Who makes the indexes? MSCI, FTSE and friends explained

Part of ETF basics

Behind every ‘MSCI World’ or ‘FTSE All-World’ fund is a company most investors never think about — the one that decides which companies are in, and which are out. They’re the mapmakers of the market.

The company behind the index

You’ll hear that a fund ‘tracks the MSCI World’ or ‘the FTSE All-World’ — but those indexes don’t just exist in nature. They’re built and maintained by index providers: companies such as MSCI, FTSE Russell and S&P Dow Jones (with others like Solactive and Bloomberg too). They’re the market’s mapmakers, and ETF issuers pay to license their maps. Your fund is really just a faithful follower of one provider’s rules.

What an index provider actually does

Their job is to write and police the rulebook. That means deciding which companies qualify for an index, how much weight each gets (usually by company size), and when the list is reviewed and reshuffled. They also make the big classification calls — like whether a country counts as ‘developed’ or ‘ ’, which decides whether its companies land in a developed-world fund or an emerging-markets one. The ETF doesn’t make these choices; it simply mirrors them.

Why it can matter to you

Because different providers draw the lines differently, two funds that sound the same can hold subtly different baskets. A classic example: providers don’t always agree on how to classify a country like South Korea, so one ‘developed world’ index may include it while another puts it in emerging markets. The number of companies can differ too — one ‘world’ index might hold noticeably more names than another. Usually these gaps are small, occasionally they’re worth noticing.

Do you need to care? Mostly not

For everyday broad investing, the differences between the big mainstream index families are minor, and any of them does the core job well. Where a glance pays off is when you’re comparing two near-identical funds — the index they track is one of the real differences hiding under matching names — or when a specific country’s classification genuinely matters to you. Otherwise, knowing the provider is the rulebook-writer is plenty. This is background, not a reason to prefer any particular fund.

Common questions

Is MSCI World or FTSE All-World better?

Neither is ‘better’ — they’re slightly different maps of the global market, built by different providers with different rules (FTSE’s all-world range folds in emerging markets, for instance, while ‘MSCI World’ is developed markets only). Which suits you depends on whether you want emerging markets included, not on the provider’s name. This is background, not a recommendation.

Does the index provider hold my money?

No — that’s a common mix-up. The index provider only publishes the rules and the index. A separate company, the ETF issuer (like iShares or Vanguard), runs the actual fund and holds the assets. They’re two different businesses doing two different jobs.