In the first 10 months of 2025, more than US$63 billion went into global equity ETFs. That’s over US$20 billion more than the next most popular category, US equities. It’s also more than double the amount captured by European equities.
The ‘global equity’ category does include funds that invest only in developed economies. However, funds that combine developed and emerging markets could be more compelling for long-term investors.
Diversification is one of the key features of a global equity fund. The idea is quite simple. By spreading your investment out across different regions and industries, you can potentially reduce risk.
You can smooth out the ups and downs and get access to a wider range of opportunities, particularly when compared to investing everything in a handful of different investments that all behave similarly.
The last part of that is important. Diversification can be most effective when you combine investments that are expected to behave differently.
How did we get here?
Past performance may not predict future returns, but it can be useful for perspective. The past 20 years has shown how different equity markets can perform in a variety of conditions. It highlights the importance of having a broad range of investments.
Let’s look at the relative returns of the US, the rest of the developed world, and emerging markets1. We’ll also exclude smaller companies from this basic analysis.
Annual returns from 2006 to 20151
| 2006 | 2007 | 2008 | 2009 | 2010 | 2011 | 2012 | 2013 | 2014 | 2015 | |
| US | 15% | 5% | -38% | 26% | 15% | 1% | 15% | 32% | 13% | 1% |
| Rest of developed | 17% | 0% | -46% | 38% | 15% | -12% | 18% | 21% | -4% | -2% |
| Emerging markets | 33% | 41% | -53% | 83% | 19% | -19% | 18% | -4% | 2% | -15% |
From 2006 to the end of 2015, emerging markets delivered the best annual returns five times. The US came out on top in the other five years. Some of the returns were extraordinary, such as in 2009, when emerging markets rose 83%. However, we can’t forget the previous year, when the Global Financial Crisis dragged equity markets around the world sharply lower.
Annual returns from 2016 to end-November 20251
| 2016 | 2017 | 2018 | 2019 | 2020 | 2021 | 2022 | 2023 | 2024 | 2025* | |
| US | 12% | 22% | -5% | 32% | 21% | 27% | -19% | 27% | 25% | 18% |
| Rest of developed | 3% | 26% | -14% | 23% | 10% | 12% | -15% | 19% | 4% | 30% |
| Emerging markets | 14% | 33% | -13% | 21% | 16% | 0% | -17% | 9% | 13% | 25% |
Conditions and market leadership shifted over the next decade. From January 2016 to the end of November 2025, emerging markets only led the performance table in two years (2016-2017). Although, it should be noted that the 33% return in that second year was noteworthy.
Developed economies outside of the US led the way in 2022, although this was a year when markets across the world were down. Every other year during this decade was dominated by the US equity market. Conditions in the first 11 months of 2025 have been quite different, with strong returns from each of the three segments.
It’s time for the next chapter
So, what happens next? Some predict the end to the period of “US exceptionalism”. This would mean holding more than just US equities could be sensible.
It still makes sense, however, to maintain some exposure to this mammoth market. Europe has been gaining attention from investors looking for an alternative to the US. We’ve also seen China back in the spotlight, particularly its technology companies, which offer exposure to Artificial Intelligence (AI) with cheaper valuations than their US counterparts. Developed markets, particularly outside of the US, have produced some of the best returns so far in 2025, followed by emerging markets.
One way investors can gain global diversification is to invest in each area of the market separately and manually control how much goes where. This do-it-yourself investment option can be expensive and time-consuming, and it would require a certain amount of expertise. For most, it could be easier to invest in one fund that does it all automatically.
The world in one simple ETF
The Invesco FTSE All-World UCITS ETF gives investors instant access to more than 4,000 companies from around 50 developed and emerging markets. More than US$2.5 billion is currently invested in the ETF.
A lot of the monthly flows into the fund are from people using monthly savings plans, which are now widely available.
Monthly investing allows investors to benefit from “pound-cost averaging”, meaning more shares are automatically purchased when prices are lower, and less when prices are higher. This can have the impact of smoothing returns over the long term.
Want to know more?
The Invesco FTSE All-World UCITS ETF offers you simple exposure to the FTSE All-World Index for the lowest cost in the market.
Discover Invesco’s full range of ETFs here.
FAQs on global equity ETFs
- What is a global equity ETF and why are global equity ETFs popular in 2025? A global equity ETF is an exchange-traded fund that invests in companies across multiple regions, including the US, other developed markets, and emerging markets. In 2025, global equity ETFs have become popular because they offer diversification and have attracted over US$63 billion in inflows, capturing more flows than all other ETF categories.
- Why is diversification important in global equity investing? Diversification helps reduce portfolio risk by spreading investments across regions and sectors that behave differently. Global equity ETFs aim to allow investors to smooth returns by combining the performance of the US market, developed ex-US markets, and emerging markets.
- How have emerging markets and developed markets performed over the last 20 years? From 2006–2015, emerging markets led performance in five of ten years, while from 2016–2025, US equities dominated returns. This long-term rotation between market leaders demonstrates why diversified exposure across global markets can be beneficial for investors.
- What is “US exceptionalism” and how does it affect investor decisions? “US exceptionalism” refers to the period where US equities have consistently outperformed other global markets. Some analysts expect this phase to ease, encouraging investors to hold more balanced exposure including Europe, China, and broader Asian markets.
- Why might investors add exposure to Europe, China, or Asian markets in 2026? European equities are attracting investors seeking alternatives to the US. China’s technology sector could offer access to AI at lower valuations, and Asian markets have delivered some of the strongest returns in 2025, making them attractive potential additions to a global portfolio.
- Is it better to build a global portfolio manually or use a global equity ETF? Most investors find it easier, cheaper, and more efficient to use a global equity ETF. Building regional allocations manually can be time-consuming, costly, and requires deep market knowledge, whereas a single ETF can provide instant diversification.
- What does the Invesco FTSE All-World UCITS ETF invest in? The Invesco FTSE All-World UCITS ETF provides exposure to over 4,000 companies across approximately 50 developed and emerging markets, tracking the FTSE All-World Index at one of the lowest costs in the market.
- How do monthly savings plans support long-term investing? Monthly investing allows investors to benefit from pound-cost averaging, which can help smooth the purchase price over time, making it a popular method for accumulating shares in global ETFs.
- What makes the FTSE All-World Index attractive for long-term investors? The FTSE All-World Index includes large and medium sized companies from both developed and emerging markets, offering broad geographic and sector diversification in a single benchmark, which can align well with long-term global investment strategies.
- Are global equity ETFs suitable for long-term investors? Global equity ETFs provide diversified exposure, reduce reliance on a single region, and offer a simple, low-cost way to capture global economic growth. This could make them well-suited for long-term investment horizons.
This content is part of a paid partnership with Invesco. It is for educational purposes only, does not constitute investment advice and may not be suitable for all audiences. Capital at risk. The value of your portfolio with InvestEngine can go down as well as up. You may get back less than you invest. ETF costs also apply. This communication is provided for general information only and should not be construed as advice. If in doubt you may wish to consult a professional adviser for guidance. Tax treatment depends on personal circumstances and is subject to change. Past performance is not a reliable indicator of future returns.
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