Global index fund: which one should you choose?

A global index fund buys the big companies of many countries in one go. Picture a basket that holds more than 1,000 companies from 23 countries.^[1]

• The fund copies an index: a list of companies kept by a provider like MSCI or FTSE Russell.
• The MSCI World holds 1,248 companies from 23 developed countries, including the United Kingdom.^[1][6]
• The United States makes up 72.77% of the MSCI World, the United Kingdom 3.52%.^[1]
• Example: out of £100 invested, about £73 goes to American companies and about £3.50 to British companies.

The MSCI World, the FTSE All-World and the FTSE Global All Cap do not put the same countries or the same company sizes in the basket.

• The MSCI World holds only the large and mid-sized companies of 23 developed countries. The iShares Core MSCI World UCITS ETF (SWDA) tracks this index.^[1][2][7]
• The FTSE All-World adds emerging countries to the large and mid-sized companies of developed countries. The Vanguard FTSE All-World UCITS ETF (VWRP) tracks this index.^[3][8]
• The FTSE Global All Cap also adds small companies: 10,221 shares at 30 September 2026, against 1,248 companies in the MSCI World. The Vanguard FTSE Global All Cap Index Fund tracks this index.^[1][4][9]

The MSCI World has returned 8.98% a year on average since the end of 1987, calculated in dollars.^[1] The 8.98% includes dividends: the share of profits that companies pay out to their shareholders. In some years, the index falls sharply.

• Example: at 9% a year, £10,000 grows to about £23,700 in 10 years (£10,000 × 1.09, ten times in a row). In 20 years, the same amount grows to about £56,000. This calculation is a simulation, not a promise.
• Over 10 years, the MSCI World returned 13.50% a year up to 30 October 2026.^[1]
• Bad years happen: the MSCI World lost 17.73% in 2022 and 8.20% in 2018.^[1]
• The worst fall made the MSCI World lose 57.46% between October 2007 and March 2009.^[1]

Ask yourself 4 questions, in this order.

1. Which index? Decide whether you want emerging countries and small companies in your basket (section 2).
2. What fees? Example: on £10,000, fees of 0.14% cost you £14 a year, fees of 0.23% cost you £23.^[3][4]
3. Accumulating or distributing? An accumulating fund reinvests the dividends for you. A distributing fund pays them into your account. Example: if your fund receives £150 in dividends during the year, the accumulating fund reinvests them for you, the distributing fund pays you the £150.
4. ETF or traditional fund? An ETF is bought on the stock market, like a share. A traditional fund is bought on a platform, from the fund manager. Example: SWDA and VWRP are ETFs, the Vanguard FTSE Global All Cap Index Fund is a traditional fund.

An index fund follows its index very closely. Example: SWDA returned 10.56% a year over 5 years, against 10.49% for the MSCI World, in dollars.^[2]

An ISA (Individual Savings Account) is a tax-free savings or investment account: you can put in up to £20,000 per tax year, in a single account or split across several.^[5] The Stocks & Shares ISA is the one that holds funds and shares.^[5]

• You pay no tax on the income from an ISA, or on its capital gains: the profit when you sell for more than you paid.^[5]
• Nothing to declare: ISA gains do not go on your tax return.^[5]
• Example: if your £20,000 earns £1,000 in your ISA, you keep the £1,000, tax-free.
• SWDA: iShares' October 2026 factsheet states that this ETF is ISA eligible.^[2]
• For the other funds, ask your platform or your broker whether each one is accepted in your ISA.

Donnie tracks funds compared with the MSCI World index. Some have done better than the MSCI World over 7 years.

• Fidelity Select Semiconductors Portfolio returned +35.1% a year over 7 years, against +13% for the MSCI World.
• Columbia Seligman Technology and Information Fund Institutional Class returned +27.7% a year over the same period.
• Columbia Seligman Global Technology Fund Institutional 2 Class returned +27.3% a year over the same period.
• Example: your £10,000 invested 7 years ago would be worth £82,305 in Fidelity Select Semiconductors Portfolio, against £23,536 in the MSCI World.

Before you put one of these funds in your ISA, ask your platform whether it is accepted.

Three mistakes lose you money with a global index fund.

• Buying the United States twice: American companies already make up nearly three quarters of the MSCI World.^[1] An extra US equity fund raises their weight in your money even more.
• Selling during a fall: the MSCI World fell in 2022, then gained 24.42% in 2023.^[1] Selling in 2022 would have locked in the loss and missed the 2023 rise.
• Forgetting the platform fees: these fees come on top of the fund's fees. Example: a platform that takes 0.25% a year on £10,000 costs you £25 more each year.