Complete guide to the best global index funds and ETFs
If you want to invest in stocks around the world, you don’t need a passport. Find out how to invest in global tracker index funds and ETFs for a cheap and efficient way to invest internationally.
Just like Pitbull, you too can become “Mr Worldwide” (or Mrs Worldwide if you prefer) by using an index fund or exchange-traded fund (ETF) to achieve global domination with your investment portfolio. Owning a piece of the world might seem far-fetched, but it’s now easier than ever to be an international investor – right from the comfort of your own home.
The value of the global stock market is projected to hit $128 trillion (about £95 trillion) in 2025 Global index funds and ETFs could be just the ticket to get you to the destination of financial freedom. Here’s your ultimate guide to navigating the world of global investing from the comfort of your sofa or even on your phone on the go.
What is a global index fund?
A global index fund is a type of investment fund that usually mirrors and tracks the performance of a global stock market index. Rather than picking individual stocks from each country, these funds buy a broad basket of shares from companies across multiple countries, continents, industries, sectors and sizes.
Think of it as the world tour of investing, one ticket gives you exposure to markets at home and beyond. However, not all global equity funds are the same because the underlying index might include or exclude specific regions or stock markets. For example, some global index funds don’t include emerging markets.
How to invest in a global index fund or ETF
One of the best things about global funds and ETFs is that you can invest in them through many different share dealing platforms. So, if you’re in the UK and want to get started investing in the best global index funds the world has to offer, here’s a simple step-by-step guide:
Research global funds. It’s important to take some time to find the right fund or ETF to invest in. Finding the best fund provider with the right stocks and lowest costs for your individual investing goals will be a personal decision.
Find a platform. Only some brokers will give you access to certain global index funds. So, it’s worth checking to see which investing platform will let you invest in the particular fund or ETF you want to buy.
Fund your account. Once you’ve picked a fund that suits your investing strategy and found a suitable trading platform to invest, depositing funds is next.
Buy the global fund. With funds ready in your account, it’s time to buy your chosen fund. The great thing about global funds is that you get exposure to a whole basket of stocks in one transaction. This can save you plenty of money if your brokerage charges you a commission for buying shares.
Best global equity index funds and ETFs
Most global funds should be tracking a similar benchmark index. The most common two are the MSCI index and the FTSE All-World index. Depending on your investing platform it could make more sense to use either an index fund or an exchange-traded fund.
Some platforms will only let you access ETFs, and with other platforms it may be cheaper to invest in funds rather than ETFs, for example.
Best global index funds
Here are some of the largest and most popular global equity index funds available to UK investors:
HSBC FTSE All World Index
Vanguard FTSE Global All Cap Index
Fidelity Index World Fund
Legal & General Global Equity Index Fund
Vanguard LifeStrategy 100% Equity Fund
Best global ETFs
Here are some of the largest and most popular global equity ETFs available to UK investors:
There’s no exact formula for picking the best global equity fund to use. This is largely because you still have plenty of options when it comes to narrowing down your choices.
For example, you may want to include or exclude emerging markets. Or, you may want to focus on small cap or large cap stocks. Perhaps you want a global fund that uses an ESG filter. The point is, global funds can still come in all shapes and sizes.
Another key consideration is cost. Each fund or ETF will have an ongoing cost displayed as a percentage, and these can vary across providers – even if the funds are essentially the same. So, you still need to carefully consider how you want to invest and what sort of global strategy you want to explore with your portfolio.
Why would investors use a global fund?
The key reasons for using a global equity fund usually come down to:
Diversification. Spread your money across hundreds or thousands of companies.
Efficiency. You don’t need to worry about managing a global stock portfolio, everything is automatic.
Cost. One investment can reduce your commissions, but even if you don’t pay a commission, these passive funds usually have relatively low ongoing fees.
Simplicity. You only need to make a single investment each time you want to buy or sell more global stocks.
Availability. Most investing platforms should stock (excuse the pun) at least one or a handful of global funds and ETFs.
Long-term potential. Investing all over the world can increase your ability to generate returns from different regions.
Cost of investing in global funds
The key costs to consider if you’re thinking about investing in global equity funds would be:
The ongoing funds charges.
Platform fees for holding funds, sometimes this is free.
Commissions for buying or selling funds and ETFs on your platform (some are commission-free).
Currency conversions if you’re buying ETFs or funds priced in euros or US dollars, for example.
