MSCI World vs S&P 500
The MSCI World is sold as the diversified global index, but the United States makes up by far its largest share. Setting it against the S&P 500 therefore measures what the other twenty-two developed markets add to — or subtract from — a portfolio that is already overwhelmingly American.
Over the period both series share, S&P 500 comes out ahead at +12.6% a year.
| Asset | Total return | Annualised | Volatility | Largest drawdown |
|---|---|---|---|---|
| MSCI World | +433.2% | +12.0% a year | 14.4% | −24.1% (October 2022) |
| S&P 500 | +475.1% | +12.6% a year | 14.2% | −22.4% (April 2020) |
Figures calculated on 26/10/2026 from monthly closing prices. Past performance is no guide to future performance.
A global index with an American core
The MSCI World tracks large and mid-cap companies across twenty-three developed markets. Emerging markets are absent, despite what the name suggests — that is the MSCI ACWI.
Constituents are weighted by free-float market capitalisation, so each country’s weight follows the size of its market. The United States occupies the largest share by a wide margin, ahead of Japan and the United Kingdom. The largest holdings in the MSCI World are therefore the largest holdings in the S&P 500.
What diversification actually brings
When the two curves separate, it is because the rest of the developed world did something different from the United States — which has happened over entire decades, in both directions. The difference is rarely dramatic year by year; it shows up over long periods.
A second factor works quietly: currency. A euro-based investor holding the MSCI World holds a basket of currencies, whereas the S&P 500 is almost pure dollar exposure. The tool lets you switch the display currency, and see what that switch alone does to the verdict.
Frequently asked questions
Does the MSCI World include emerging markets?
No. It covers developed markets only. Emerging markets belong to the MSCI Emerging Markets index, and the two together to the MSCI ACWI.
Does diversification always reduce risk?
It reduces the risk tied to any single market. It does not protect against general falls: in 2008 every developed market fell together.