Best global ETFs to watch

Exchange Traded Funds (ETFs) is an investment fund that trades on stock exchange just like individual stocks, while holding a basket of underlying assets such as stocks, bonds, commodities or a combination thereof. They have revolutionised investing by providing accessible, cost-effective exposure to diversified portfolios across hundreds of different themes. 

How ETFs Work

ETFs are designed to track the performance of a specific index, sector, commodity or investment strategy. Unlike mutual funds, which are priced once a day at market close, ETFs trade throughout the day at market prices. This structure combines the diversification benefits of mutual funds with the flexibility and liquidity of individual stocks.

Key features include:

• Passive management — many ETFs passively track an index, eliminating the need for active fund management and reducing costs
• Transparency — holdings are typically disclosed daily, allowing investors to see exactly what they own
• Tax efficiency — ETFs generally generate fewer taxable events than mutual funds due to their creation and redemption process
• Fractional ownership — investors can gain exposure to hundreds or thousands of securities through a single purchase 

ETF diversification benefits

Diversification is often viewed as key to sound risk management. By spreading investments across different asset classes, geographic regions and sectors, investors can significantly reduce their portfolio risk without necessarily sacrificing returns.

The classic investment principle of ‘not putting all your eggs in one basket’ is more relevant than ever. Consider Japan's stock market, which peaked in 1989 and still hasn't fully recovered decades later. Investors who concentrated their portfolios in Japanese equities experienced devastating long-term losses. 

Similarly, UK investors heavily weighted toward domestic oil, commodity, and financial companies faced severe challenges during the 2008 Global Financial Crisis. It remains to be seen whether those invested fully in US tech equities will suffer a similar fate, or not.

Key types of diversification include:

• Geographic diversification — currently, US stocks represent more than 60% of global market capitalisation, but this hasn't always been the case. In the 1980s, Japan dominated global markets. In recent decades, the US tech giants have led the charge. And future market leaders may emerge from China, India or other developing economies
• Sector diversification — no single sector consistently outperforms. Technology has dominated in the 2010s and early 2020s, but energy, financials and healthcare have had their periods of leadership. ETFs provide easy access to multiple sectors simultaneously
• The Rule of 30 — traditional diversification wisdom suggests holding at least 30 individual positions to adequately diversify away company-specific risk. ETFs make this easy by providing exposure to hundreds or even thousands of securities in a single investment

Top Global ETFs to watch

There are thousands of ETFs to consider, but the selection below have been chosen for their significant popularity among investors and constant media coverage. They represent a good starting point for your own research.

Amundi Prime All Country World UCITS ETF

The Amundi Prime All Country World UCITS ETF (GBP) has become a popular choice for investors seeking global diversification due to its low cost. With an expense ratio of just 0.07%, it’s one of the cheapest global ETFs on the market. The fund tracks the Solactive GBS Global Markets Large & Mid Cap index, covering both developed and emerging markets, and has accumulated over $3.5 billion in assets under management.

This ETF offers broad global exposure, making it particularly attractive for long-term buy-and-hold investors. The combination of comprehensive market coverage and rock bottom fees positions it as an excellent core holding for portfolios of any size.

Vanguard FTSE All-World UCITS ETF

The Vanguard FTSE All-World UCITS remains one of the most popular and comprehensive global ETFs available to investors today. With an expense ratio of 0.19%, it provides exposure to nearly 4,000 companies across 50 countries, offering exceptional diversification with a well-established track record and strong brand reputation. Having accumulated over $29 billion in assets under management, it stands as one of the most trusted global ETFs.

The broad diversification inherent in this ETF offers protection against single-country downturns while providing exposure to global growth opportunities, including AI-driven US tech stocks and emerging market potential. However, investors should be aware of certain considerations: the US concentration bias and technology sector dominance can increase volatility, and the fund has historically underperformed the S&P 500 over longer periods. 

iShares Core MSCI World UCITS ETF

The iShares Core MSCI World UCITS ETF focuses exclusively on developed markets, providing exposure to roughly 1,500 companies within 23 developed countries, covering 85% of the listed equities in each country. With an expense ratio of 0.20% and nearly $130 million in assets under management, this fund has established itself as a cornerstone holding for many institutional and retail portfolios. 

