Vanguard filed for an All-World ETF, iShares already has one with ticker ACWI and Northern Trust has one in the hopper. The underlying indexes have US, developed foreign and emerging foreign.

This is probably the purest index exposure one could have. Like any other index fund of course this type of product will have flaws and by blending together everything a lot of the attributes from the components will be blended away. Be that as it may it is still indexing at its purest–IMO anyway.

One thing to note is that foreign lead domestic in the 70s, 80s and this decade and domestic lead in the 90’s. If I had to make a bet on either the US or the rest of the field I would take the field but there will be periods that US outperforms and so an All-World product will obviously lag which is important to remember.

This brings up the idea of how lazy can a portfolio be and still add a little value. If I really wanted to buy the world and just keep it forever (assumes proper asset allocation) I think I would add in some sort of absolute return fund to smooth out the ride. In this little exercise I am assuming the bigger chunk goes into the all-world and a small portion to absolute.

The goal would be to smooth out the bear markets a little and if you can average 8% from the all-world and 5% from the absolute and you save properly (which is always the most important) you can probably do ok.

This is obviously not my preference nor would it be my 5th choice but it makes for an interesting discussion….what say you?

Last 5 posts by Roger Nusbaum

• The Big Picture for the Week of November 15, 2009 - November 14th, 2009
• Process Drilldown - October 23rd, 2009
• Sunday Morning Coffee 10-18-09 - October 18th, 2009
• A Little Followup From This Morning - October 8th, 2009
• Wednesday Roundup - October 7th, 2009