposure to these countries or not in order to choose which one to hold.
Take a look into this topic, it's great to help you decide
https://investmentmoats.com/passive-inv ... fferences/
In order to compare apples with apples, we need to add iShares MSCI emerging markets to the MSCI world. Otherwise we're comparing a developed country ETF with an all world ETF.
Anyway, in term of performance both of the options will give you almost if not same performance. Perhaps FTSE will give you a slightly better performance because you will save a bit cost from rebalancing, but that difference is not huge? So I would say both have same performance.
So, now it comes to simplicity and flexibility
The one fund ETF has better simplicity in terms of distribution and rebalancing. The other two funds have more flexibility in terms of changing the weight % between the two funds.
The questions that I would ask here before selecting funds:
1. Do you prefer simplicity over flexibility?
2. Would you ever change the weighting of emerging to add or remove more %?
For me it's 1. Yes 2. No. I don't wanna bother with rebalancing and calculating how much should go to each fund. So I go to FTSE all world option.
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Re: I can't choose between world FTSE and MSCI
Vanguard has recently launched a new All World ESG ETF which also includes small caps https://www.justetf.com/en/etf-profile. ... 00BNG8L278
I don't know if ESG is something you are interested (this Vanguard ETF employs really loose exclusionary criteria), but it holds thousands of securities from both developed and emerging markets and it's an interesting alternative to a combination of three iShares ETFs for developed, emerging, and small caps.
I don't know if ESG is something you are interested (this Vanguard ETF employs really loose exclusionary criteria), but it holds thousands of securities from both developed and emerging markets and it's an interesting alternative to a combination of three iShares ETFs for developed, emerging, and small caps.
Re: I can't choose between world FTSE and MSCI
Thank you I'll check it out!Betelgeuse79 wrote: ↑Sun May 09, 2021 11:42 pm Vanguard has recently launched a new All World ESG ETF which also includes small caps https://www.justetf.com/en/etf-profile. ... 00BNG8L278
I don't know if ESG is something you are interested (this Vanguard ETF employs really loose exclusionary criteria), but it holds thousands of securities from both developed and emerging markets and it's an interesting alternative to a combination of three iShares ETFs for developed, emerging, and small caps.
Re: I can't choose between world FTSE and MSCI
Technically it's not the same.Dragan wrote: ↑Sun May 09, 2021 8:49 pmWhy not buy 2 (or 3) funds and just not do any rebalancing? That would be equivalent to buying only 1 fund.mohd wrote: ↑Sun May 09, 2021 11:07 amOh I missed EM on your post, my badAstones wrote: ↑Sun May 09, 2021 9:51 amThanks.mohd wrote: ↑Sun May 09, 2021 8:18 am I was in the same boat, I wasn't sure whether to choose FTSE or MSCI.
I ended up choosing FTSE to get exposure to countries like China
The difference between them is not really huge or (noticeable)
In some years FTSE overcomes MSCI and in some years it's the opposite.
Basically, you have to decide whether you want to get exposure to these countries or not in order to choose which one to hold.
Take a look into this topic, it's great to help you decide
https://investmentmoats.com/passive-inv ... fferences/
In order to compare apples with apples, we need to add iShares MSCI emerging markets to the MSCI world. Otherwise we're comparing a developed country ETF with an all world ETF.
Anyway, in term of performance both of the options will give you almost if not same performance. Perhaps FTSE will give you a slightly better performance because you will save a bit cost from rebalancing, but that difference is not huge? So I would say both have same performance.
So, now it comes to simplicity and flexibility
The one fund ETF has better simplicity in terms of distribution and rebalancing. The other two funds have more flexibility in terms of changing the weight % between the two funds.
The questions that I would ask here before selecting funds:
1. Do you prefer simplicity over flexibility?
2. Would you ever change the weighting of emerging to add or remove more %?
For me it's 1. Yes 2. No. I don't wanna bother with rebalancing and calculating how much should go to each fund. So I go to FTSE all world option.
Holdings under a fund are automatically rebalanced by the vendor on a frequent basis (mostly quarterly)
for instance, VWRA ETF might hold 87% in the developed market and 13% in the emerging market. After some years this percent might not remain the same.
Re: I can't choose between world FTSE and MSCI
Another all world index with similar costs to VT is SPGM
Re: I can't choose between world FTSE and MSCI
I buy a developed world etf and an emerging markets etf. I amend the allocation to the proportions of FTSE All World and buy towards the start of the month. The two ETFs then move in parallel (more or less) to VWRL.mohd wrote: ↑Mon May 10, 2021 7:24 amTechnically it's not the same.Dragan wrote: ↑Sun May 09, 2021 8:49 pmWhy not buy 2 (or 3) funds and just not do any rebalancing? That would be equivalent to buying only 1 fund.mohd wrote: ↑Sun May 09, 2021 11:07 amOh I missed EM on your post, my badAstones wrote: ↑Sun May 09, 2021 9:51 amThanks.mohd wrote: ↑Sun May 09, 2021 8:18 am I was in the same boat, I wasn't sure whether to choose FTSE or MSCI.
