The MSCI World (ex Australia) Index comprises more than 1,700 companies listed on the exchanges of 22 of the world's major developed economies.
Investing overseas increases diversification and provides access to investment opportunities not available in Australia. After all, more than 98 per cent of the global sharemarket is located outside Australia.
A world of investment opportunities
The MSCI World Index has a broad sector and company composition with the top 10 companies representing only 10 per cent of the index. By comparison, the Australian market is highly concentrated with a large representation in the financial services and resource sectors. The top 10 Australian companies make up around 40 per cent of S&P/ASX 300 Index with four out of the top five companies in the financials sector.
Many industries are not represented or under represented in Australia. For example, the MSCI World Index has an allocation of more than 20 per cent to the fast growing information technology and healthcare sectors. By comparison, Australia has less than 5 per cent in these sectors.
Investing in a fund that tracks the MSCI World Index is one way of achieving access to many of the world's best known brands such as Coca-Cola, Microsoft, Toyota and Vodafone. The largest company in the MSCI World Index, Exxon Mobil has a market capitalisation of USD 458.4 billion.
These companies can be classified as truly global with customers all around the world.
Top 10 companies in MSCI World (ex-Australia) Index
1. Exxon Mobil
2. General Electric
3. Citigroup
4. AT&T Corp
5. Microsoft
6. Bank of America
7. Royal Dutch Shell
8. BP
9. HSBC Holdings
10. Procter & Gamble
* Companies representing the largest proportion of the index
