Donald Trump’s sweeping global tariffs have triggered a stampede from global equities that to put it mildly, has inflicted short-term pain on investors’ portfolios. Given the US president’s unpredictability, Shares expects markets will remain volatile for a while longer yet. Yet our experience tells us that keeping your money invested in the markets over the long term is the surest fire way to grow your wealth.
Over time, this latest correction is likely to present as a blip on a long-run chart moving up and to the right, as was the case in the periods following the Wall Street Crash of 1929, Black Monday in 1987, the Asian financial crisis of 1997, the bursting of the technology bubble in 2000, not to mention the 2008 Great Financial Crisis and the stock market plunge that accompanied the onset of Covid-19 and its associated lockdowns in 2020.
Bargain hunters brave enough to stomach near-term volatility and dip their toes back into the equity market waters might do so via a low-cost global equity tracker fund covering all the bases in one product. Rather than taking a bet on a particular country, a global tracker will spread your risks across multiple geographies, as well as offering diversified exposure to various industries, while costs are typically much lower than with an equivalent actively managed fund.
A vehicle we think fits the bill is Fidelity Index World (BJS8SJ3), a passive fund designed to mirror the performance of the MSCI World index, which levies a palatable ongoing charge of 0.12%. If the MSCI World were to rally 10% over the next year, so should Fidelity Index World, minus the annual charge built into the fund of course. Drip feeding funds into such a product through regular investment could be a sensible approach for nervous investors and should also help smooth out the worst impacts of any forthcoming volatility.
WHAT WOULD YOU BE BUYING?
The MSCI World index provides exposure to the best part of 1,400 companies across 23 developed market countries. By tracking this index, Fidelity Index World provides access to a who’s who of market leading names including iPhone seller Apple (AAPL:NASDAQ), Jensen Huang-steered chips outfit Nvidia (NVDA:NASDAQ) and software firm Microsoft (MSFT:NASDAQ).
Buying shares in this £10.62 billion of assets fund also provides exposure to the likes of online retail-to-cloud giant Amazon (AMZN:NASDAQ), Mark Zuckerberg-led Facebook-parent Meta Platforms (META:NASDAQ) and search and cloud business Alphabet (GOOG:NASDAQ), not to mention Warren Buffett’s Berkshire Hathaway (BRK.B.NYSE), one of the largest companies in the US employing several hundred thousand people through its railroad, manufacturing, retailing, energy, confectionery and insurance businesses and which also boasts a gargantuan investment portfolio.
As at 28 February 2025, Fidelity Index World had nearly three quarters (72.25%) of its assets in the US, so its fortunes are largely tied to the success of the world’s biggest stock market. But because of how the index works, if stocks in the US market started to become less popular, weightings would shift, and holdings from other markets would move in to make up a larger percentage of the index and therefore the fund, whose next biggest allocations are to Europe, Japan and the UK.
Shares also observes that Fidelity Index World’s underlying portfolio offers a reassuring balance between cyclical, economically sensitive and defensive sectors, at 32.1%, 48.1% and 19.8% of assets respectively.
Prospective investors are buying into a fund with projected earnings growth of 10.45% and a near-2% dividend yield. Fidelity Index World has generated a cumulative five year return of 95.1%, comfortably ahead of the 69.6% from the Investment Association’s Global sector. Morningstar data shows Fidelity Index World has delivered three, five and 10-year annualised total returns of 7.39%, 14.81% and 10.97%, nicely ahead of the 5.51%, 11.79% and 8.39% from the research firm’s Global Large-Cap Blend Equity category. While Fidelity Index World provides exposure to a plethora of companies around the globe, it is important to note its focus on developed markets. Therefore, investors who want to broaden their horizons and also include emerging markets should look at funds that track the widely followed MSCI ACWI index instead.
These articles are provided by Shares magazine which is published by AJ Bell Media, a part of AJ Bell. Shares is not written by AJ Bell.
Shares is provided for your general information and use and is not a personal recommendation to invest. It is not intended to be relied upon by you in making or not making any investment decisions. The investments referred to in these articles will not be suitable for all investors. If in doubt please seek appropriate independent financial advice.
Investors acting on the information in these articles do so at their own risk and AJ Bell Media and its staff do not accept liability for losses suffered by investors as a result of their investment decisions.
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