VWCE vs IWDA: Which should you choose? Comparison in 2025
Investing in ETFs continues to be an increasingly popular choice among investors due to their simplicity, diversification, and low costs. Among the most sought-after options in the global market, two names stand out: VWCE (Vanguard FTSE All-World UCITS ETF) and IWDA (iShares Core MSCI World UCITS ETF).
Both offer exposure to global equities, but they differ in strategies, coverage, and characteristics that can impact your financial goals.
In this article, we will explore the key differences between these two ETFs, their costs, allocations, and main features, helping you determine which one is the best choice for your long-term investment strategy.
Overview
What are VWCE and IWDA?
IWDA (full name iShares MSCI World UCITS ETF) replicates the MSCI World Index, meaning it invests in mid- and large-cap companies across 23 developed countries, including the U.S., Europe, and Japan. It’s widely used by investors looking for global equity diversification with low management fees.
VWCE (full name Vanguard FTSE All-World UCITS ETF) replicates the FTSE All-World Index, focusing on mid- and large-cap companies in both developed and emerging markets (e.g., Thailand, Mexico, and Brazil). It provides broader global coverage compared to IWDA.
Geographic allocation
VWCE’s largest allocation is the United States at around ~65% of its portfolio. Japan follows at ~6%, with other notable regions including the UK, China, and Canada.
Below you can find the geographic allocation of VWCE, including the 10 biggest countries (according to the factsheet):
IWDA allocates ~74% of its portfolio to the United States, with Japan as the second-largest country at ~5%. Other important allocations include the UK and Canada.
Below you can find the geographic allocation of IWDA, including the 10 biggest countries (according to the factsheet):
Sector allocation
Both VWCE and IWDA are widely diversified across similar sectors, with the Information Technology sector being the largest in both ETFs. Other major sectors, such as Financials, Consumer Discretionary, and Industrials, carry comparable weights in each fund.
Below you can find sector allocation details for both VWCE and IWDA:
Portfolio structure
VWCE holds about 3,700 stocks, covering both developed and emerging markets for broader exposure. IWDA holds about 1,400 stocks, focusing exclusively on developed markets.
Performance
Since July 2019 (when VWCE was launched), both ETFs have shown very similar performance, with IWDA holding a slight edge in that time frame:
Looking at simulated performance data going back to 2004, IWDA generally maintains a small advantage, but the difference is almost negligible. The high correlation between IWDA and VWCE is due to the overlap in the companies and the weight those companies carry in each index.
Total Expense Ratio (TER)
TER (Total Expense Ratio) indicates the total operating costs of a fund, including management, administrative, and other expenses. It’s expressed as an annual percentage, showing how much investors pay on average for the fund. Lower TERs generally benefit investors.
- IWDA has an annual TER of 0.20%.
- VWCE has an annual TER of 0.22%.
This difference is largely due to the different structures and complexities of each fund’s investments.
Investment universe
IWDA: Invests exclusively in developed markets, where transaction and administrative costs are generally lower due to higher market efficiency and economies of scale.
VWCE: Includes both developed and emerging markets. Emerging markets often entail higher costs because of lower liquidity, local regulations, and operational challenges.
Currency diversity
IWDA is exposed to a smaller range of currencies (primarily USD, EUR, JPY), which keeps forex-related costs lower.
VWCE engages with a wider array of currencies, including those of emerging markets, which may involve higher transaction fees and greater currency volatility.
Risk factos
Although both VWCE and IWDA offer diversified investment strategies, it’s important to understand the associated risks.
- Market Risk and Global Exposure: Both ETFs invest solely in stocks, which means they’re more susceptible to market volatility. If global stock markets fall, your investment will likely incur losses. To mitigate this risk, consider diversifying into other asset classes (e.g., bonds).
- Currency Risk: Even though VWCE and IWDA trade in EUR on European exchanges, the underlying assets are mostly denominated in USD. As a result, USD/EUR exchange rate fluctuations can affect your returns. A weaker U.S. dollar could reduce your gains when converting back to EUR.
- Limited Allocation Flexibility: By investing in VWCE or IWDA, you’re essentially “locked in” to the respective indexes. If you want more control over specific regions or sectors, these ETFs might limit your flexibility.
Brokers to invest in VWCE and IWDA
Below are some of the top ETF brokers in Europe:
Data as of January 27, 2025.
In addition to trading commissions, you may encounter other fees such as custody fees. DEGIRO is the only broker that charges an annual connectivity fee of €2.50 per exchange.
Which should you choose?
Deciding between VWCE and IWDA depends on your priorities, financial objectives, and risk tolerance. Both ETFs offer an efficient and diversified way to invest in global equities, but they have distinct features that can influence your choice.
IWDA is an excellent option if you prefer simplicity and exclusive focus on developed markets, featuring a slightly lower TER and reduced exposure to emerging-market and currency risks.
VWCE offers broader diversification by including emerging markets. This can be advantageous if you want exposure to high-growth regions, even if the costs are slightly higher.
Regardless of which ETF you choose, both are strong tools for a passive, long-term investment strategy. Before you invest, consider factors like your overall asset allocation, time horizon, and broker-related costs.
Happy investing!
