MSCI World vs. FTSE All-World: Is One Global ETF Enough?

It doesn't have to be complicated. For most investors in Switzerland, a single global ETF is all it takes – broadly diversified, low-cost, proven in performance. The only real decision: MSCI World or FTSE All-World? In this guide, we'll show you the difference, what it means for your returns, and what you should keep in mind tax-wise as a Swiss investor.

What is a global ETF?

A global ETF tracks thousands of companies from all over the world in a single product. With one purchase, you automatically own a share of Apple, Nestlé, Samsung, and thousands of other companies. You don't have to pick individual stocks or time the market – you simply buy "the market".

Why is one ETF enough?

The answer lies in diversification. When you're invested in several thousand companies, it barely matters if some of them perform badly. And because the ETF adjusts its weightings automatically, you don't have to worry about a thing.

On top of that, there's an inconvenient fact for the fund industry: over 90% of actively managed funds fail to beat their benchmark index over the long term – after costs. The ETF is the index. You pay a fraction of the fees and still get the better return.

MSCI World vs. FTSE All-World – the one decision that matters

Both are "global", but they're not identical. The difference lies mainly in the emerging markets:

In short: The MSCI World covers only developed markets, while the FTSE All-World additionally includes emerging markets like China, India, or Taiwan. If you want maximum diversification, go with the All-World. If you deliberately want to leave out the (more volatile) emerging markets, go with the MSCI World. Either is a perfectly reasonable choice – the only mistake is not deciding at all.

IWDA vs. VWRL in concrete terms

• iShares Core MSCI World (IWDA): accumulating (automatically reinvests dividends), very low 0.20% TER, ideal for anyone who just wants to set it and forget it.
• Vanguard FTSE All-World (VWRL): distributing (you receive dividends in your account), 0.22% TER, including emerging markets – a single product for the whole world.

Both are tradeable on the Swiss exchange SIX in CHF and are set up cleanly for Swiss investors from a tax perspective (more on that in a moment).

Taxes for Swiss investors – what you should know

This is where many people slip up. Three points matter:

• Fund domicile Ireland (ISIN starts with "IE"): Thanks to the tax treaty between Ireland and the US, only the reduced withholding tax of 15% applies to US dividends within the fund. So look for ETFs domiciled in Ireland – both of the ones mentioned above qualify.
• You cannot reclaim these 15% at the fund level – it's the unavoidable "tax leakage". But there's nothing more to be gained with a broad global ETF anyway.
• Accumulating saves no taxes in Switzerland: Contrary to common belief, dividends are taxed as income here – regardless of whether the ETF distributes or accumulates. The ESTV Kursliste shows the taxable income. The choice between IWDA and VWRL is therefore not a tax question, but a question of convenience.

Currency risk – do you need to hedge?

A global ETF holds companies in dollars, euros, yen, and many other currencies. That sounds like risk – but for long-term equity investments, it's secondary. Whether the ETF is denominated in CHF, USD, or EUR changes nothing about the underlying values; the trading currency is just a conversion. An expensive currency hedge usually isn't worth it for a long-term equity portfolio. Don't let it unsettle you.

Home bias – add a bit of Switzerland?

Some people deliberately mix in a small share of Swiss stocks (e.g. an SPI or SMI ETF), because their expenses are in CHF. That's a matter of taste. For most people, the global ETF is more than enough – Switzerland is already included in it anyway, simply at its real global weighting.

Where can you buy these ETFs?

We use findependent for automatic monthly savings plans and Saxo for individual purchases. With code KUU7NG at findependent, you get a CHF 1'000 fee allowance; at Saxo there's a trading credit of CHF 500.

If you're still at the very beginning, start with our ETF guide for beginners. We'll show you step by step how to set up an automatic savings plan in the ETF savings plan guide.

Frequently asked questions about the global ETF

MSCI World or FTSE All-World – which is better?

There's no objectively "better" option. The FTSE All-World is more broadly diversified (incl. emerging markets), while the MSCI World focuses on developed markets. Both are a solid foundation for your entire portfolio. Pick one and stick with it.

Is a single ETF really enough?

For most people, yes. A global ETF covers thousands of companies across over 40 countries. More complexity rarely brings more return – but almost always more effort and cost.

Accumulating or distributing?

Tax-wise it makes no difference in Switzerland – both variants are taxed on the dividends. Accumulating (IWDA) is more convenient because it reinvests; distributing (VWRL) gives you cash flow. Choose according to your preference.

Do I need to pay attention to the fund domicile?

Yes. Prefer ETFs domiciled in Ireland (ISIN "IE…"). They benefit from the favourable tax treaty with the US and reduce the withholding tax on US dividends to 15%.

The bottom line

Get started. Just get started. One global ETF – whether MSCI World or FTSE All-World – a monthly savings plan, and time does the rest. There's no perfect choice; the best one is the one you stick with.