US Stocks vs. The World

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Interpretation

What is the proportion of the US stock market to the global stock market? The ratio in the chart above divides the MSCI USA by the MSCI World index. When it rises, US stocks outperform the rest of the world - and when it falls, US stocks underperform. By definition, this ratio cannot grow forever. At some point, US stocks would simply make up 100% of global stocks. The chart shows that, since the financial crisis of 2008, US stocks have been outperforming the rest of the world.

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MSCI USA vs. MSCI World Index

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Interpretation

The MSCI USA Index is designed to measure the performance of the large and mid cap segments of the US market. It covers approximately 85% of the free float-adjusted market capitalization in the US. The MSCI World Index includes a collection of stocks of all the developed markets in the world, as defined by MSCI.

MSCI USA to ACWI Ratio

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Interpretation

The ratio in the chart above divides the MSCI USA by the MSCI All Country World Index (ACWI) index. The MSCI ACWI is a better measure for global equities because it also includes emerging markets. It consists of the MSCI World Index and the MSCI Emerging Markets Index. However, as of May 2021, emerging markets stocks are only weighted with 13.11%, whereas stocks from developed markets account for 86.89%. The USA make up 57.84%, followed by Japan (6.0%). The index is often used as a benchmark for the performance of global equity funds. Unfortunately, it only dates back to the year 1988.

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S&P 500 vs. MSCI ACWI Index

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