This ETF excludes emerging markets entirely, which reduces overall volatility and focuses investors exclusively on stable, established economies. This makes it ideal for those seeking developed-market exposure without the additional risks associated with emerging-market investments. 

iShares Core S&P 500 UCITS ETF

While technically US-focused rather than global, the iShares Core S&P 500 UCITS ETF deserves a mention due to its popularity and the inherently global nature of its constituent companies. This ETF tracks the 500 largest US companies by market capitalization with an expense ratio of just 0.03%, making it one of the most cost-effective ways to gain exposure to American blue-chip companies. 

The index has delivered average annual returns of 10.15% since 1957, establishing one of the strongest long-term track records in equity investing. Warren Buffett famously recommends this as a core holding for retirement savings.

Many S&P 500 companies generate significant international revenue, providing investors with indirect global exposure. For example, constituents including Apple, Microsoft and Coca-Cola derive substantial portions of their revenues from overseas markets, creating a degree of international diversification. 

Vanguard Total International Stock ETF 

For investors seeking to complement their US holdings with international exposure, the Vanguard Total Stock Market ETF stands out as a Gold-rated Morningstar pick. With an expense ratio of just 0.05% and holdings of over 8,000 international stocks from both developed and emerging markets, it offers exceptional breadth of diversification with no single company exceeding 2% of the portfolio weight. 

For investors who are overweight US stocks or who simply want to ensure their portfolio isn't overly dependent on American market performance, this ETF provides comprehensive ex-US exposure in a single, highly liquid, and cost-effective package. It serves as an ideal complement to US-focused holdings, creating a more balanced global portfolio.

Invesco Physical Gold ETC

Gold remains a critical portfolio diversifier and inflation hedge, and the Invesco Physical Gold GBP Hedged ETC offers one of the most direct ways to gain gold exposure. The structure is backed 1:1 by physical gold bullion held securely in JP Morgan vaults, ensuring that investors have exposure to actual physical metal rather than derivatives or futures contracts. The current context makes gold particularly relevant: gold prices have surged to over $4,000/oz.

The rationale for holding gold extends beyond recent price appreciation. Gold provides protection during periods of market stress, hedges against currency debasement and inflation, and historically exhibits low correlation with equities, making it an effective portfolio stabiliser. Central banks continue to accumulate gold at near-record levels, supporting long-term demand and suggesting institutional confidence in gold's role as a monetary asset. 

Vanguard FTSE Emerging Markets ETF

For growth-oriented investors willing to accept higher risk, emerging markets may offer compelling opportunities for potentially superior long-term returns. The Vanguard FTSE Emerging Markets ETF provides this exposure with an expense ratio of 0.08%, investing in economies including China, Brazil, Taiwan, India and other developing nations. 

Top holdings include companies like Taiwan Semiconductor, Tencent and Alibaba, representing some of the most innovative and rapidly growing companies in the world. However, investors must be prepared for high volatility, political instability, and currency risks that come with emerging market investing.

Despite a decade of underperformance relative to developed markets, emerging markets may be poised for a resurgence as global supply chains diversify away from concentrated production centers and middle-class populations expand dramatically in India and Southeast Asia. 

iShares UK Dividend UCITS ETF

For income-focused UK investors, the iShares UK Dividend UCITS ETF offers regular cash flow through a strategy that invests in the top 50 FTSE 350 companies with the highest dividend yields. Top holdings include well-established names like HSBC, Rio Tinto and Legal & General, all of which have histories of returning cash to shareholders through dividends. The fund's focus on income generation through reliable dividend payers makes it particularly attractive for retirees or others seeking regular portfolio income rather than pure capital appreciation.

However, investors should remain aware that dividends are never guaranteed, and cyclical companies in particular can cut payouts during economic downturns. The dividend-focused strategy can also lead to concentration in certain sectors like financials, energy, and utilities, which may underperform during growth-oriented market phases. 

