Investing in the MSCI World… BUT With a Twist!

Investing in the MSCI World… BUT With a Twist!

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In the ever-evolving landscape of financial markets, the choice between active and passive investing has long been a subject of debate among investors. While many have found solace in the widely popular MSCI World ETF, there's a compelling case for a different approach – a passive strategy with a unique twist that could potentially amplify returns: the quality factor. Investing with a focus on quality adds a nuanced dimension to the conventional passive investing approach, bringing a strategic element to passive investing that might just be the game-changer investors are seeking. In a world dominated by market indices and exchange-traded funds (ETFs), it's essential to explore passive investing alternatives that not only preserve the essence of passive investing but also harness the power of quality metrics. This video delves into the realm of passive investing with a twist, shedding light on why the quality factor deserves a closer look. As we navigate through the intricacies of investment strategies, we'll uncover the potential benefits of deviating from the well-trodden path of MSCI World Index and exploring alternatives that align more closely with the principles of quality-driven investing. Get ready to rethink your passive investment approach and discover how a subtle shift in focus could lead to a substantial boost in returns.

MUSIC:

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I hope you enjoyed the content!

What I should have included in the video is a comparison of the total expense ratio of the indices. The TER of the "iShares Edge MSCI World Quality Factor UCITS ETF" for instance is slighter higher than the TER of the "iShares Core MSCI World UCITS ETF" (0.3% vs. 0.2%). The Quality ETF also owns fewer stocks (300 vs 1, 500).

This doesn't change the overall point I was trying to make here though.

[massafelipe]

Ishares and Xtrackers offerings ARE NOT tracking MSCI World Quality index but MSCI World Quality Sector Neutral index, which is significantly different form the former.

[jjmontgo]

Thank you SO much. I hadn't heard of Quality Factor ETFs and it looks like just the thing I've been looking for.

[Xandr]

i still dont understand wich one to hold and why the quality one earns more? so i should just start buying the quality one from now on?

[yaseral-saffar]

There is actually MSCI quality index going back to 1976 and it shows that it underperforms between 1976 and 1995. I suspect it underperforms during inflationary periods. Actually between 1976 and 1986 the real returns of each respectively were 6.67% and 8.8%, fairly big.

[Kingdia]

What’s an etf I can buy for msci world quality index?

[dennista]

Interesting video, the only "twist" in the video is that you dont mention the higher risk and fees.
The MSCI World Index includes 1, 511 companies where the MSCI Quality Index only includes 298 companies! This is a diversification multiple of 5x for the MSCI World.
Also, the demographic diversification is lower than the one of the MSCI World.
On top of that the TER of the MSCI World is at 0, 2% where as the one of the MSCI World Quality is at 0, 38%.
Those are things that should have been mentionned in this video if you ask me.
Every Pro comes with at least one con ;)

[Messi_CR]

The best companies are those who are capital light and don't need to invest capital upfront to grow their cashflow stream. I really like the business characteristics of Meta and the search and youtube business of alphabet.

[NattyLegend]

From what I can tell MSCI World has outperformed MSCI World Quality Factor on both 5 year and 10 year basis

[blaggzear]

TLDR: S&P 500 > MSCI World Quality Factor > MSCI World

[jamesbyrne]

Out performed not Odd performed or Art performed.