Analysis: This is how safe the MSCI World is

For a long time, MSCI World ETFs were considered a simple and comparatively safe investment. But doubts have been increasing recently. Rightly so?

For a long time, MSCI World ETFs were considered a simple and comparatively safe investment. But doubts have been increasing recently. Rightly so?

Anyone who deals with ETFs will sooner or later come across the MSCI World Index. It reflects the development of almost 1,600 of the world’s largest companies from almost two dozen industrial nations and is therefore used by many fund companies as the basis for their investment products. The spread of the MSCI World ensures a comparatively low risk. Nevertheless, the price development in the summer of 2023 and geopolitical events caused uncertainty. How crisis-proof is the MSCI World actually? We’ll investigate the question.

This question is likely to concern many investors. MSCI World ETFs have so far been considered a safe and easy entry point when it comes to building private wealth . Falling prices are likely to cause doubts among those who made their first investment just a few months ago – and possibly lead to the wrong reaction. But even somewhat experienced investors could increasingly think about reallocating – i.e. relocating their investments. It’s not just crises like the ones recently in the Middle East that raise doubts about the stability of the index: Dangerous clumping is once again being discussed more frequently. This refers to a highly uneven distribution, for example in relation to individual countries or sectors.

We use historical developments to show how crisis-proof the MSCI World probably is. We also look at clumping: Where has an imbalance formed and what effects could it have? If you want to be on the safe side: At the end we will look at alternatives and their risks.

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