ACWI: Go With U.S. Funds Instead

seekingalpha06-17

best-photo/E+ via Getty Images ETF Overview iShares MSCI ACWI ETF (NASDAQ:ACWI) owns a portfolio of about 2,400 large-cap and mid-cap stocks from both emerging and developed markets. ACWI's portfolio ...

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ACWI's portfolio ...</p>\n\n<a href=\"https://seekingalpha.com/article/4699616-acwi-go-with-us-funds-instead\">Source Link</a>\n\n</div>\n","source":"seekingalpha_fund","html":"<!DOCTYPE html>\n<html>\n<head>\n<meta http-equiv=\"Content-Type\" content=\"text/html; charset=utf-8\" />\n<meta name=\"viewport\" content=\"width=device-width,initial-scale=1.0,minimum-scale=1.0,maximum-scale=1.0,user-scalable=no\"/>\n<meta name=\"format-detection\" content=\"telephone=no,email=no,address=no\" />\n<title>ACWI: Go With U.S. Funds Instead</title>\n<style type=\"text/css\">\na,abbr,acronym,address,applet,article,aside,audio,b,big,blockquote,body,canvas,caption,center,cite,code,dd,del,details,dfn,div,dl,dt,\nem,embed,fieldset,figcaption,figure,footer,form,h1,h2,h3,h4,h5,h6,header,hgroup,html,i,iframe,img,ins,kbd,label,legend,li,mark,menu,nav,\nobject,ol,output,p,pre,q,ruby,s,samp,section,small,span,strike,strong,sub,summary,sup,table,tbody,td,tfoot,th,thead,time,tr,tt,u,ul,var,video{ font:inherit;margin:0;padding:0;vertical-align:baseline;border:0 }\nbody{ font-size:16px; line-height:1.5; color:#999; background:transparent; }\n.wrapper{ overflow:hidden;word-break:break-all;padding:10px; }\nh1,h2{ font-weight:normal; line-height:1.35; margin-bottom:.6em; }\nh3,h4,h5,h6{ line-height:1.35; margin-bottom:1em; }\nh1{ font-size:24px; }\nh2{ font-size:20px; }\nh3{ font-size:18px; }\nh4{ font-size:16px; }\nh5{ font-size:14px; }\nh6{ font-size:12px; }\np,ul,ol,blockquote,dl,table{ margin:1.2em 0; }\nul,ol{ margin-left:2em; }\nul{ list-style:disc; }\nol{ list-style:decimal; }\nli,li p{ margin:10px 0;}\nimg{ max-width:100%;display:block;margin:0 auto 1em; }\nblockquote{ color:#B5B2B1; border-left:3px solid #aaa; padding:1em; }\nstrong,b{font-weight:bold;}\nem,i{font-style:italic;}\ntable{ width:100%;border-collapse:collapse;border-spacing:1px;margin:1em 0;font-size:.9em; }\nth,td{ padding:5px;text-align:left;border:1px solid #aaa; }\nth{ font-weight:bold;background:#5d5d5d; }\n.symbol-link{font-weight:bold;}\n/* header{ border-bottom:1px solid #494756; } */\n.title{ margin:0 0 8px;line-height:1.3;color:#ddd; }\n.meta {color:#5e5c6d;font-size:13px;margin:0 0 .5em; }\na{text-decoration:none; color:#2a4b87;}\n.meta .head { display: inline-block; overflow: hidden}\n.head .h-thumb { width: 30px; height: 30px; margin: 0; padding: 0; border-radius: 50%; float: left;}\n.head .h-content { margin: 0; padding: 0 0 0 9px; float: left;}\n.head .h-name {font-size: 13px; color: #eee; margin: 0;}\n.head .h-time {font-size: 11px; color: #7E829C; margin: 0;line-height: 11px;}\n.small {font-size: 12.5px; display: inline-block; transform: scale(0.9); -webkit-transform: scale(0.9); transform-origin: left; -webkit-transform-origin: left;}\n.smaller {font-size: 12.5px; display: inline-block; transform: scale(0.8); -webkit-transform: scale(0.8); transform-origin: left; -webkit-transform-origin: left;}\n.bt-text {font-size: 12px;margin: 1.5em 0 0 0}\n.bt-text p {margin: 0}\n</style>\n</head>\n<body>\n<div class=\"wrapper\">\n<header>\n<h2 class=\"title\">\nACWI: Go With U.S. Funds Instead\n</h2>\n\n<h4 class=\"meta\">\n\n\n2024-06-17 22:39 GMT+8&nbsp;&nbsp;&nbsp;<a href=https://seekingalpha.com/article/4699616-acwi-go-with-us-funds-instead><strong>seekingalpha</strong></a>\n\n\n</h4>\n\n</header>\n<article>\n<div>\n<p>best-photo/E+ via Getty Images ETF Overview iShares MSCI ACWI ETF (NASDAQ:ACWI) owns a portfolio of about 2,400 large-cap and mid-cap stocks from both emerging and developed markets. ACWI's portfolio ...