MSCI World outperforms DAX in the long term – Diversification beats home market
This article was created with the help of artificial intelligence.
Key Takeaways
- The MSCI World Index achieves an average annual return of six percent in the long term and outperforms the DAX through global diversification across different sectors and geographic regions.
- The DAX showed weakness phases in the second half of 2021 and throughout 2022, while the MSCI World Index performed better during this period.
- The three-month volatility of the MSCI World averages 15 percent and is stabilized through broad diversification, which cushions market fluctuations more effectively.
- The DAX leads to concentration risk through its focus on large German companies, while the MSCI World offers a more balanced risk profile.
- MSCI World ETFs are among the cheapest equity ETFs with total expense ratios of sometimes just 0.12 percent per year.
- With dividend-reinvesting ETFs, the reinvestment of dividends through compounding leads to significant additional returns over the long term.
According to Finanztip analyses from 20 April 2026, investors should expect an average annual return of six percent from MSCI World ETFs in the long term. This expectation is based on performance data from the price trend between early 2020 and end of 2024. The global equity index outperforms the DAX through broad diversification across sectors and regions.
Historical weakness phases of the DAX
The DAX performed worse than the MSCI World Index in the second half of 2021 and throughout 2022, as documented by Finanzgeschichten.com in April 2025. During this phase, savings plans bought relatively more DAX shares than MSCI World shares due to lower entry prices. According to LYNX analyses from 6 March 2026, the average dividend yields of the MSCI World are between one and three percent per year. With dividend-reinvesting ETFs, these dividends are immediately reinvested, which means the compounding effect leads to significant additional returns over the long term.
Volatility and risk profile in comparison
The three-month volatility of the MSCI World averages 15 percent, as reported by Test.de on 2 February 2026. This measurement is based on returns over the last 63 trading days. Due to its broad diversification, the MSCI World Index often cushions market fluctuations better than smaller or less diversified equity indices. Compared to the German Stock Index, the MSCI World offers a more balanced risk profile through global diversification across different sectors and geographic regions.
According to Finanztip's assessment from 20 April 2026, currency risk for MSCI World ETFs is not a real problem. The DAX is concentrated on large German companies, which leads to concentration risk, while the MSCI World offers broad global exposure with companies from different sectors and geographic markets.
Cost-efficiency as an additional advantage
The cheapest MSCI World ETFs are among the most affordable equity ETFs available. Amundi's finanzen.net MSCI World UCITS ETF stands out with a total expense ratio (TER) of just 0.12 percent per year, as reported by finanzen.net on 13 March 2026. For comparison: The iShares Core DAX is rated as one of the cheapest DAX ETFs.
Market analyses consistently show that the MSCI World usually performs better than the DAX in the long term, primarily due to the benefits of global diversification. For long-term savings plan investments, dividend-reinvesting ETFs without dividend payouts are recommended, as the reinvestment of dividends through compounding over decades leads to significant additional returns.