8Mon·

S&P 500 vs. MSCI World,

Which savings plan is the right one for your wealth accumulation


The S&P 500 Index comprises the 500 largest listed companies in the USA that generate around 40% of their sales outside the USA. The MSCI World Index comprises around 1600 companies from developed countries around the world.

The S&P 500 therefore focuses exclusively on US companies, while the MSCI World offers a broader geographical diversification (but with approx. 70% US share).


Over the past ten years, however, the S&P 500 has clearly outperformed the MSCI World with an average annual return of 16.15%. This compares with an average annual return of 12.89% for the MSCI World.


The costs for the S&P 500 amount to 0.07 percent, compared to 0.20 percent for the MSCI World.


Criticism of the S&P500, high valuations, limited diversification and high concentration.


Clearly a matter of taste, but anyone looking for concentration and a higher return should invest in the S&P500.


What do you say S&P500 or MSCI World?

I myself have opted for the S&P500 ETF from Vanguard. I think the USA will continue to be the leader, because the USA is a stock and business-friendly country, which also entices top companies to set up a base there.

-low cost -higher yield -sufficiently diversified -long-term growth potential


$VUAG (-0.51%)
$IWDA (-0.55%)

attachment
02.07
Vanguard S&P 500 ETF logo
Bought x5.18 at €96.53
€500.00
38
51 Comments

profile image
In my opinion, the MSCI World or an All World Etf is best for long-term wealth accumulation. I don't need to make a bet that the USA will be as well off in 60 years as it is today. With the World Etf, I invest in the winners, wherever they come from, without having to reallocate and pay taxes. If you want to make the most of compound interest, you should avoid regional bets
12
profile image
3
profile image
@Luffy3D2Y 0.03 Tue ⚘️🍾
2
profile image
Nasdaq 🔥
3
profile image
@ValueWilli That has power 👌
1
profile image
Got MSCI World and SP500
2
profile image
profile image
profile image
@Therapeut Because I don't want to save for Japan and Europe individually
profile image
@Cashflow_Investor ah, good point🤔
profile image
I have the $VUSA in my depot and am happy with it. 15% 🇨🇦 Rest 🇺🇸 😊
2
profile image
@Doe Why the distributing version?
profile image
My entire portfolio is distributing 😁
2
profile image
@Doe What is your current monthly income😎
profile image
I'm currently holding on to the edge of the €1000 FB. I have the rest in my trading portfolio in all kinds of warrants and various stocks. shares.
2
profile image
S&P500 👌🏻
2
profile image
Good luck! Against the "low cost" argument, I would say that the $PR1W (I hope I have the right one) is an alternative. It is significantly cheaper than the World. Since I didn't know it myself and don't want to switch at the moment due to taxes, it's not an alternative for me. Possibly for additional purchases. Please do your own research on this one. My initial research showed that the biggest difference seems to be that South Korea is not included in Prime. However, the yield should be almost the same. All with reservations, as I've only had a very rough look at it myself.
1
profile image
@SchlaubiSchlumpf I also have the Prime. As far as I know, it's without South Korea. Some people just don't like Amundi and the fact that it is issued in Luxembourg.... is just a matter of taste. Performance this year is 16.3%
profile image
Average since inception is about 15% plus about 1.5% dividend
profile image
@Hotte1909 nice 👍🏻
Yes, Ireland would probably be better from a tax point of view. Luxembourg in terms of fees. Performance seems to match the world. I don't think they really diverge. If I need world again (at the moment I have factor focus) I see it as a good addition.
1
profile image
@SchlaubiSchlumpf That is correct. China and Australia are not included either. Amundi actually makes quite good ETFs. There's not much going on with all the world ETFs anyway, one swears by them, the other by them. One wants theaurizer the other wants distributions...
1
profile image
One of the many reasons I believe in factor diversification more than plain country diversification. No world/acwi for me, mostly factors.

Now, watch me underperforming the broad market for the next 10 years because I’m value tilted 😂
1
profile image
@deodorhunter why the value tilt tho? I can’t become friend with the size factor (at least without value or quality tilt). But I love the opportunity of the momentum and quality. I am build my portfolio with the world as Center and some strongly growing factor etfs with those three equally distributed
1
profile image
@SchlaubiSchlumpf philosophy, but mainly the tilt is based on the huge spread the value factor possesses in this historical period. Or to be more precise, since the end of the so called “lost decade” (2008 -2017ish), when quality took over after years of underperformance. We know markets are cyclical, I believe HmL (value) will rear its head again. Hopefully while I’m still alive and can take advantage of that 😅.
When value comes back, I also get free momentum boost, as the two are, counterintuitively, quite correlated.

