Investment Primer: The Global Size & Style Composite

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What, Why, and How of Global Size & Style

The Global Size & Style composite includes funds that invest in companies across all geographies, including the United States, developed international markets, and emerging markets. These funds are designed to be comprehensive, single-product solutions for capturing worldwide economic growth and innovation. The “why” is to achieve the broadest level of equity diversification, spreading investment risk across different countries, currencies, and economic cycles.

The “how” is achieved by targeting the entire global equity market. Within this broad mandate, funds are further broken down by company size (Large, Mid, Small Cap) and investment style (Value, Blend, Growth). Many funds in this composite are passive Beta strategies that track major global indexes like the MSCI ACWI, while others are actively managed Tactical or Factor funds where a manager makes decisions on country allocations and stock selection.

Portfolio Construction Approaches

Global Size & Style funds can be used in several ways to build the equity portion of a portfolio.

  • Core: This approach involves using a single, broad-based fund as the entire equity allocation. A passive Global Large Cap Blend ETF that tracks a major world index is a classic example of a “set it and forget it” core holding for global equity exposure. An investor might also choose a diversified active global fund as their core, believing in the manager’s skill to navigate different global market environments.
  • Build Your Core: This approach involves using a global fund as the foundation and then adding other funds to tilt the allocation. For example, an investor might use a global ETF as their core and add a standalone Emerging Markets ETF to increase their exposure to that higher-growth region beyond what the core fund provides.
  • Concentrated Alpha Strategies: This involves blending more focused satellite positions around a central global core. An investor might use a passive global ETF for their core allocation and add a concentrated, actively managed Global Small Cap fund in an attempt to generate “alpha,” or returns above the global benchmark.

A Practical Guide to Locating Funds in the ETF Action Database

A proper peer group is essential for any comparative analysis. A good starting point is the Global Size & Style ETF Dashboard, which groups all relevant ETFs by composite and category, with hyperlinks to the ETF Database for deeper analysis.

3.1 Foundational Screening: Building the Initial Universe

The first step is to use the top-level classification filters to isolate funds within the Global Size & Style composite.

  • Step 1: Select the Database. Navigate to the ETF, Mutual Fund, or other desired database.
  • Step 2: Filter by Asset Class. Select Asset Class = Equity.
  • Step 3: Filter by Composite. Select Composite = Size & Style – Global.
  • Step 4: Filter by Category. To focus on a specific segment, select the desired Category (e.g., Global Large Cap – Blend, Global Large Cap – Value).

Advanced Filtering: Refining Your Peer Group

After the foundational screen, the list can be refined by screening for outliers and unique characteristics.

  • Brand (Issuer): Investors may prefer to stick with established fund providers with long track records in global investing.
  • Assets Under Management (AUM): Setting a minimum AUM threshold can screen out smaller funds that may face viability risks.
  • Expense Ratio: Costs are a critical factor, especially in global funds where they can be higher.
  • Liquidity (ETFs only): For ETFs, metrics like average daily trading volume and bid-ask spreads are important.
  • ESG Flag: For investors with sustainability goals, the ESG Flag allows you to screen for funds that apply environmental, social, or governance criteria.

A Framework for Evaluating Global Funds

For global equity funds, a thorough evaluation requires a deep look “under the hood” to understand the specific geographic allocations that drive risk and return. A fund labeled “Global” can have vastly different exposures to the U.S., developed international, and emerging markets. ETF Action’s institutional-grade datasets are essential for this multi-layered analysis.

Risk/Return Analysis: The Importance of Benchmarks

The foundational step is to analyze a fund’s historical risk and return profile against an appropriate global benchmark.

ETF Action assigns a Beta Tracker to each category—a specific, broad-based ETF chosen to represent that market segment (e.g., a large MSCI ACWI ETF for the Global Large Cap Blend category). Key metrics from the Risk & Return report should be compared against this Beta Tracker to gauge performance. While the examples below are some of the most common, ETF Action’s comprehensive datasets provide a full suite of risk statistics for deeper insights.

  • Total Return: How has the fund performed over various time periods compared to its global benchmark?
  • Standard Deviation (Volatility): Was the fund more or less volatile than its benchmark?
  • Sharpe Ratio: Did the fund provide better risk-adjusted returns?
  • Alpha: Did the fund add value beyond what would be expected based on its market risk?
  • Up/Down Capture Ratios: How did the fund perform relative to its benchmark during periods of global market gains versus losses?

Quantitative Analysis: The Power of Look-Through Analytics

For global funds, look-through analysis is paramount. A fund’s name only tells part of the story; its holdings reveal the true geographic and currency exposures that drive performance.

  • Geographic Exposure (Market, Region, Country): This is the most important look-through analysis for global funds. What is the fund’s allocation to the U.S. versus the rest of the world? Within the non-U.S. portion, what is the split between developed and emerging markets? Two “Global” funds can have dramatically different risk profiles if one has 60% in the U.S. and 5% in Emerging Markets, while another has 40% in the U.S. and 15% in Emerging Markets. Understanding these allocations is crucial for managing risk.
  • Sector & Industry Exposure: As with other equity funds, understanding sector bets is key. A global fund heavily tilted toward Technology will perform very differently from one tilted toward Financials.
  • Concentration: Look-through data reveals how concentrated a fund is in its top holdings, which is important for understanding idiosyncratic risk from specific global companies.
  • Overlap Analysis: When combining a global fund with other funds (e.g., a U.S. fund), overlap analysis is vital to avoid unintentionally overweighting a specific country or region.

While a detailed, manual look-through analysis provides the deepest insights, it can be time-intensive. ETF Action’s derived analytics are designed to simplify this process by providing a completely objective, rules-based framework. It’s important to distinguish between classifications and derived analytics. The classifications, such as the Equity – Market Assignment (Global, U.S., Dev Ex-U.S.) or Equity – Region Assignment (North America, Eurozone), are rules-based labels that place a fund into a specific bucket, which is powerful for initial screening. The derived analytics, like the Equity – Sector Concentration rating or the various factor tilt scores, offer a more nuanced view. They quantify the intensity of a fund’s characteristics on a numeric scale relative to a broad global market benchmark. This dual system of objective classifications and quantitative ratings provides a powerful framework to more efficiently search for funds and conduct an initial evaluation.

Qualitative Analysis: Evaluating the Strategy

The Strategy classification provides a high-level guide to a fund’s approach, which dictates the qualitative evaluation.

  • Beta: For passively managed funds, the key is to understand the index methodology. How does the index determine country weights? How are companies selected and weighted? The Implementation field details this, showing whether the fund is market-cap weighted or uses an alternative scheme.
  • Factor & Tactical: For actively managed funds, the focus is on the manager’s process. How do they make country and currency allocation decisions? What is their process for selecting individual global stocks? The qualitative review should confirm that the manager’s philosophy is reflected in the portfolio’s look-through characteristics.

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