</p>\n\n<a href=\"https://seekingalpha.com/article/4699616-acwi-go-with-us-funds-instead\">Source Link</a>\n\n</div>\n\n\n</article>\n</div>\n</body>\n</html>\n","isBrief":false,"type":0,"news_type":1,"symbol":"NVDA","symbol_name":"英伟达","start_time":0,"source_url":"https://seekingalpha.com/article/4699616-acwi-go-with-us-funds-instead","article_id":"2444957551","we_media_id":null,"thumbnails":["https://static.seekingalpha.com/cdn/s3/uploads/getty_images/182885515/image_182885515.jpg"],"rights":null,"url":"https://stock-news.laohu8.com/highlight/detail?id=2444957551","pubTimestamp":1718635192,"sourceInfo":{"source_id":"seekingalpha_fund","name":"Seeking Alpha"},"weMediaInfo":null,"summary":"We think there are 2 primary reasons. First, ACWI has lower exposure to technology sector than the S&P 500 index. Below is a chart that shows the sector allocation of ACWI. As can be seen from the chart, information technology sector represents about 25.9% of ACWI's total portfolio. In contr","collect":0,"end_time":0,"defaultTopTitle":"seekingalpha.com","property":[],"viewcount":null,"language":"en","relate_stocks":{"NVDA":"英伟达","SPY":"标普500ETF","BK4512":"苹果概念","URTH":"iShares MSCI World Index Fund","V":"Visa","LU0511384066.AUD":"SUSTAINABLE GLOBAL THEMATIC PORTFOLIO \"A\" (AUDHDG) ACC","OEF":"标普100指数ETF-iShares","LU0320765059.SGD":"FTIF - Franklin US Opportunities A Acc SGD","LU0158827948.USD":"ALLIANZ GLOBAL SUSTAINABILITY \"A\" (USD) INC","GB00B4LPDJ14.GBP":"FUNDSMITH EQUITY \"R\" (GBP) ACC","LU0861579265.USD":"联博低波幅策略股票基金A","IE00B3M56506.USD":"NEUBERGER BERMAN EMERGING MARKETS EQUITY \"A\" (USD) ACC","VOO":"Vanguard标普500ETF","IE00BD6J9T35.USD":"NEUBERGER BERMAN NEXT GENERATION MOBILITY \"A\" (USD) ACC","LU":"陆金所","IVV":"标普500指数ETF","BK4516":"特朗普概念","BK4023":"应用软件","FDN":"First Trust Dow Jones Internet I","ACWI":"MSCI全球ETF-iShares","LU0127658192.USD":"EASTSPRING INVESTMENTS GLOBAL TECHNOLOGY \"A\" (USD) ACC","BK4592":"伊斯兰概念","SDS":"两倍做空标普500ETF","UPRO":"三倍做多标普500ETF","LU0348723411.USD":"ALLIANZ GLOBAL HI-TECH GROWTH \"A\" (USD) INC","IE00B775SV38.USD":"NEUBERGER BERMAN US MULTICAP OPPORTUNITIES \"A\" (USD) ACC","LU0957808578.USD":"THREADNEEDLE (LUX) GLOBAL TECHNOLOGY \"ZU\" (USD) ACC","LU0965509010.AUD":"AB LOW VOLATILITY EQUITY PORTFOLIO \"AD\" (AUDHDG) INC","ADBE":"Adobe","LU0642271901.SGD":"Janus Henderson Horizon Global Technology Leaders A2 SGD-H","LU0889565833.HKD":"FRANKLIN TECHNOLOGY \"A\" (HKD) ACC","BK4559":"巴菲特持仓","BK4501":"段永平概念","OEX":"标普100","SSO":"两倍做多标普500ETF",".SPX":"S&P 500 Index","LU2125154778.USD":"ALLSPRING GLOBAL EQUITY ENHANCED INCOME \"A\" (USD) INC","SH":"标普500反向ETF","LU2095319765.USD":"Natixis Thematics Subscription Economy R/A USD","BK4141":"半导体产品","IE00BJJMRY28.SGD":"Janus Henderson Balanced A Inc SGD","IE00BBT3K403.USD":"LEGG MASON CLEARBRIDGE TACTICAL DIVIDEND INCOME \"A(USD) ACC","BK4503":"景林资产持仓","IE00BMPRXN33.USD":"NEUBERGER BERMAN 5G CONNECTIVITY \"A\" (USD) ACC","SPXU":"三倍做空标普500ETF","MSFT":"微软","LU2210149790.SGD":"Natixis Thematics Subscription Economy R/A SGD-H","IEMG":"iShares Core MSCI Emerging Markets ETF"},"translate_title":"ACWI：选择美国基金","themeId":null,"isJumpTheme":false,"ttsUrl":null,"symbols_score_info":{"ACWI":1,"ADBE":1,"V":1,"URTH":1,"NVDA":1,"MSFT":1,"IEMG":1,"VOO":0.9,"SPY":0.9,"FDN":0.8,"SDS":0.6,"OEF":0.6,"OEX":0.6,"SH":0.6,"SPXU":0.6,"SSO":0.6,"UPRO":0.6,".SPX":0.6,"ESmain":0.6,"IVV":0.6,"LU":0.6},"content_text":"best-photo/E+ via Getty Images ETF Overview iShares MSCI ACWI ETF (NASDAQ:ACWI) owns a portfolio of about 2,400 large-cap and mid-cap stocks from both emerging and developed markets. ACWI's portfolio has a lower exposure to technology sector than the S&P 500 index. This can be detrimental as technology sector is expected to grow rapidly in the upcoming decade. In addition, its inclusion of emerging markets stocks has dragged its performance in the past as these markets often have higher volatility and risks involved. Together, these may result in ACWI's continual underperformance to the S&P 500 index in the future. Therefore, we do not think it is necessary to own this fund. YCharts Fund Analysis Good return since the low in 2022, but not as good