Is investing only in the MSCI World enough?

The key points in brief

• The MSCI World can be a solid foundation, but it does not make a fully diversified portfolio on its own.
• It includes around 1,300 companies from 23 developed markets. Emerging markets and smaller companies are not included.
• Around 72% of the index currently consists of US companies, and the entire index is made up of shares.
• Adding more ETFs or tech stocks can unintentionally increase concentrations that already exist in your portfolio.
• Whether the MSCI World is right for you depends on your goals, investment horizon and ability to take risk.

What exactly is the MSCI World?

The MSCI World is a stock market index. It follows a fixed set of rules that determine which companies from which countries are included and how much weight each company receives.

An ETF tracking the MSCI World aims to follow the performance of this index as closely as possible. This means there is not just one MSCI World ETF. Instead, several fund providers offer ETFs that track the same index.

The MSCI World includes large and medium-sized listed companies from 23 developed markets, including the United States, Japan, the United Kingdom and Switzerland. Within these markets, it covers around 85% of the market value of shares that are freely available to trade.

How the MSCI World is currently made up

• Number of index constituents: 1,283
• Markets included: 23 developed markets
• US weighting: 72.45%
• Ten largest index constituents: 25.74%
• Information technology: 30.27%

The index is weighted by market capitalisation. The higher a company’s market value, the greater its share of the index.

These weightings are not fixed. If one company performs better than others, its share of the index automatically increases. If it loses value, its weighting decreases. The index therefore continuously reflects changes in the stock market.

Data as of 30 June 2026. Source: MSCI World Index.

Is the MSCI World sufficiently diversified?

The honest answer is: it depends on what you compare it with.

Within developed equity markets, the MSCI World is broadly diversified. With a single ETF, you spread your money across more than a thousand companies from different countries and sectors. That is considerably more diversified than a portfolio containing only a handful of individual shares.

However, the MSCI World represents neither the entire global stock market nor a complete investment portfolio.

Diversification can take place across several dimensions:

• individual companies
• sectors
• countries and regions
• company sizes
• currencies
• different asset classes

The MSCI World covers some of these dimensions well. Others are missing entirely.

Where the MSCI World reaches its limits

1. Emerging markets are not included

The MSCI World only includes companies from developed markets. Emerging markets such as China, India, Brazil, South Korea and Taiwan are not part of the index.

If you also want exposure to these markets, you could add an emerging markets ETF or choose a broader index that already combines developed and emerging markets.

This does not mean that emerging markets automatically deliver higher returns. They may grow faster, but they can also come with greater political, economic and currency risks. The main benefit is that they give you exposure to an additional part of the global stock market.

2. Small caps are not included

The MSCI World contains large and mid caps – in other words, large and medium-sized listed companies. Smaller companies, known as small caps, are not included.

Small caps are not automatically better investments or guaranteed to grow faster. However, they can react differently to economic developments than large corporations.

If you also want to cover this part of the stock market, you need a small-cap ETF or an index that includes companies of different sizes.

3. The MSCI World consists entirely of shares

An MSCI World ETF spreads your money across many companies, but not across different asset classes. It remains a pure equity investment.

Its value can therefore fluctuate considerably. According to MSCI, the index’s largest historical drawdown between October 2007 and March 2009 was around 57%. The performance of a specific ETF in Swiss francs may differ due to fees and currency movements.

Other asset classes, such as bonds or precious metals, can perform differently from shares. They can help spread risk more broadly, although no asset class automatically provides protection during every crisis.

Listed real estate companies are included in the MSCI World. However, they made up only around 1.7% of the index in June 2026 and are not the same as investing directly in property.

4. The US weighting is high

Around 72% of the MSCI World currently consists of US companies. Its ten largest constituents make up around a quarter of the entire index.

This concentration is real, but it is not automatically a flaw.

The high weighting exists because US companies currently represent a large share of global stock market value. Many of these companies also generate revenue around the world.

Country weightings also change with the markets. In the 1980s, for example, Japan had a much higher weighting in the MSCI World than it does today.

Even so, investors should be aware that the performance of the MSCI World is heavily influenced by the US stock market and a relatively small number of very large companies.

If you deliberately reduce the US allocation, you are moving away from the market’s current weighting. That can make sense, but it is also an active decision and does not automatically mean your portfolio is more diversified.

More ETFs do not automatically mean more diversification

There is no fixed number of ETFs that a good portfolio needs.

A single ETF tracking a very broad global index can be more diversified than a portfolio containing several sector, country or thematic ETFs. Owning more funds can even create overlaps that are easy to miss.

