A question for the group.
Does anyone know what exactly is the difference between different global market cap weighted indices
For example MSCI ACWI vs. Solactive GBS Global large and mid cap index
As far as I can read they both seem to use free float market cap for Large and mid cap companies and represent about 85% of market cap in the world.
So I was wondering what’s the point of having two indices doing the same thing ?
Jump to section III in MSCI Vs FTSE Vs SOLACTIVE: Which Index Should Your Equity ETF Track?
In order to use an index for the purpose of constructing an index fund, one has to pay license fees to the index provider. Solactive is obviously cheaper than MSCI.
SIX will be launching their own indices as well.
They will for sure be the cheapest.
3 posts were merged into an existing topic: Alternatives to cap-based weighting in index funds
Would anyone like to create and maintain a wiki on this topic? Might be easier than to repost tables.
If @Abs_max doesn’t want to do it I’d be happy to, but I want to finish this wiki article first.
I have never created a wiki article actually, so don’t know the process . So I am fine if you can do it.
I can provide inputs as needed.
Sorry, I meant forum’s internal Wiki. You make a post in this category and everyone can modify it:
Ahh okay. Will try to do so
8 posts were merged into an existing topic: Currency hedging
Is this the right location ?
Yes, perfect. I have reshuffled it already to have funds in a more logical, from my point of view, sorting order.
Why do you put specifically SWRD for MSCI World? There are many, if not too many, ETFs on this index.
I think I just took the one with lower cost and also large size. In meantime maybe there are more options with lower costs
An equal weighted etf with 1500 holdings is pretty crazy. I imagine there is lots of trading costs, that I have a hard time believing it will be worth it.
Two new ETFs from Amundi
0.03% MSCI USA (WEBH)
0.15% MSCI world ex USA (WEXE)
This is for investors who might not want WEBG (0.07%) because they want to overweight or underweight USA
I have one question as I find following data a bit weird. I would have expected that both VWCE and SSAC should track quite close to their benchmark (basically they benefit from the lower WHT versus benchmark due to treaty, so that should help reduce impact of TER)
What I see in data is that Vanguard is performing as expected but ishares is outperforming a lot its benchmark.
How can this be explained?
I used three year information to avoid impact of higher ETF fees if existed in past.
3 year performance (annualised)
VWCE -: 5.77%
Benchmark -: 5.78% (FTSE all world)
TER -: 0.22%
SSAC-: 5.92%
Benchmark -: 5.77% (MSCI ACWI)
TER -: 0.20%
This is why I don’t like sampling. The MSCI ACWI index tracks 2757 stocks https://www.msci.com/documents/10199/8d97d244-4685-4200-a24c-3e2942e3adeb , while SSAC iShares contains only 1688 stocks https://www.ishares.com/uk/individual/en/products/251850/ishares-msci-acwi-ucits-etf
Most likely BlackRock choose to sample out smaller stocks, which performed less than large caps. This would explain most of the difference. But the performance is unpredictable (random walk), it may happen than this sampling would in the future result in negative tracking difference.
Second, (although it has less of an impact), BlackRock is fanatic about stock lending, lending out much more than Vanguard (and retaining more for themselves more than Vanguard).
I believe Vanguard provides qualitatively best ETFs in the UCITS land.
But could it be it is efficient to not invest is very small stocks as it adds mainly to costs but not to results ?