Relevant Benchmark for World Stock Fund

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aristotle'sfootprint
Posts: 4
Joined: Sat Jul 06, 2019 3:05 pm

Relevant Benchmark for World Stock Fund

Post by aristotle'sfootprint » Thu Jul 11, 2019 9:39 am

Given the limited international equity options in my 401k, my core holding is American Funds Capital World Growth and Income Fund (RWIGX). I'm wondering about the relevant benchmark for the fund. On Morningstar's performance page, the benchmark used is MSCI ACWI Ex USA, which seems odd given that it's a world stock (not ex-US) fund. Does anyone have any insight into why this is? I checked, and Morningstar also uses MSCI ACWI Ex USA as the benchmark for other world stock funds (e.g., Vanguard Total World Stock), so it's not an error. What am I missing?

Thanks in advance!

asif408
Posts: 1698
Joined: Sun Mar 02, 2014 8:34 am
Location: Florida

Re: Relevant Benchmark for World Stock Fund

Post by asif408 » Thu Jul 11, 2019 9:48 am

According to RWIGX's information page (https://www.americanfunds.com/individua ... fund/rwigx), it is benchmarked against the MSCI ACWI. It does appear to have slightly different allocations by region compared to the ACWI (underweights US & Japan, overweights Europe and EM, etc).

I think for simplicity sake, you can just benchmark against the performance of the ACWI ETF, which it has tracked closely the last 10 years: http://quotes.morningstar.com/chart/fun ... A%5B%5D%7D. Any performance differences will be likely due to the slight differences in regional allocations (e.g., it will do better if Europe and EM outperform, worse if they underperform, etc). I don't know why Morningstar pulls up the ex-US benchmark, but if you change the benchmark to world stock you'll see it tracks the world stock benchmark closely.

Topic Author
aristotle'sfootprint
Posts: 4
Joined: Sat Jul 06, 2019 3:05 pm

Re: Relevant Benchmark for World Stock Fund

Post by aristotle'sfootprint » Thu Jul 11, 2019 12:37 pm

Thanks asif408. It's just odd that Morningstar doesn't use MSCI ACWI as the default benchmark for world stock funds, and I wanted to make sure there's not something I'm missing. Right, the fund sure has hugged the benchmark.

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