World portfolio: the whole world in one or two ETFs

Basics9 min read · updated 7 October 2026 · 8 sources

A world portfolio spreads your equity holdings across all the major stock exchanges in the world: developed and emerging markets, large and mid-sized companies. It is the simplest way to avoid home bias and share in the growth of the global economy. But there are differences between the MSCI World, the MSCI ACWI and the FTSE All-World, and the question of the right share for emerging markets leads to different answers. Here are the numbers.

The main global indices

Global ETFs usually track one of the major indices. These weight companies by their free-float market capitalization: the larger a company, the more weight it has. The figures below come from the factsheets as of September 30, 2026.

The MSCI World contains only developed markets; according to MSCI World Factsheet (2026), it covers about 85% of the free-float market capitalization in each country. The MSCI ACWI (“All Country World Index”) adds emerging markets and, according to MSCI ACWI Factsheet (2026), covers about 85% of the global investable equity market. The FTSE All-World pursues the same goal as the ACWI with its own methodology; it classifies some countries differently (South Korea, for example, counts as a developed market there). For investors, the ACWI and the All-World are largely interchangeable.

According to MSCI EM Factsheet (2026), a few markets dominate the MSCI Emerging Markets: Taiwan with 28.94%, South Korea with 21.4%, China with 19.8% and India with 10.65%. If you add emerging markets, you are therefore mainly bringing Asian technology and industrial companies into your portfolio.

How large is the share of emerging markets?

The factsheets do not state the share of emerging markets in the ACWI directly, but it can be calculated. If the developed markets in the ACWI contain the same companies with the same weights relative to each other as in the MSCI World, then the ratio of the US weights equals the share of developed markets in the ACWI.

If you combine an MSCI World ETF with an emerging markets ETF in a ratio of 88 to 12, you roughly replicate the ACWI. Many investors deliberately choose a higher share, such as 70 to 30. More on this below.

Variants of the world portfolio

The 70/30 world portfolio became well known in Germany through, among other things, the book by Kommer (2018). It weights emerging markets roughly by their share of the global economy instead of by market capitalization. The rationale: emerging markets generate a large part of global economic output but are less represented on the stock market, because many of their companies are not listed or only partly listed.

Deviating from market weight is an active decision. It may or may not pay off. There is no guaranteed excess return from emerging markets.

What the research shows

Solnik (1974) provided early evidence of the benefits of international diversification: because markets in different countries do not move in lockstep, the risk of an equity portfolio falls much more with foreign stocks than with more domestic ones. French and Poterba (1991) showed that investors nevertheless barely made use of this advantage and held almost exclusively domestic stocks.

Long-term country data from Dimson et al. (2002) make visible how differently individual markets performed over a century. That is an argument against relying on a single country. And Fama and French (2012) examined size, value and momentum in North America, Europe, Japan and Asia Pacific and found value premiums in all four regions, which decrease with company size except in Japan; momentum appeared everywhere except Japan. If you want to add factors to your world portfolio, you will find the basics in the article on Fama-French factors.

Market weight or your own weighting?

Weighting by market capitalization has a theoretical basis: the market portfolio is the portfolio that all investors hold together (see CAPM). It needs no forecasts, causes little trading and adjusts by itself. The drawback: countries and companies whose prices have risen sharply get more and more weight. At the moment, this leads to a very high US share.

• Market capitalization: simple, cheap, no forecast needed, but heavily concentrated in the largest markets.
• Economic output (GDP): more emerging markets and Europe, less US; requires rebalancing between several ETFs.
• Equal weighting of regions: maximum diversification by country, but a large deviation from the market and more frequent reallocation.

All three are defensible. More important than the exact weighting is that you understand it, stick with it and reset it regularly through rebalancing.

Large, mid-sized and small companies

The standard indices contain only large and mid-sized companies. Small caps are largely missing; they are found in extended indices such as the MSCI ACWI IMI (“Investable Market Index”) or in dedicated small-cap ETFs. By market capitalization, small companies make up only a minor part of the market, but they increase the number of holdings considerably. If you add them, you diversify more broadly and at the same time bet on the size effect, whose premium is disputed in the research (see Fama-French factors).

Building your own world portfolio step by step

1. Set your equity allocation: first decide what part of your wealth goes into equities at all and what part is invested safely. This determines the risk more than any choice of index (see 60/40 portfolio).
2. Choose the index solution: one ETF on the ACWI or All-World for maximum simplicity, or World plus Emerging Markets for your own weighting.
3. Decide on the emerging markets share: market weight (just over a tenth) or deliberately more, such as 20% to 30%. Make the decision once and write it down.
4. Select the ETF: look at ongoing charges, fund size, replication method and use of income; details under ETF basics.
5. Set rules for later: with two ETFs, return to the target weighting once a year or after larger deviations; preferably direct new contributions into the underweight part.

If you combine several ETFs, you should check for overlaps: an MSCI World plus an additional S&P 500 ETF pushes the US share even higher; an ACWI ETF plus an emerging markets ETF counts emerging markets twice. These overlaps are exactly what the look-through makes visible.

Implementation and costs

• Ongoing charges: broad global ETFs are among the cheapest funds. Even so, a cost difference of a few tenths of a percent has a noticeable effect over decades (see compound interest).
• One or two ETFs: a single-ETF solution needs no rebalancing between regions. Two ETFs allow your own weighting but require regular rebalancing.
• Currency: a global ETF brings a large amount of dollar risk with it, regardless of the fund currency (see currency risk).
• Distributions: whether a fund pays out its dividends or reinvests them makes no difference to the return before taxes.

How Portfolio Lab calculates it

Portfolio Lab includes several world portfolios as templates: one ETF each on the FTSE All-World and the MSCI ACWI, the Kommer world portfolio 70/30 and with factors, plus long series from asset classes in euros. In the Look-through you can see how your portfolio is actually spread across countries, regions and sectors, even across several ETFs. In the Backtest you compare market weight and 70/30 over the same period. The look-through methodology describes how the country allocation is derived from the holdings lists.

This article explains a method; it is not investment or tax advice. Worked examples are simplified and rounded. All terms in the glossary.