Performance Comparison: MSCI World ETF vs S&P500 ETF (2004-2024)
Over the past 20 years, the choice between an ETF tracking the MSCI World and an ETF following the S&P500 has proven decisive for the overall performance of an international equity portfolio. In euros, the average annualized performance of the S&P500 over the 2004-2024 period reaches approximately +9.8% per year, compared to +7.9% per year for the MSCI World.
These figures notably come from popular ETFs such as the Amundi MSCI World UCITS ETF (ISIN: FR0010756098, TER 0.38%) and the iShares Core S&P 500 UCITS ETF (ISIN: IE00B5BMR087, TER 0.07%). This 1.9 percentage point difference in favor of the S&P500 is explained by the marked outperformance of U.S. stocks, particularly the tech giants, over this period.
Decade-by-Decade Analysis: 2000-2010 and 2010-2020
To better understand the underlying dynamics, it is useful to split the 20 years into two decades:
Decade
S&P500 (annualized performance in EUR)
MSCI World (annualized performance in EUR)
2000-2010
-0.9%
+1.8%
2010-2020
+13.6%
+8.5%
The first decade was marked by the bursting of the internet bubble in 2000, followed by the 2008 financial crisis. The S&P500 suffered a slight average annual loss (-0.9%), while the MSCI World limited the damage thanks to its geographic diversification (+1.8%).
The following decade saw overwhelming dominance by the United States, driven by the GAFAM (Google, Apple, Facebook, Amazon, Microsoft). The S&P500 thus generated an exceptional annualized performance of +13.6%, compared to +8.5% for the MSCI World. The overwhelming weight of the American giants in the index explains this outperformance.
The Paradox of the High Correlation Between S&P500 and MSCI World
A key point often overlooked is that the S&P500 today represents about 70% of the total capitalization of the MSCI World. This massive weighting induces a very strong correlation between the two indices, estimated at 0.95 over 20 years.
This structural proximity means that, despite apparent diversification, the MSCI World remains closely tied to U.S. performance. The advantage of geographic diversification is therefore limited when the U.S. market is in a bullish phase.
Arguments in Favor of the S&P500
Superior performance: The S&P500 has historically outperformed the MSCI World over the long term, notably thanks to the strength of American technology stocks.
American innovation and leadership: The United States hosts the world’s largest innovative companies, driving growth and value creation.
Strong dollar: A robust dollar over the period has enhanced the value of American assets in euros, amplifying gains for European investors.
Arguments in Favor of the MSCI World
True geographic diversification: The MSCI World includes about 23 developed countries, reducing exposure to the specific risk of a single market.
Avoidance of American home bias: By investing in the MSCI World, investors limit their dependence on the U.S. economy alone, which is often subject to political or valuation risks.
Protection in case of U.S. underperformance: In the event of a U.S. market downturn, diversification can limit losses.
Forward-Looking Scenarios: Towards Geographic Rebalancing by 2030?
American dominance could be challenged in the next decade. Countries like India, Europe, or Japan could emerge as growth drivers, especially if the GAFAM experience slowdowns.
For illustration, in 1990, Japan represented nearly 45% of the MSCI World. Today, its share has fallen to about 6%, illustrating the cyclical evolution of regional weights. This dynamic could repeat with other regions.
Synthetic Comparison of MSCI World and S&P500 ETFs
Criterion
MSCI World ETF (e.g., Amundi FR0010756098)
S&P500 ETF (e.g., iShares IE00B5BMR087)
Annualized performance 2004-2024 (in EUR)
+7.9%
+9.8%
Average TER
0.38%
0.07%
Geographic coverage
23 developed countries
United States only
Weight of U.S. market in the index
~70%
100%
Sector exposure
Technology 20%, Financials 15%, Healthcare 12%, etc.
Technology 30%, Consumer Discretionary 15%, Healthcare 13%, etc.
Correlation with S&P500
0.95
1
Which Choice According to Your Investor Profile?
Investor with strong U.S. conviction: The S&P500 is suitable if you believe in the sustainable leadership of the United States and want to maximize your performance. The iShares Core S&P 500 UCITS ETF (ISIN IE00B5BMR087, TER 0.07%) is a low-cost, liquid solution accessible in PEA and brokerage accounts.
Investor seeking maximum diversification: The MSCI World offers global exposure that limits risks related to geographic concentration. The Amundi MSCI World UCITS ETF (ISIN FR0010756098, TER 0.38%) is a classic option, although slightly more expensive, interesting within a PEA.
In summary, the choice primarily depends on your risk appetite, investment horizon, and analysis of global macroeconomic trends.
Conclusion
Over the past 20 years, the S&P500 has clearly shown better annualized performance in euros (+9.8% vs. +7.9%). However, this outperformance is strongly correlated with American dominance within the MSCI World, which limits the diversification effect. The 2010-2020 decade widened this gap thanks to the GAFAM, while the 2000-2010 decade saw the MSCI World better withstand crises.
Investing in an S&P500 ETF amounts to betting on the continuation of American and technological supremacy, whereas the MSCI World offers a compromise between performance and geographic diversification. The future context could reshuffle the cards, especially if other regions like India or Europe take the lead.
Disclaimer: This article is for informational purposes only and does not constitute personalized investment advice. Past performance is not indicative of future results. Before making any investment decisions, it is recommended to consult a qualified financial advisor and assess your risk profile.
