For those who have been focusing on MSCI World for your global equity exposure, this one is for you.

The MSCI World Index focuses on developed markets – 23 countries. However, as you may know, it does not include emerging markets. Given that emerging markets represent over 42% of world GDP* it is worth seeking broader exposure which includes emerging market equities and greater exposure to the “real economy” across the world.

MSCI has a broader index known as the All Country World Index or ACWI. Over and above the 23 developed countries, ACWI includes 24 emerging market (EM) countries which currently make up 12% of the index. A variation that makes an important difference to return and diversification!

Adding EM introduces an increased number of shares as well as an improved geographic diversification for the SA investor relative to the plain MSCI index. Interestingly the EM basket of securities has a relatively low level of correlation with the South African market of 0.65.

Over extended periods of time, investors are typically rewarded when making EM allocations as the risk premium typically leads to an out-performance over Developed Markets.

CoreShares has expanded its local unit trust range to now include a Rand domiciled fund which will track the ACWI index. The portfolio has been structured as a fund of funds so that it can hedge the underlying exposures seamlessly thus ensuring low ongoing fees, minimal cash drag and low transaction fees.

The CoreShares MSCI ACWI FoF is currently one of the only low-cost portfolios of its kind, benchmarking the MSCI ACWI index in South Africa.

The expected Total Expense Ratio (TER) of the portfolio is 0.6%. This expected TER includes the underlying funds which we are utilising to provide the exposure efficiently.

*Source: World Bank 

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