SWRD vs IWDA: which should you choose?

What is SWRD?

SWRD is a ticker of SPDR MSCI World (IE00BFY0GT14), a global ETF that tracks the MSCI World index. The ETF provides exposure to large- and mid-cap stocks from 23 developed countries. It offers broad diversification across multiple sectors and regions, allowing you to gain access to global equities in countries like the US, Germany and Japan. The fund is managed by SPDR, which is part of State Street Global Advisors, one of the largest asset managers in the world managing trillions in assets globally.

The returns of SWRD have also been excellent throughout the years. Since 1979, the MSCI World index has delivered an average return of 10.3%! If you had invested €10,000 in 1979, you would have €865,000 today.

What is IWDA?

IWDA is a ticker of the iShares Core MSCI World ETF (IE00B4L5Y983). Like SWRD, IWDA also tracks the MSCI World index. But it's offered by iShares, a brand of BlackRock. Just like State Street, BlackRock is an immense asset manager, with other $2 trillion invested.

Because it tracks the same index, the returns of IWDA are very similar to SWRD:

SWRD vs IWDA

As they back track the same index, there aren't too many consequential differences between both ETFs. The major difference is that SWRD is slightly cheaper with a total expense ratio of 0.12% compared to IWDA's 0.20%.

But that's not the complete picture. We compared them on a range of criteria:

• performance
• diversification
• distribution of dividends
• cost
• tax-efficiency
• broker fees
• replication
• suited for monthly investing
• size
• sustainability
• governance of the fund provider

Before diving into the details, let's look at the comparison:

Performance: tie

The graph above shows that the historical performance of SWRD and IWDA has been close to equal, since they both track the MSCI World index. Since 1980, the average yearly return has been around 10.2%. This is considerable, especially compared to a savings account!

The performance of SWRD slightly better because it has a lower cost. SWRD costs 0.12% per year, whereas iShares charges 0.20% fo IWDA.

Diversification: tie

SWRD and IWDA have similar diversification because they track the same MSCI World index. This index covers 1,500 companies across 23 developed markets, and is very diversified. The only criticism could be that it doesn't invest in emerging markets like Brasil or China. So both SWRD and IWDA can be completed with an emerging markets ETF inside a diversified portfolio.

Distribution of dividends: tie

Both SWRD and IWDA are accumulating ETFs, meaning they reinvest the dividends. This bypasses the dividend tax for Belgian investors.

Cost: SWRD wins

The cost of an ETF is measured by the total expense ratio (TER), which is the yearly fee charged by the fund provider for managing the fund. It is expressed as a percentage of the invested amount. SWRD has a lower TER at 0.12%, making it cheaper than IWDA, which has a TER of 0.20%. This lower cost can be a deciding factor for long-term investors looking to minimize fees.

Tax-efficiency: tie

Taxes are an important consideration when choosing an ETF. Both SWRD and IWDA fulfil some fiscal best practices, particularly for Belgians:

• ✅ They're both accumulating, meaning that neither requires you to pay dividend taxes. Instead, dividends are automatically reinvested in the fund.
• ✅ They're both domiciled in Ireland. We prefer funds domiciled in Ireland or Luxembourg because they're slightly more optimised fiscally, as these two countries have special tax treaties with the US.
• ✅ They both invest only in stocks. So no Reynders tax has to be paid, which is the Belgian tax on capital gains for bonds. Fortunately, in Belgium there's no tax on capital gains for stocks!

Broker fees: IWDA wins

Many Belgian and foreign brokers have cheaper fees for ETFs traded on Euronext exchanges. Fortunately, both IWDA and SWRD trade on Euronext Amsterdam. But IWDA has a slight advantage as it's part of DEGIRO's core selection, making it very cheap through DEGIRO.

Replication: tie

Both SWRD and IWDA are physically replicated ETFs, meaning the fund providers hold the actual stocks in the respective indexes. This method is generally considered safer than synthetic replication, where the index's performance is mimicked through derivatives or other complicated financial instruments.

Suited for monthly investing: SWRD wins

Investing part of your income every month is the best strategy for most people. It simplifies saving and budgeting because your investments follow the rhythm of your income. It also removes the temptation of timing the market. Market timing is incredibly difficult and most often leads to a worse outcome. On top that, it can bring negative emotions such as stress or regret. In contrast, monthly investing brings peace of mind.

