The MSCI ACWI and the S&P 500 are two of the most popular equity benchmarks globally, but they serve different investment strategies. The S&P 500 tracks 500 of the largest US companies, offering concentrated exposure to the US market. In contrast, the MSCI ACWI covers over 2,300 large and mid-cap stocks across 23 developed and 24 emerging markets, providing true global diversification.
Geographic Exposure and Concentration
The primary difference lies in geographic reach. While the S&P 500 is 100% US-focused, the MSCI ACWI includes the US alongside international markets like Japan, the UK, France, and emerging economies such as China and India.
However, because the US stock market has dominated global returns over the past decade, the US makes up roughly 60% to 65% of the MSCI ACWI. This means both indexes share heavy exposure to mega-cap US technology stocks, though the S&P 500 has a slightly higher concentration in this sector.
Performance and Volatility
Historically, the S&P 500 has outperformed the MSCI ACWI due to the exceptional growth of US equities. The S&P 500 benefits from world-leading US multinational corporations, while the MSCI ACWI's performance is moderated by slower-growing international economies.
Conversely, the MSCI ACWI can offer lower volatility during periods when US markets underperform or international markets rally, spreading risk across different regulatory environments and currencies.
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Whether you invest in global funds tracking the MSCI ACWI or US-focused S&P 500 ETFs, monitoring your true geographic and sector exposure is essential. You can use free portfolio trackers like Samet to analyze your asset allocation and see how your holdings align with global benchmarks.
FAQ
Is the S&P 500 included in the MSCI ACWI?
Yes. The US market is a major component of the MSCI ACWI. US stocks typically make up about 60% to 65% of the total weight of the MSCI ACWI index.
Which index has higher returns, MSCI ACWI or S&P 500?
Over the past decade, the S&P 500 has generally outperformed the MSCI ACWI, driven by the strong performance of US technology and growth stocks. However, past performance does not guarantee future results.
Which index is better for long-term diversification?
The MSCI ACWI provides broader geographic diversification by including developed and emerging international markets alongside the US, whereas the S&P 500 offers pure US market exposure.