Risks of investing in a global fund
Here are some of the key drawbacks and risks to think about if you want to invest in a global fund:
Market risk. Since these funds invest in equities (stocks and shares), they can be affected by global economic downturns, market corrections, recessions, or sector-wide slumps. If global markets fall, so will your investment.
Currency risk. Global funds often invest in assets denominated in foreign currencies. This means that fluctuations in exchange rates can affect your returns, positively or negatively.
Concentration. Some indices (like the MSCI World) have heavy exposure to the US stock market, and therefore a heavy concentration into tech giants like the “Magnificent Seven“. This can lead to a lack of true diversification and increased exposure to a few large companies.
Emerging market volatility. Funds that include emerging markets (like FTSE All-World) may face political instability, lower regulation, and higher volatility, which can impact performance.
Inflation and interest rates. I’m sure you’re probably sick of hearing about interest rates and global geopolitics, but worldwide economic factors, like rising interest rates or inflation, can affect market sentiment and the valuation of equities from here to Timbuktu.
Tracking error. Index funds aim to follow an index closely, but they may not match it perfectly. This deviation, known as tracking error, can arise from fund fees, taxes, or rebalancing delays.
We analysed all popular share dealing platforms in the UK using 35 data points and combined this with our expert insight from using the apps. The platforms we've selected as best for each category offer stand-out features or a unique combination of elements for a specific aspect of investing. If we show a "Promoted for" pick, it's been chosen from among our partners and is based on factors that include special features or offers, and the commission we receive. Keep in mind that our picks may not always be the best for you – it's important to compare for yourself. More details in our full methodology.
Our expert says: What’s the difference between the MSCI index and the FTSE All-World index?
"Both the MSCI and FTSE indices offer global exposure, but there are some key differences. MSCI World focuses on developed markets, excluding emerging markets like China or India, for example.
The FTSE All-World includes both developed and emerging markets, giving it broader coverage so funds mirroring this benchmark sometimes include more stocks. It’s always worth just checking the fund documents to ensure you know what you’re investing in."
Emerging markets can add costs and unpredictability
Bottom line
Global index funds and ETFs are a smart way to diversify your portfolio with minimal fuss. Whether you’re a beginner investor or a seasoned pro, these funds could find a place in your portfolio.
Global equity funds offer a hands-off, passive route to tapping into worldwide growth. Just make sure to pick the right investing platform and compare fees and funds before you dive into international waters.
Frequently asked questions
Global index funds offer broader diversification by including companies from multiple regions, which can reduce the risk associated with economic slumps in one country or area.
However, country or region-specific funds may outperform at times if that specific region is booming, just take a look at the US and the S&P 500 in recent years. It’s about balancing global breadth with more targeted investments.
Yes. Like all investments in the stock market, global index funds carry risk. Market downturns, currency fluctuations, or geopolitical events can all affect returns. However, these funds are typically designed for long-term investing, where the goal is to ride out short-term volatility.
Accumulation funds reinvest any dividends you earn back into the fund automatically, ideal if you’re focused on growing your portfolio. Distribution funds, on the other hand, pay out dividends to you as cash, which may be preferable if you want regular income.
If your global index fund is held in a tax-efficient account like a stocks and shares ISA or a self-invested personal pension (SIPP), your returns will be mostly tax-free. Outside of these wrappers, you may owe capital gains tax (CGT) or income tax depending on how much you earn.
One of the perks of global index investing is that it’s mostly hands-off. Usually, a helpful strategy is to dollar-cost-average each month when you get paid (some platforms even offer reduced or no commissions for investing regularly this way).
You can check your portfolio as often as you like, but if you’re investing for the long-term, try to limit this because it only invites unnecessary stress and worry into your life. Some investors check in quarterly or annually. If you’re contributing regularly and using a diversified fund, frequent rebalancing is rarely necessary.
George is a deputy editor at Finder. He has previously written for The Motley Fool UK, Nasdaq, Freetrade, Investing in the Web, MoneyMagpie, Online Mortgage Advisor, Wealth, and Compare Forex Brokers.
He's focused on making personal finance and investing engaging for everyone. To do this he draws from previous work and his Level 4 Diploma for Financial Advisers (DipFA), sharing what he’s learnt. When he’s not geeking out about money, you’ll find him playing sports and staying active. See full bio
George's expertise
George has written 248 Finder guides across topics including:
In a nutshell, an index fund is a low-cost portfolio of shares and other assets that tracks a financial or stock market index. They’re a popular investment choice in the UK and worldwide.
The FTSE 100 is the UK’s most famous stock index. Here’s how you can invest in it today.
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