That said, I tilt, so the other factors are still very present in my overall plan. But I have to juggle a bit, actively rebalance and stay on the ball, and I really don’t mind it, it’s stimulating.
For example, my momentum exposure right now will come from semis, in the most concentrated but not stupidly so manner, because momentum has the most premium in concentration.
This means I have to be able to handle the certain decline at some point in the future, rebalance and relocate to the next concentrated momentum, or switch to a broader one.
For quality, I have S&P, which is expensive yes, but has quality under a lot of metrics even if it’s not a “factor product”, and some good consistent historical momentum.
My soon to be core (building it up), $JPGL , is actually an equal weighted, equally weighted sector product based on FTSE Developed, with good profitability, value and min vol exposure, while also being deeply LCV (Large Cap Value).

You’re perfectly spot on on the size factor when you say that it needs a companion: size only has premium with value. Sadly, in the UCITS universe, that means getting a lot of negative momentum exposure. But size is the factor with the most expected return premium, so SCV needs a place too (Small Cap Value).
Em is value too with quality screen for me, cheap + cheap sounds fine by me.
Market is market, once you own a share you are exposed to market factor.
Some sprinkles of off-risk too, will vary based on market phase (bull/bear)

I also target investment and moat, but those are more complicated and this comment is already too long 😅. At least I hope it will be an interesting one 😂
1
profile image
@deodorhunter that’s dann cool. I follow the principle that value quality and co are mostly randomised. Mostly bc I don’t know better. Anyways rebalancing is what I aim to do top. Mostly by new invests. Do you know a good etf for sc value?
I go EM Value and quality too. I do like 7,5% EM and 7.5 factored EM. 3.75 quality and 3.75 value. At least I am going to. Just recently began to invest into factors and science I am not going to sell me msci world due to taxes I have to save a while until I have the balance I aim to have.
profile image
@deodorhunter SC would be ok with value. Didn’t find those on my German platforms though…
profile image
@SchlaubiSchlumpf I do know an etf like that! Actually, four! But only three make the cut for me personally considering tracking difference, ter and actual fund and transaction costs compared to performance/risk. $ZPRV and/or $USML for us SCV, and $ZPRX for europe SCV. The fourth is $DGSD, it’s more of a proxy (dividend yield used as a metric for value, also exposed to profitability, a metric of quality) and targets em. Expensive tho: one, underlying assets of fund are bloody expensive to trade and with a lot of dividend leakage due to value methodology and two, em is actually hard to rein in a SCV framework compared to developed.
All should be tradable on German exchanges, I see them on XETRA at my broker, and save into 2 of them.

A famous us fund in the factor investing universe is coming to UCITS ETF landscape soonish, with a Developed World SCV, but it’s gonna be actively managed most likely.
Which per se isn’t the end of the world, but little is known other than the headline. Need to see costs, methodology and adoption (fund AUM growth) first though
For easy comparison, the upcoming etf should be a mix of $AVDV and $AVUV (40/60ish I would expect)
profile image
@deodorhunter ok $USML doesnt have the value tilt, does it? The $ZPRX and $ZPRV could be a combination for me.

I don’t expect much from an actively managed Fund.
a) i expect to much cost from an actively managed Fund and
b) it’s always a question of how the Fund is managed. If the manager is very transparent, it could be a thing. But why not take a passively managed then?

Anyhow it seems to be worth, keeping an eye on.
profile image
@SchlaubiSchlumpf It actually has a value exposure, not in the name of the product but you can see the loadings with regressions. I can't post the regression graph, but I'll give you a nice tool to use and see for yourself :)
https://f4ratk.web.app/tickers/USML.L:US

Disclaimer: be sure to always use the USD version of the funds, and the Reuters RIC /iNAV Reuters ticker. You can find them on justetf under the section "Listings". The data used for calculating the regressions comes from Yahoo Finance, so it's not gonna be perfect.
1
profile image
Spoken like a lion 🗽
1
Why are you all with the Vanguard SP, is there a reason not to take it IE00B5BMR087 / CSPX

(Don't know how to link this)
1
profile image
@Invesdos in the end the differences are not big, vanguard is the 2nd largest provider therefore
1
profile image
@Invesdos Dollar sign and then enter share and link it. $CSPX :)
3
profile image
@Invesdos I always ask myself the same question. I'm also in $CSPX.
View one more answer
profile image
Is your savings rate already flowing into the ETF instead of into individual shares?
1
profile image
@Petzi-Port Yes, the shares are running away from me right now. I should have invested in Microsoft, but they're too expensive for me.
I'm now starting a low savings plan and collecting cash on the side
profile image
@Therapeut ok i understand, i also don't know what to buy at the moment everything is running away.
Lvmh vl again
2
profile image
My top choice would be an ETF on the MSCI World Quality but there is not one yet. There are a couple of ETFs on similar indexes but not as good as it is.
1
Does it make sense to save for both or will it be too much of a duplication?
profile image
@KerryS so it's a double whammy, but it's a matter of taste
Comment was deleted
profile image
@Jooooonas98 I do it the same way
3
profile image
@DividendenMieze me too 😅👍🏻
2
Deleted User
8Mon
Comment was deleted
View all 2 further answers
Deleted User
8Mon
Comment was deleted
Show answer
Deleted User
8Mon
Comment was deleted
View all 2 further answers
Join the conversation