The concept of the "best" world ETF is subjective and depends on an investor's specific goals, risk tolerance, and time horizon. However, based on 1-year fund return performance as of November 30, 2024, among FTSE All-World UCITS ETFs, the Invesco FTSE All-World UCITS ETF Dist demonstrated the highest return.
Understanding "Best" in World ETFs
When evaluating Exchange Traded Funds (ETFs), "best" can refer to a multitude of factors, including:
- Short-term or long-term performance: How the ETF has performed over a specific period.
- Expense Ratio (TER): The annual cost of holding the ETF.
- Tracking Difference: How closely the ETF's performance matches its underlying index.
- Diversification: The breadth of its market exposure.
- Liquidity: How easily it can be bought and sold.
This answer specifically defines "best" by the 1-year fund return for FTSE All-World ETFs as of 30/11/2024.
Top Performing FTSE All-World ETFs by 1-Year Return (as of 30/11/2024)
The table below highlights the top performers in the FTSE All-World ETF category based on their 1-year fund return as of November 30, 2024:
| Rank | ETF Name | 1-Year Fund Return |
|---|---|---|
| 1 | Invesco FTSE All-World UCITS ETF Dist | +25.68% |
| 2 | Invesco FTSE All-World UCITS ETF Acc | +25.57% |
| 3 | Vanguard FTSE All-World UCITS ETF (USD) Distributing | +25.30% |
It's important to note that past performance is not indicative of future results.
Key Characteristics of FTSE All-World ETFs
FTSE All-World ETFs aim to provide broad exposure to global equity markets, typically including large and mid-cap stocks across both developed and emerging economies. This makes them a popular choice for investors seeking diversified global market coverage.
The ETFs listed above also highlight different share classes:
- Distributing (Dist) ETFs: These funds pay out dividends to investors.
- Accumulating (Acc) ETFs: These funds automatically reinvest any dividends back into the fund, potentially leading to greater compounding returns over time without the need for manual reinvestment by the investor.
Factors to Consider Beyond Short-Term Returns
While short-term performance can be interesting, a holistic approach to choosing a world ETF involves several other critical factors:
- Expense Ratio (TER): Even small differences in fees can significantly impact long-term returns. For example, a 0.22% TER versus a 0.15% TER can amount to substantial savings over decades.
- Tracking Efficiency: This refers to how well an ETF replicates the performance of its underlying index. A lower tracking difference is generally preferred.
- Fund Size and Liquidity: Larger, more liquid ETFs typically have tighter bid-ask spreads, making them easier and cheaper to trade.
- Dividend Policy: Decide whether you prefer receiving regular income (distributing) or having your dividends automatically reinvested for growth (accumulating). Your tax situation may also influence this choice.
- Domicile: The country where the ETF is registered can affect its tax efficiency for investors from different regions.
- Investment Horizon: If you have a long-term investment horizon, focus more on low costs and broad diversification rather than short-term performance spikes.
How to Choose the Right World ETF for You
Selecting the "best" world ETF should align with your personal financial strategy. Here are some practical steps:
- Define your objectives: Are you saving for retirement, a down payment, or a shorter-term goal?
- Assess your risk tolerance: World ETFs are equity-based and subject to market fluctuations.
- Prioritize low costs: Research ETFs with competitive expense ratios, as these directly impact your net returns over time.
- Consider dividend treatment: Decide if you want dividends paid out or reinvested.
- Utilize credible resources: Websites like justETF.com offer detailed comparisons of various ETFs, including expense ratios, fund sizes, and performance data.
- Consult a financial advisor: For personalized advice tailored to your unique financial situation.
In summary, while the Invesco FTSE All-World UCITS ETF Dist showed the highest 1-year return as of late 2024, the "best" world ETF for you will ultimately depend on a comprehensive evaluation of its costs, long-term performance trends, and how well it fits your individual investment plan.
