Here, I’ll attempt to answer whether or not the iShares Core MSCI World All Cap ETF (ASX: IWLD) has it all.
About ETFs
Exchange-traded funds, or ETFs, are investment funds listed on a securities exchange that provide exposure to a range of shares or assets with a single purchase. ETFs can be ‘managed funds’ or ‘index funds’, or in other words, active or passive.
The Australian Finance Podcast episode below explains index funds, ETFs and managed funds in more detail:
What Is The iShares World All Cap ETF?
The iShares IWLD ETF aims to track the performance of the MSCI World Investible Market Index by investing in companies both large and small, and based in Australia and overseas.
To explain more simply what the fund invests in, we can look at its main holdings which are actually just other iShares ETFs. For instance, almost 56% of the fund is invested in the iShares S&P 500 ETF (ASX: IVV), which you can read more about here.
While IVV provides large-cap exposure, another 7% of IWLD is invested in the iShares S&P Small-Cap ETF (ASX: IJR) for US small-cap exposure. I’ve previously written about the IJR ETF here.
The iShares Core MSCI EAFE ETF (ASX: IEFA) makes up a further 33% of IWLD, which invests in small, mid, and large-cap companies in developed countries excluding Canada and the US.
Another 3.5% is allotted to the iShares Core S&P/TSX Capped Composite Index ETF (ASX: XIC), which provides exposure to the Canadian stock market, while the remaining 1.5% of IWLD is held in Australian dollars.
The end result is that nearly 63% of IWLD is invested in the US, with Japan (8.4%), the UK (5.4%) and Canada (3.5%) receiving the next largest weightings.
In terms of sector allocation, information technology has the highest weighting (16%), followed by financials (15%), health care (12%) and consumer discretionary (11%).
Over the last three years, the World All Cap ETF has returned an average of 13.21% per year, with a 5.64% return over the last 12 months. These returns include the semi-annual distributions paid by the ETF, whereby IWLD has a trailing dividend yield of 2.45%.
Fees And Risks
The management fee for IWLD is 0.09%, making this one of the cheapest ETFs on the ASX. Although the fund is well-diversified across equity markets and sectors, it lacks any exposure to other asset classes like bonds, real estate or commodities. So, while this is a diversified fund, you shouldn’t consider yourself fully diversified if IWLD is all that you own.
The fund is also heavily weighted to the US stock market, so a market crash in the US would still severely impact your returns, at least in the short term.
My Take On The IWLD ETF
The World All Cap ETF may be an interesting way to go beyond a standard S&P 500 ETF and gain better diversification benefits without materially increasing management fees. However, you should be mindful of the extra risk in terms of overall portfolio composition. It might not be my first pick for an ETF, but IWLD is certainly worth considering.
For our number-one ASX ETF pick, have a look at the free report below.
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Disclosure: At the time of writing, Max owns shares in the iShares S&P 500 ETF (ASX: IVV).