I ended up choosing FTSE to get exposure to countries like China
The difference between them is not really huge or (noticeable)
In some years FTSE overcomes MSCI and in some years it's the opposite.
Basically, you have to decide whether you want to get exposure to these countries or not in order to choose which one to hold.
Take a look into this topic, it's great to help you decide
https://investmentmoats.com/passive-inv ... fferences/
In order to compare apples with apples, we need to add iShares MSCI emerging markets to the MSCI world. Otherwise we're comparing a developed country ETF with an all world ETF.
Anyway, in term of performance both of the options will give you almost if not same performance. Perhaps FTSE will give you a slightly better performance because you will save a bit cost from rebalancing, but that difference is not huge? So I would say both have same performance.
So, now it comes to simplicity and flexibility
The one fund ETF has better simplicity in terms of distribution and rebalancing. The other two funds have more flexibility in terms of changing the weight % between the two funds.
The questions that I would ask here before selecting funds:
1. Do you prefer simplicity over flexibility?
2. Would you ever change the weighting of emerging to add or remove more %?
For me it's 1. Yes 2. No. I don't wanna bother with rebalancing and calculating how much should go to each fund. So I go to FTSE all world option.
Holdings under a fund are automatically rebalanced by the vendor on a frequent basis (mostly quarterly)
for instance, VWRA ETF might hold 87% in the developed market and 13% in the emerging market. After some years this percent might not remain the same.
Re: I can't choose between world FTSE and MSCI
Well, the spirit behind splitting EM and developed is just that.
Every time you're about to make an adjustment, you check the market cap of the two assets and buy in such a way that your weights get as close as possible.
This is what I would do with the 3 iShares (developed + EM + small cap).
The advantages with respect to VWRL is that you pay slightly smaller fees and you have more holdings, so larger diversification.
I think that with the 3 iShares you get to more than 7k holdings. Not yet the >9k of VT though, because you have no EM small cap, but the difference should be minimal.
Re: I can't choose between world FTSE and MSCI
But why would you need to make any adjustments after the initial buy in? The proportion of EM in the VWRL will automatically change according to market cap, and so will the size of your EM fund in the 3-way buy in.Astones wrote: ↑Mon May 10, 2021 9:32 amWell, the spirit behind splitting EM and developed is just that.
Every time you're about to make an adjustment, you check the market cap of the two assets and buy in such a way that your weights get as close as possible.
This is what I would do with the 3 iShares (developed + EM + small cap).
The advantages with respect to VWRL is that you pay slightly smaller fees and you have more holdings, so larger diversification.
I think that with the 3 iShares you get to more than 7k holdings. Not yet the >9k of VT though, because you have no EM small cap, but the difference should be minimal.
Re: I can't choose between world FTSE and MSCI
Let me give you an example.
When the market cap of a given index increases because a new company is added to the index, you don't see this increase materialize in your ETF (since it's not due to the growth of the companies you already own, but to the purchase of a new company).
Imagine the example in which you have two funds, A and B, and someone else has a single fund C=A+B.
The new company is added to B. The guy with C will sell a little bit of everything from A and B in order to buy the company proportionally to the market cap. In your case, only companies of B will be sold. So you can see that the addition of this company has provoked a mismatch between the weights of A and B taken separately with respect of A and B when they are together inside C.
EM has a larger turnover with respect to developed, so it is likely that there will be deviations of similar kind in the ETF weights over the long run.
Re: I can't choose between world FTSE and MSCI
This is exactly why I prefer the one fund ETF, I just simply buy the amount of shares I want and forget about it. I don't have to do any calculation or an extra effort - how lazy I am!Astones wrote: ↑Mon May 10, 2021 9:32 amWell, the spirit behind splitting EM and developed is just that.
Every time you're about to make an adjustment, you check the market cap of the two assets and buy in such a way that your weights get as close as possible.
This is what I would do with the 3 iShares (developed + EM + small cap).
The advantages with respect to VWRL is that you pay slightly smaller fees and you have more holdings, so larger diversification.
I think that with the 3 iShares you get to more than 7k holdings. Not yet the >9k of VT though, because you have no EM small cap, but the difference should be minimal.
Re: I can't choose between world FTSE and MSCI
I am very tempted to go that road. The difference in return is likely going to be small.mohd wrote: ↑Mon May 10, 2021 11:00 amThis is exactly why I prefer the one fund ETF, I just simply buy the amount of shares I want and forget about it. I don't have to do any calculation or an extra effort - how lazy I am!Astones wrote: ↑Mon May 10, 2021 9:32 amWell, the spirit behind splitting EM and developed is just that.
Every time you're about to make an adjustment, you check the market cap of the two assets and buy in such a way that your weights get as close as possible.
This is what I would do with the 3 iShares (developed + EM + small cap).
The advantages with respect to VWRL is that you pay slightly smaller fees and you have more holdings, so larger diversification.
I think that with the 3 iShares you get to more than 7k holdings. Not yet the >9k of VT though, because you have no EM small cap, but the difference should be minimal.