What matters is not how many ETFs you own, but what they contain.

Additional ETFs can serve different purposes:

• An emerging markets ETF adds exposure to emerging economies.
• A small-cap ETF adds smaller companies.
• A bond ETF spreads risk across different asset classes.
• A precious metals ETF can provide additional diversification.
• A Swiss equity or bond ETF can increase the share of investments in Swiss francs.

If you only hold an MSCI World ETF, you do not need to rebalance the individual companies yourself. The index is continuously adjusted.

Rebalancing becomes important when you combine several portfolio building blocks with specific target allocations. If shares perform significantly better than bonds, for example, the equity allocation grows. Over time, your portfolio may become riskier than you originally intended.

What investors in Switzerland should consider

For investors in Switzerland, currencies matter as well as the choice of shares.

An ETF traded in Swiss francs is not automatically protected against movements in foreign currencies. What matters is the currencies to which the companies and investments within the fund are economically exposed.

A genuine currency hedge is usually clearly labelled “CHF hedged”. The fund then attempts to reduce some of the impact of exchange-rate movements.

However, currency hedging requires additional work and can affect performance both positively and negatively.

How important a Swiss franc allocation is also depends on your stage of life. Someone who plans to remain invested for several decades has different needs from someone who will soon finance a large share of their expenses from their portfolio.

Especially before and during retirement, you should therefore look at your entire financial situation rather than focusing on a single ETF:

• occupational pension assets and Pillar 3a
• existing property
• cash reserves
• planned withdrawals
• regular income and expenses
• willingness and ability to take risk

Avoid this common MSCI World mistake

A typical portfolio often comes together like this:

You start with an MSCI World ETF. It is a simple, familiar and broadly diversified solution.

After a while, you keep reading about how well the S&P 500 has performed, so you add an S&P 500 ETF too.

A few years later, you also want to invest in individual shares. Naturally, you choose some of your favourite companies – Nvidia, Apple or Microsoft. They are successful, constantly in the media and their share prices have risen strongly. Each decision therefore feels perfectly sensible on its own.

But over time, your portfolio ends up containing several ETFs and individual shares that largely include the same companies.

Nvidia, Apple and Microsoft already have significant weightings in both the MSCI World and the S&P 500. In the MSCI World alone, these three companies currently make up around 13% of the index.

Without meaning to, a portfolio that started out broadly diversified gradually becomes a bigger bet on the US market and a small number of large technology companies.

That is not automatically wrong. But you should understand the risk you are taking.

Before making an additional investment, ask yourself:

Does this investment genuinely add something to my portfolio, or am I simply buying more of what I already own?

How Selma builds a global portfolio for you

Selma does not simply look for the one “best ETF”.

First, Selma looks at your full financial picture: how much you can save, your existing investments, property and mortgages, upcoming expenses, investment horizon, and how much risk you are both willing and able to take.

Based on this information, Selma creates a personal portfolio for you. It is built around a global market portfolio and may include different building blocks depending on your situation:

• global shares for long-term growth
• government and corporate bonds for greater stability
• real estate investments for additional diversification
• precious metals as another portfolio building block
• crypto as an optional part of your Selma portfolio

The mix of these investments is not the same for everyone.

If you already own property, for example, your portfolio may look different from that of someone who does not. Someone who will need their money soon or is approaching retirement also needs a different risk allocation from someone who plans to remain invested for several decades.

Selma continues to look after your portfolio once you start investing. It is automatically monitored and rebalanced, taking both global market developments and changes in your financial situation into account.

The aim is not to predict short-term market trends. It is to keep your portfolio appropriately balanced over the long term.

With a single ETF, you make and manage all these decisions yourself. Selma is therefore a good solution for anyone who wants a professionally constructed portfolio without having to continuously manage its selection, weighting and adjustments.

You can learn more about how this works in our two-part series:

• How Selma builds your personal portfolio
• How Selma manages and rebalances your investments

Conclusion: Is an MSCI World ETF enough?

The MSCI World is a solid and cost-effective foundation. However, as a standalone investment strategy, it is less broadly diversified than its name might suggest: around 72% of the index consists of US companies, and the entire index is made up of shares.

Especially when investing larger amounts, you may not want your wealth to depend too heavily on a single region or asset class. A well-diversified portfolio spreads risk across different markets and asset classes while reflecting your investment horizon and personal situation.

You can build and manage this kind of strategy yourself. Or you can leave it to Selma: Selma creates a personal, globally diversified portfolio for you and automatically takes care of its ongoing management and adjustment.