Vanguard filed for an All-World ETF, iShares already has one (ACWI) and Northern Trust (NTRS) has one in the hopper. The underlying indexes have U.S., 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 led domestic in the '70s, '80s and this decade, and domestic led in the '90s. If I had to make a bet on either the U.S. or the rest of the field I would take the field, but there will be periods that U.S. 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?
More: Core Building Blocks: Large, Mid & Small Cap US ETFs, and Broad International ETFs
