RetireJapan

adamu wrote: ↑Tue Dec 07, 2021 12:58 pm
I was thinking that the indices such as FTSE All Cap and MSCI are invented by the west and are usually in categories such as "developed world", "emerging markets", etc. If there is a huge shift, say an emerging market country takes off, that is not going to be accounted for in a lot of the indices. I'm not sure how the balance between developed/emerging is handled in an index like MSCI ACWI. Would it be updated quickly enough?

It looks like for MSCI ACWI the re-balances of the different country proportions occur either 2 or 4 times a year via the semi-annual/quarterly index reviews: https://www.msci.com/c3db2dfe-e0f1-4bc1 ... 854f0abc51 (200+ page document I won't be reading tonight )

That should be fast enough, I think. It would take seismic changes of the world order on a few month timescale for it not to be. Could happen I suppose, which reminds me... still need to go look for that second home in the woods far from anywhere

The self-adjusting nature of index funds is their beauty, the winners are automatically held and weighted accordingly, and the losers are automatically get spun out. With All-Country, you have the biggest possible pie, so there is absolutely no intervention necessary.

Now if you want a global approach but on a cross-regional basis (rather than the market-cap-weighted approach that All-Country gives you), an alternative could be to buy, say, 50% Developed Countries and 50% Emerging Countries indexes. This approach would allow you to more "actively" select weighting, while still keeping it simple with just two broad-based indexes, and also avoids any overlap.