At time of writing, SWRD trades around €36 whereas IWDA trades around €100. Most brokers do not offer fractional shares, meaning you have to buy whole units of a share. The lower stock price makes SWRD easier for monthly investing, as you will have less cash on your brokerage account not working for you.

Size: tie

Over €70 billion is invested in IWDA, and SWRD has €7 billion invested. That's a large difference. But both funds are sufficiently large that the risk of either shutting down by their provider is minimal especially as they are significant providers to the market.

Sustainability: both lose

Neither SWRD or IWDA exclude companies based on sustainability criteria. Fossil fuel industry, weapon industry, companies that do not meet certain standards for labour rights... it's all in there.

Governance of the fund provider: tie

Both SPDR (which manages SWRD) and BlackRock (which manages IWDA) operate under a traditional asset management structure. Neither company has a special ownership model where investors in their funds also have ownership in the company itself.

Instead, both are owned by shareholders. As a result, their governance and management structures are very similar, meaning there is no significant difference between the two in terms of governance for European investors.

Verdict: slight win for SWRD

SWRD edges ahead with its lower expense ratio (0.12% vs 0.20%), making it the more cost-effective choice for long-term investors. It’s also better suited for monthly investing due to its lower share price. However, IWDA has the advantage of lower broker fees in some cases, especially for those using certain low-cost platforms like DEGIRO.

Both funds are excellent for developed markets, but SWRD wins in terms of overall cost and flexibility for monthly contributions.

Curvo: more diversification with less effort

The difficulties of managing your own portfolio of ETFs

Choosing a single ETF like SWRD or IWDA is not the entire story when investing your life savings. Stocks are a risky asset class, and not everyone can psychologically handle their fluctuations. To bring success over the long term, you need to build a portfolio of ETFs that is suited to your goals, your appetite for risk and your capacity for taking risks. But this is not an easy task as there are thousands of ETFs to choose from. Furthermore, this portfolio of funds needs to be kept in balance over time, and adapt to changes in your life situation. When managing your own portfolio, these responsibilities fall onto you.

We saw most of our friends not investing because of these difficulties. Or they tried but stopped after a while because they didn't trust themselves enough to make the right financial decisions for their future. Yet, we think investing in ETFs or index funds is a powerful tool to improve our financial well-being. That's why we built Curvo: to take care of all the complexities of good investing so you don't have to worry.

Index investing without hassle

Curvo addresses the challenges of managing your own investments through a broker:

• Portfolio of index funds built for you. You are asked a few questions at the start to learn about you and your goals. Based on your answers, you are matched with the best portfolio of index funds for you. This can be the Growth portfolio, but also any of the other portfolios. The point is that you don't need to decide which ETFs to buy.
• Diversification. We firmly believe in the power of diversification to lower risk and seek investment returns. Each portfolio consists of over 7,500 companies, diversified across sectors and countries.
• Invest sustainably. Your investments focus on one guiding principle: don’t invest in companies that are considered destructive to the planet. Sectors like non-renewable energy, vice products, weapons and controversial companies are all excluded.
• Rebalancing done for you. No need to worry about keeping your portfolio in balance, this is handled for you.
• Fractional shares. All your money is invested. There’s no cash left sitting on the side.
• Automated monthly investing. Set up your monthly plan and get peace of mind that your money is working for you.
• Start from €50. No need for a large lump sum to get started.
• Project your savings into the future. Through Curvo you can see how much your portfolio is expected to be worth in the future. You can answer questions like “how will increasing my monthly contribution by €50, €100 or €200 affect my long-term savings?” to give a concrete idea for the “future you”.
• Withdraw anytime. There’s no long-term contract or exit fees if you wish to stop investing.

Learn further how it compares to investing yourself through a broker.

Conclusion

Choosing between SWRD and IWDA ultimately depends on your specific investment goals and circumstances. While both offer excellent exposure to developed markets, SWRD edges ahead with its lower expense ratio and better suitability for monthly investing. However, IWDA might be preferable if you're using certain low-cost brokers.

Remember, successful investing isn't just about picking the right ETF—it's about building a diversified portfolio that aligns with your risk tolerance and financial objectives. If you're finding it challenging to navigate these decisions on your own, consider exploring Curvo. Our app simplifies the investment process by creating a tailored portfolio based on your unique needs, handling rebalancing, and offering features like fractional shares and automated monthly investing. Why not take the hassle out of investing and focus on what really matters—your financial future?