Investors looking to create a diversified stock portfolio would be hard-pressed to find a more

comprehensive solution than the MSCI All Country World Index (ACWI). While there are a few
different flavors, the ACWI includes a diverse portfolio of micro to large cap equities in
developed countries and small to large cap equities in emerging market countries.
The ACWI is developed and maintained by Morgan Stanley Capital International (MSCI) - a
leading provider of investment decision support tools to clients ranging from large pension plans
to boutique hedge funds. Many exchange-traded funds (ETFs) use these indices as a basis for
their holdings, which has made the acronym ubiquitous in the financial markets.
Why Investors Use the ACWI
Investors use the MSCI All Country World Index (ACWI) for a number of different reasons.
First, the ACWI offers an easy and measurable way for investors globally diversify. Institutional
investors can measure implied bets, quantify home biases and ensure a fully diverse portfolio,
while individual investors can purchase global diversification in a single security.
Second, institutional investors often use the ACWI as a benchmark for their own portfolios. For
instance, pension funds may have a mandate saying that they must be globally diversified. Their
holdings are then compared to the ACWI in order to determine if they meet those objectives.
Combined, these are the two most common uses of the ACWI.
Popular Variations of the ACWI
Morgan Stanley Capital International (MSCI) utilizes a number of different variations on its All
Country World Index (ACWI). Choosing the right variation depends on the situation. For
instance, a U.S. investor looking to diversify into international stocks may want to choose an ex-
US index, since he or she already has exposure to U.S. equities.
The three most popular variations are:
MSCI ACWI IMI - The Investable Market Index covers approximately 9,000 securities across
large, mid and small cap segments and across style and sector segments in 45 developed and
emerging markets.
MSCI ACWI All Cap Index - The All Cap Index covers approximately 14,000 securities including
large, mid, small and micro cap developed markets together with large, mid and small cap
segments of emerging markets.
MSCI ACWI Ex Indices - The Ex Indices are used to exclude certain countries - usually the
primary investor's home country - from the index, since these investors may already have
significant exposure to their own country.
How to Invest in the ACWI
The easiest way for individual investors to gain exposure to the All Country World Index
(ACWI) is through ETFs. Many different ETF providers utilize the ACWI in various forms,
which means there are many different options available. But the three most popular providers
are:
iShares MSCI ACWI Index Fund (ACWI)
iShares MSCI ACWI ex-US Index Fund (ACWX)
SPDR MSCI ACWI ex-US ETF (CWI)
Since these funds use the same core index, investors should consider expense
ratios andliquidity when deciding the best option. Expense ratios are important to consider since
they directly affect annual reports, while liquidity is important to consider, especially when
investing in shorter time horizons where timely selling is important.
Some Alternatives to the ACWI
While the MSCI All Country World Index (ACWI) may be the most popular, there are several
other indices used for global exposure, too. The two most popular alternatives are the FTSE All
World Index and the S&P World Index, which offer similar diversification and have multiple
associated ETFs for individual investors to invest in.
Some popular all world ETFs using these indices and others include:
FTSE All World ex-US ETF (VEU)
Total World Stock Index ETF (VT)
S&P Global 100 Index (IOO)
Vanguard FTSE All World ex-US Small Cap ETF (VSS)
Vanguard Total International Stock ETF (VXUS)
Table below shows comparison for the past thirteen years.
Year
MSCI
ACWI
MSCI
World
MSCI ACWI
IMI
2000 -13.94 -12.92 -15.17
2001 -15.91 -16.52 -15.39
2002 -18.98 -19.54 -17.26
2003 34.63 33.76 36.18
2004 15.75 15.25 16.93
2005 11.37 10.02 12.06
2006 21.53 20.65 21.49
2007 12.18 9.57 11.66
2008 -41.85 -40.33 -42.01
2009 35.41 30.79 37.18
2010 13.21 12.34 14.87
2011 -6.86 -5.02 -7.43
2012 16.8 16.54 17.04
2013 23.44 27.37 24.17


A broad and investable global equity benchmark, such as the MSCI ACWI IMI (Investable
Market Index), can play a critical role in an integrated global investment process. MSCI ACWI
IMI covers over 9,000 securities across large, mid and small cap size segments and across style
and sector segments in 46 Developed and Emerging Markets.
Clients seeking an even more comprehensive global equity benchmark may consider the MSCI
ACWI All Cap Index. It covers approximately 14,000 securities and includes large, mid, small
and micro cap size segments for all Developed Markets countries in the index together with
large, mid and small cap size segments for the Emerging Markets countries.
MSCI ACWI IMI or the MSCI ACWI All Cap Index can be used as broad global equity
benchmarks for:
Asset Allocation - Providing a consistent and complete representation of the global equity
markets, MSCI ACWI IMI can assist with asset allocation decisions by helping to: capture the
full spectrum of diversification opportunities; identify implied bets; and quantify any home bias
in an equity allocation.
Performance Measurement and Attribution - Several plan sponsors and consultants use MSCI
ACWI IMI as the benchmark for global mandates. Regional subsets of MSCI ACWI IMI, such
as MSCI EAFE IMI or MSCI Emerging Markets IMI, are used for more specialized investment
mandates.
MSCI ACWI All Cap Indexes are created by appending the MSCI Micro Cap Indexes to MSCI
ACWI IMI.

MSCI Select OECD Indexes
The MSCI Select OECD Index and MSCI Select OECD Investable Market Index (IMI) are
composed of securities from member countries of the 'Organisation for Economic Cooperation
and Development' (OECD) that are covered by MSCI.

The value for S&P Global Equity Indices (annual % change) in Mauritius was -8.43 as of 2012.
As the graph below shows, over the past 15 years this indicator reached a maximum value of
93.96 in 2007 and a minimum value of -49.24 in 2008.
All the data needed for this topic research are obtained from DataStream. Twenty countries are used in
this study and the performance is examined on a monthly basis.