State Street Global Advisors (SSGA) has launched a new ETF – the SPDR MSCI World UCITS ETF – in Europe, providing exposure to a globally diversified basket of developed market stocks.

Antoine Lesné, Head of EMEA Strategy & Research for SPDR ETF.

The fund is linked to the well-known MSCI World Index which covers large- and mid-cap representation across 23 developed market countries including the US.

With over 1,600 constituents, the index represents roughly 85% of the entire developed market equity universe.

Stocks are weighted by float-adjusted market capitalization within the index.

“The MSCI World Index is often considered as the bedrock of a large international portfolio,” said Antoine Lesné, Head of EMEA Strategy & Research for SPDR ETF. “Many investors use it as a core building block around which to build satellite tilts with sector or regional exposures, or blend it with global or regional bond allocations in a diversified portfolio.”

Lesné continued, “The MSCI World Index’s high level of both country and sector diversification has historically exhibited better risk-adjusted returns compared to other developed market regional indices.”

Almost two-thirds (62.1%) of the total index weight is allocated to stocks listed in the US, while the next largest country exposures are Japan (8.3%), the UK (5.9%), and France (3.9%).

The largest sector exposures are financials (16.3%), information technology (15.4%), health care (12.9%), industrials (11.3%), and consumer discretionary (10.4%).

The ETF is available to trade in euros on Xetra (SPPW GY), Borsa Italiana (SWRD IM), and Euronext Amsterdam (SWRD NA), as well as on London Stock Exchange in US dollars (SWRD LN) and pound sterling (SWLD LN). Income is accumulated within the portfolio.

The fund comes with a total expense ratio (TER) of just 0.12% which makes it the joint-cheapest ETF in Europe tracking the MSCI World Index, alongside the $175 million Lyxor Core MSCI World UCITS ETF (LCWL LN). The largest fund in this space is the $17.0 billion iShares Core MSCI World UCITS ETF (SWDA LN) which comes with a TER of 0.20%.

Lesné added, “As a transparent and physically replicated solution, the SPDR MSCI World UCITS ETF offers investors a very efficient beta exposure, while the attractive pricing means this fund can be used for long-term holdings and a tool for eliminating cash frictions in a portfolio.”

According to SSGA, global equity ETFs represented approximately 30% of total equity ETF inflows in EMEA year to date, gathering more than $2.6bn.