Pros and cons of ETF investing

Like all investing strategies, ETF investing has its advantages and drawbacks:

Pros of ETF investing

• Cost efficiency — ETFs typically offer lower expense ratios than actively managed mutual funds. Many global ETFs charge between 0.03% and 0.20% annually, compared to 1-2% for traditional mutual funds. Over decades, these cost savings compound dramatically
• Liquidity and flexibility — unlike mutual funds that trade once a day, ETFs can be bought and sold throughout trading hours at market prices. This provides greater control over entry and exit points
• Diversification — a single global ETF can provide exposure to thousands of companies across dozens of countries, instantly creating a well-diversified portfolio
• Tax advantages — the ETF structure minimises taxable distributions through in-kind redemptions, making them more tax efficient than mutual funds for taxable accounts
• Transparency — daily disclosure of holdings allows investors to know exactly what they own, unlike mutual funds which typically disclose holdings quarterly
• Accessibility — low share prices and the ability to buy single shares make ETFs accessible to investors with limited capital

Cons of ETF investing

• Trading costs — while expense ratios are low, frequent trading may incur brokerage commissions and bid-ask spreads that can erode returns
• Tracking error — ETFs may not perfectly replicate their underlying index due to fees, trading costs and replication methodology, resulting in slight performance differences
• Overtrading temptation — the ease of trading ETFs can lead to impulsive decisions and market timing attempts, which can harm long-term returns
• Concentration risk — some ETFs, particularly those tracking market-cap-weighted indices, can become heavily concentrated in a few large companies or sectors. For example, the S&P 500 is heavily weighted toward mega-cap technology stocks
• Diversification limitations — during market crises, correlations between asset classes often increase, reducing the protective benefits of diversification. Research shows that diversification benefits can be limited during periods of severe market stress
• Lack of active management — while low costs are attractive, passive ETFs cannot adapt to changing market conditions or avoid overvalued securities

Building Your ETF Portfolio

The following is not financial advice. Everybody’s personal situation is different and you may wish to seek professional advice. However, as a broad indication:

Many recommend a core-satellite strategy where 70-80% of your portfolio consists of broad market index ETFs (the core), with the remaining 20-30% in specialised ETFs targeting specific themes, sectors or strategies (the satellites). 

Your core holdings might include the Vanguard FTSE All-World or Amundi Prime All Country World for comprehensive global exposure, while your satellite holdings might include a gold ETF for inflation protection, an emerging market ETF for growth potential, a dividend ETF for income or sector-specific ETFs for tactical positions.

Your asset allocation should reflect both your time horizon and comfort with volatility. Aggressive portfolios suited for young investors with 30+ year horizons might consist of 90-100% global equity ETFs, with an optional 5-10% allocation to emerging markets for additional growth potential. 

Moderate portfolios appropriate for mid-career investors with 15-25 year horizons typically include 70-80% global equity ETFs, 10-20% bond ETFs and 5-10% in gold or alternative assets. Conservative portfolios designed for those near or in retirement with 5-15 year horizons generally hold 40-60% global equity ETFs, 30-40% bond ETFs, and 10-20% in gold, dividend stocks or defensive assets.

Common mistakes to avoid

Even experienced investors make mistakes. These are some of the common ones:

• Over-diversification — holding too many overlapping ETFs dilutes returns without additional diversification benefits
• Chasing performance — last year's outperformers often become this year's losers
• Ignoring costs — even small fee differences compound significantly over decades
• Neglecting rebalancing — portfolios drift over time and should be rebalanced periodically 
• Panic selling — market downturns are temporary; selling during crashes locks in losses
• Home country bias — overweighting domestic stocks increases concentration risk

Global ETFs summed up

• ETFs offer cost-effective diversification with instant exposure to thousands of securities and expense ratios as low as 0.03-0.20%, significantly cheaper than traditional mutual funds 
• Geographic diversification reduces concentration risk since market leadership shifts over time. Spreading investments globally protects against single-country downturns
• Core-satellite strategy balances stability and opportunity by allocating 70-80% to broad market index ETFs and 20-30% to specialised ETFs targeting themes like emerging markets, gold or dividends
• Avoid common pitfalls that erode returns by not chasing last year's winners, overtrading, panic selling during downturns, or over-diversifying with overlapping funds