as... Let us look at ACWI's performance in the past 2 years. As we know, 2022 was a challenging year for the market due to surging inflation. As a result, the market reached a cyclical low in October 2022. Since this bottom, ACWI has delivered a total return of 49.2%. This was quite impressive. Unfortunately, this performance lags some other funds. For example, iShares MSCI World ETF (URTH) which focuses on developed markets stocks, delivered a total return of 51.6% in the same period. The S&P 500 index performed even better, registered a total return of 55.7%. YCharts ACWI includes stocks from both emerging markets and developed markets Let us now look at the portfolio composition of ACWI. As can be seen from the table below, stocks from the U.S. represent about 64.4% of the total portfolio. This is followed by Japan's 5.1%, U.K.'s 3.4%, and China's 2.6%. iShares It may look like that there is too much exposure to U.S. stocks, but we think this is normal as this fund implements market-weighted approach. Since the U.S. market has a much higher market capitalization than any other markets in the world, it should not be a surprise to see a high exposure to U.S. stocks. We like ACWI's exposure to U.S. stocks because many of these U.S. large-cap and mid-cap stocks have competitive business models and can grow their businesses both in the U.S. and globally. Examples of these companies include Apple (AAPL), Nvidia (NVDA), and Microsoft (MSFT), Adobe (ADBE), and Visa (V). But its long-term return is inferior than the S&P 500 index Below is a chart that compares ACWI's performance to the S&P 500 index and URTH since its inception in 2012. As can be seen from the chart below, ACWI delivered a total return of only 236.3%. This is inferior than URTH's 272.6% and significantly underperformed the S&P 500 index's return of 433.4%. YCharts Reasons of ACWI's inferior return Why has ACWI trailed the S&P 500 index since its inception? We think there are 2 primary reasons. First, ACWI has lower exposure to technology sector than the S&P 500 index. Below is a chart that shows the sector allocation of ACWI. As can be seen from the chart, information technology sector represents about 25.9% of ACWI's total portfolio. In contrast, technology sector represents about 32.6% of the S&P 500 index. This lower exposure can cause a great impact as technology sector has been the leading growth sector among all other sectors in the past few decades. This trend is expected to continue due to many technological megatrends such as AR/VR, artificial intelligence, cloud computing, etc. Therefore, ACWI's lower exposure to technology sector will likely drag its performance relative to the S&P 500 index. iShares Second, ACWI's exposure to emerging markets is not beneficial. Although some of these markets has outperformed the broader market occasionally, but they rarely consistently outperform the broader market in the long run due to higher risks and volatility involved in these emerging markets. Risks include political risks, policy change risks, regulation risks, currency risks, etc. can contribute to this underperformance in the long run. Below is a chart that compares the total return of iShares Core MSCI Emerging Markets ETF (IEMG) to the S&P 500 index. As can be seen, IEMG's 10-year total return was only 33.2%. This is very low compared to the S&P 500 index's return of 237.6%. Therefore, having exposure to emerging markets will not necessarily improve the performance. In fact, it may be a drag to ACWI's performance in the long run. YCharts Investor Takeaway ACWI offers good exposure to developed and emerging markets. However, this exposure has not helped ACWI's return in the past and will likely not improve its return in the long run either. Therefore, we think it is probably better to seek other alternatives instead.  Additional Disclosure: This is not financial advice and that all financial investments carry risks. 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