Which Global Index Tracker Best Reflects Market Cap?

[Blatter]

I've been researching Global Index Trackers and have read up on the subject (Lars Kroijer & Andrew Craig, amongst others).

I am trying to figure out what percentage of the Global Capitalisation each nation has, so that I can pick a Global Index Tracker that best reflects these figures.

I am finding it quite difficult to establish what the Global Market Capitalisation is by country. Can anyone provide any pointers to where I might find an accurate answer?

[todthedog]

vwrl

Region exposure
As at date 31 Dec 2019


Region
VWRL
North America 57.3%
Europe 18.9%
Pacific 12.9%
Emerging Markets 10.5%
Middle East 0.2%
Other 0.2%

60%
0%
Total 100.0%

[mc2fool]

Vanguard FTSE All-World UCITS ETF (VWRL)
https://www.vanguardinvestor.co.uk/investments/vanguard-ftse-all-world-ucits-etf-usd-distributing/portfolio-data

United States 54.6% *
Japan 7.7%
Apple+Microsoft+Amazon+Facebook 7.3% *
United Kingdom 5.1%
China 4.0%
:
:

[Blatter]

Thanks for the above replies, there's quite a comprehensive fund breakdown by country in the Portfolio Data page.

My original point though, is does anyone know where I can find out what the actual World Figures are for Investment Cap by percentage by country? That way, I can establish how closely the Global Trackers reflect these figures.

My impression is that most "Global" trackers seem to over-weight in USA at the expense of other areas.

[GeoffF100]

I've been researching Global Index Trackers and have read up on the subject (Lars Kroijer & Andrew Craig, amongst others).

I am trying to figure out what percentage of the Global Capitalisation each nation has, so that I can pick a Global Index Tracker that best reflects these figures.

I am finding it quite difficult to establish what the Global Market Capitalisation is by country. Can anyone provide any pointers to where I might find an accurate answer?

The fund management group providing the tracker should be able to do a better job of that than you can. Any information that you get is not likely to be up to date, but they will have live data feeds. The information that they publish may also not be bang up to date. Some trackers are claimed to be "whole market", but illiquid stocks will be omitted, and "statistical replication" may be used. There may also be a different cut off point for stocks whose capitalisation is considered to be too low to justify their inclusion. It is also possible that some small emerging markets will be omitted. I suggest that you pick the cheapest fund or combination of funds from one of the major suppliers. VWRL = 0.9 x VEVE + 0.1 x VFEM is a good choice, with an OCF of about 0.13%. That covers large and medium cap stocks, but not small cap stocks (which are about 10% of the global market).

[GeoffF100]

My original point though, is does anyone know where I can find out what the actual World Figures are for Investment Cap by percentage by country? That way, I can establish how closely the Global Trackers reflect these figures.

You cannot. I did a Google search. The best that I could find was:

https://www.theglobaleconomy.com/rankin ... n_dollars/

That gives World Bank figures for 2008, but there is no guarantee that the numbers on the website are right. The fund management group is legally obliged to publish accurate numbers, but they may not up date them every day. If you want official live numbers, you have to pay lots of money for them. Getting this information is a major cost of running a global index tracker.

[EthicsGradient]

You cannot. I did a Google search. The best that I could find was:

https://www.theglobaleconomy.com/rankin ... n_dollars/

That gives World Bank figures for 2008, but there is no guarantee that the numbers on the website are right. The fund management group is legally obliged to publish accurate numbers, but they may not up date them every day. If you want official live numbers, you have to pay lots of money for them. Getting this information is a major cost of running a global index tracker.

Notably absent from that list are the UK, Italy, Netherlands, Sweden ... so that list won't help for these purposes.

[GeoffF100]

Here is a better link:

https://data.worldbank.org/indicator/CM.MKT.LCAP.CD

Nonetheless, it is still 2018, which is useless for the OP's purposes.

[Blatter]

From the answers here and from looking at other data, it seems that it's going to be very difficult to pick a true Global Index Tracker that accurately reflects the actual Global Capitalisation, because it seems to be a constantly changing figure?

It makes picking an individual Global Index Tracker less of an objective exercise and somewhat more subjective?

[GeoffF100]

From the answers here and from looking at other data, it seems that it's going to be very difficult to pick a true Global Index Tracker that accurately reflects the actual Global Capitalisation, because it seems to be a constantly changing figure?

It makes picking an individual Global Index Tracker less of an objective exercise and somewhat more subjective?

No, we are saying that any good global stock market tracker will do. Pick the cheapest one from a leading supplier.

The capitalisation individual stock markets changes constantly, but their weight within a global (market weighted) tracker changes constantly to match. The global tracker holds a fixed percentage of each stock in the global market. If one of those stocks doubles in value, the same quantity of stock is held, but its weight in the index doubles to match the increase in value. No stock needs to be bought or sold within the tracker. The index weights change to match the changes in value of the underlying stock.

When you buy a global tracker, you should automatically get the correct market weighting. (Small deviations are possible, but that is not relevant here.)

[GeoffF100]

What you can do here is to read the prospectus and look at the tracking error. For Vanguard and Black Rock, the tracking error should closely match the stated costs. (These have come down over time so you need to look at the historical costs). For some of the smaller tracker providers, it can be larger. The prospectus should tell you what the replication strategy is for the fund. "Full replication" is best.

[Blatter]

Thanks for the further pointers.

Carrying on with the "homework" now!