MSCI WORLD EX USA UCITS ETF

hallmark

As many are probs aware, although the S&P500 & US in general has strongly outperformed the rest of the world since 2009, that was not always the case.  As mentioned in a recent Pensioncraft video, the world excluding US outperformed the US from 1969-1989 and again from 2002-2008.  So over the last 55 years it's far from the case that the US always outperforms.
https://www.youtube.com/watch?v=bVfZPTDGFmU&t=865s

Here's a clever little graphic demonstrating the performance of S&P500 vs ROW:
S&P vs ROW

There's an argument to be made that the US is overvalued currently. Various indicators are at or near highs and some of the stats here (for example that the US is 4% of global population but 42% of global equities) IMO lend themselves to that conclusion:
https://www.visualcapitalist.com/global-share-of-us-stock-markets/


Anyway, I'm sure there will be people who strongly disagree but to summarize, some people think the US is overvalued and that we might at some point soon see a period where it underperforms vs Global ex-US.  

That being the case I decided to look for a World ex-US ETF & suprisingly although a few existed (for example ACWX) there was nothing I could see available for UK investors until a month ago. That's changed with the launch of this:
https://www.ajbell.co.uk/market-research/LSE:EXUS

As it's new it has no history or dividend info, however taking ACWX as a pretty similar ETF it looks likely to yield about 3% and the price today is actually slightly less than it was in 2008 (a truly horrible performance).


I've dived in and bought some today with the intention to add to this.  I think it's an interesting ETF, especially for anybody like me who thinks we're in a bit of a re-run of the dotcom boom.


All opinions/comments welcome, for or against

gravel_2

I suppose it could be useful as a low maintenance way to dilute US exposure. For diversification's sake it's probably best used that way (with a lower-than-index allocation to another fund tracking SPX or Russel 1000) instead of wholly excluding the US.

Performance of the index can be seen here:
https://www.msci.com/documents/10199/99459e68-5e21-4888-ace6-72a3ffe9b1ab

Doesn't seem to be available in GBP as of now.

ColdIron

30% Eurozone. 20% Japan and 12% UK. Not where I would want to have been for the last 20 years

The tech companies of today are not those off the early 2000s (vapourware)

gravel_2

ColdIron said:

30% Eurozone. 20% Japan and 12% UK. Not where I would want to have been for the last 20 years

The tech companies of today are not those off the early 2000s (vapourware)

Arguably majority of AI presently touted, and raising the market, is vapourware.

ColdIron

Agreed to some extent, but that is a pretty recent development and not much of a factor in the previous 15 years

InvesterJones

Potentially a cheaper way of doing global if combine with a cheap US fund?

masonic

I've used regional trackers for Europe, Asia ex-Japan, Japan and EM, given the lack of alternatives. With that I miss out Canada and a couple of others. Note that this fund is developed markets only. This fund has done well to get close to $200m AUM in under 3 months and it is quite cheap. Perhaps others will follow.

IanManc

According to the latest edition of the EXUS factsheet I could find dated 30.4.24 it isn't yet UK reporting. It says "seeking":

https://api.fundinfo.com/document/888a14443808613e1dc7258a5815221f_227189/MR_GB_en_IE0006WW1TQ4_YES_2024-04-30.pdf

hallmark

I THINK this has now been obtained, under Tax Data on this link it has a tick next to UK Reporting Status
https://etf.dws.com/en-gb/IE0006WW1TQ4-msci-world-ex-usa-ucits-etf-1c/

I bought mine in a SIPP so I don't believe this is an issue for me but it's a good point for anybody investing outside a wrapper.

leosayer

You may well be right but when do you expect the ex-USA fund to start outperforming? How do you know the current trend won't continue for another 10 years before a correction?

What kind of outperformance do you think this fund could give you and it is worth the risk? What are the heightened risks you are running by increasing your exposure to Europe, Japan etc? Have you compare the risks in the US with the risk in the RoW?

Are you happy that this fund doesn't give you any exposure to midcaps, small caps or emerging markets?

If USA does have a relative pull back as you predict what will the impact be on the rest of the world's markets?

Sorry if this is a bit of a downer but after decades of investing in funds, I realised how little I knew, how little I could predict the future and as a result I have no appetite for favouring one company, sector or country over another. 

hallmark

Very very broadly I see it like this:  The US & the World ex-US have historically taken it in turns to outperform for periods of years at a time.  Currently we're in a phase of substantial outperformance by the US.  I think it's a reasonable strategy to tilt investments towards ex-US in such times.  If it swung the other way and the world ex-US substantially outperformed for a stretch, I'd reverse the strategy & tilt more towards US markets.

I couldn't put a timeframe on when (if) the world ex-US could start to outperform, but I'd be happy enough if it continued to do badly for awhile yet whilst I build up a holding.

These are new purchases (i.e. I'm not selling US to buy ex-US).

I'd prefer if the ex-US fund we can buy included more of the things you mention but I suspect it's performance will be pretty closely correlated to the funds that do.

Ultimately I'm exposed to both anyway as I have very generic stuff like Vanguard LS as a substantial core holding. Hence tilt rather than bet the farm.