Many investors like keeping their ETF portfolios simple. When one ETF can get you access to most world markets, why complicate things? Just buy that ETF for your equity exposure and call it a day.
The only problem is choosing the proper world ETF. There are subtle differences between the different products.
The iShares MSCI World Index ETF (TSX:XWD) owns three underlying ETFs. Nearly 60% of assets are in the S&P 500, 36% of assets are the EAFE index (which tracks developed nations outside of North America), and under 4% of assets are in a TSX 60 ETF. It has a 0.44% management fee and yields approximately 1.6% annually.
First Asset has its own world ETF, the First Asset MSCI World Low Risk Weighted ETF (TSX:RWW). A version of the ETF that isn’t hedged to Canadian Dollar is also available.
It has assets of $260 million, making it a little more than half of the size of the iShares ETF. It has 60.3% of assets in the United States, followed by Canada (14%), and then a smattering of smaller nations. It has 200 securities in the portfolio which collectively yield around 1.9%. And it has a management fee of 0.60%, which is a little high.
Vanguard’s world ETF (TSX:VXC) holds shares of 9,782 securities located in dozens of different countries around the world. 56.2% of assets are located in North America, 20.7% are from Europe, 13.9% are from developed Asian countries, and 9.1% of assets are from Emerging Markets. It has a low MER of just 0.26% and yields a hair under 1.9%.
