A year ago, we published an article on the Best Global Equity ETFs according to Morningstar. The category remains a favourite among European investors, who poured €214 billion into global large cap blend equity ETFs in 2023.
Investors who want exposure to world stock markets have a good range of ETFs with a positive Medalist Rating. Out of 113 European-domiciled instruments in the Morningstar database, 84% are rated Gold, Silver or Bronze. The percentage rises to over 90% if we include only the ETFs covered by the Morningstar Medalist Rating.
In this article, we have identified the best global large-cap blend equity ETFs for 2024, according to Morningstar Medalist Rating. They are listed by assets under management.
The Best Global Equity ETFs According to Morningstar
Vanguard FTSE Developed World
Vanguard FTSE Developed World es el mayor fondo con calificación Gold entre los ETF de renta variable mundial de gran capitalización. Ofrece exposición a empresas de gran y mediana capitalización que cotizan en mercados desarrollados. Incluye más de 2.100 valores, de los que los 10 primeros representan menos del 20%. En los últimos nueve años, ha superado a la categoría en una rentabilidad anualizada de 2,8 puntos porcentuales en la clase examinada en este artículo. Con unos gastos corrientes del 0,12%, se encuentra entre los instrumentos más baratos de la categoría, que también incluye fondos activos.
Xtrackers MSCI AC World ESG Screened
The Xtrackers MSCI AC World ESG Screened ETF is characterised by its focus on sustainability criteria. It invests in large- and mid-cap stocks listed on international markets that meet certain environmental, social and governance requirements and have low carbon exposure. The fund, which is rated 3 stars from Morningstar, has an average risk/return profile.
JPM Carbon Transition Global Equity
The ETF replicates an index that complies with the European Climate transition benchmark (CTB) Directive. Specifically, it aims to reduce greenhouse gas (GHG) emissions intensity by at least 30% relative to the benchmark and it is designed to meet the portfolio's decarbonisation target of 7% year-on-year. Companies that operate in critical sectors such as controversial arms production, tobacco and thermal coal, or that violate international principles such as the UN Global Compact are excluded from the basket.
SPDR® MSCI ACWI IMI
Offering exposure not only to developed markets, but also emerging markets, the SPDR® MSCI ACWI IMI ETF has over 3,000 stocks in its portfolio, with the top 10 accounting for 16.3% of the total, compared to a category average of 54.6%. The ETF has had above-category returns of 2.2% annualised over the past 10 years and has a 4-star rating, dropping to 3 stars over the past five years.
UBS Global Gender Equality
Amongst the ETFs with Medalist Rating Gold, we find an international equity fund that invest in stocks with the highest gender diversity scores, taking into account the balance between the number of men and women in the workforce and in leadership positions, equity in salaries and initiatives to promote gender equality. Compared to other international equity funds, the portfolio has fewer stocks (110 stocks) and is overexposed to the financial and utility sectors (as of December 31 2023). The ETF, which has a rating of three stars in the class examined in this article, has beaten the category by an annualised 2.4 percentage points over the past three years, but has higher volatility, as measured by the standard deviation.
JPM Global Equity Multi-Factor
For those seeking exposure to global markets not based on traditional capitalisation indices, the JPM Global Equity Multi-Factor ETF may be a quality option, based on its Morningstar Medalist Rating of Gold. The fund replicates an index of mid- and large-cap stocks, listed on developed markets, that are distinguished from the reference universe by certain factor characteristics, such as value style (lower prices relative to fundamentals), momentum (the tendency for equities that have had higher returns in the past relative to their volatility) and quality (financially stable companies). The ETF, which has a Morningstar rating of 4 stars overall , has an above-average risk/return profile over the three-year period.
Fidelity Sustainable Research Enhanced Global Equity
Among ETFs with Medalist Rating of Gold, the Fidelity Sustainable Research Enhanced Global Equity is the smallest in terms of assets, with less than €41 million assets under management (as of February 9, 2024). It is an active ETF that invest at least 70% of its assets in securities with favourable ESG characteristics with regard to issues such as carbon intensity, CO2 emissions, energy efficiency, water and waste management, biodiversity, product safety, supply chains, health, safety and human rights. Over the past year, it beat the category average by 4.7 percentage points.
The Medalist Rating of the Largest Global Equity ETFs
Strong capital flows and stock market appreciation have caused the assets of global equity ETFs to grow, with some seeing their size explode. The three largest listed ETFs in Europe are iShares Core Msci World (almost €65 billion in assets) Vanguard FTSE All-World (EUR 21.2 billion) and Xtrackers MSCI World (€12.7 billion. All figures are as ofFebruary 9, 2024). All three have a positive Medalist Rating and low fees.
iShares Core Msci World
Silver-rated iShares ETF, which has exposure to about 85 per cent of global developed market capitalisation, has posted above-category average risk-adjusted returns over several time horizons (3,5, and ten years). The ETF has a Morningstar overall rating of five-star. Over the ten-year period, it has produced a 3% excess return over the average of its peers in the examined share class (as of 30 January 2024).
Vanguard FTSE All-World
Silver-rated Vanguard's ETF is characterised by a very broad portfolio, with more than 3,700 securities listed on developed and emerging stock exchanges. Compared to other competitors, it is not very concentrated, with the top ten holdings weighing less than 20 per cent of the total (54.6 per cent is the category average). The sub-fund, which has a Morningstar rating of four stars, has outperformed the category over the decade by an annualised 2.2 points (in the share class examined in this article).
Xtrackers MSCI World
Finally, Bronze-rated Xtrackers MSCI World replicates the same index as the iShares ETF, within which the U.S. accounts for 65-70 per cent of the total, and over the past nine years has beaten the category average by 2.8 percentage points annualised (as of 30 January 2024), with a good risk-return ratio (4 stars rating in the class examined).
Note to readers on methodology
The selection of the best large-cap blend global equity ETFs in this article was made using the Medalist Rating, which provides investors with Morningstar's assessment of each strategy's ability to outperform its category index net of fees. The rating can be the result entirely of the work of the analyst team, or a quantitative methodology that uses algorithms and machine learning models to mimic the researchers' decision-making process as closely as possible.
It is also possible that there is a hybrid situation where part of the rating is based on analysts' decisions and part is quantitative. For example, it may happen that the researchers cover the corporate pillar, but not the investment process. In the tables above you can see what percentage of the Medalist Rating is analyst-driven and the degree of completeness of the data that was used to generate the overall rating.
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