MSCI's Upcoming Index Revisions Set to Impact Global ETF Lineups

MSCI is set to revise its ACWI and Emerging Markets indexes on Aug 26, adding 42 securities and removing 56. The changes will likely impact ETFs linked to the indexes, with US-based growth names Rocket Lab, SoFi, and Affirm being added to the MSCI World Index. Emerging market additions include China Citic Bank, Indonesian conglomerate Dian Swastatika Sentosa, and gold producer Laopu Gold. The revisions may cause short-term trading activity, but long-term holders of ETFs tied to the indexes are unlikely to experience significant changes in risk-return profiles.

MSCI, a leading global index provider, has announced significant revisions to its ACWI (All Country World Index) and Emerging Markets indexes, effective Aug 26. The changes include the addition of 42 securities and the removal of 56, impacting numerous ETFs linked to these indexes.

Among the notable additions to the MSCI World Index are Rocket Lab, SoFi Technologies, and Affirm Holdings, three US-based firms that are the largest by market capitalization in this round of inclusions. These additions reflect the growing interest in fintech and space technology sectors. In the emerging markets category, China Citic Bank, Dian Swastatika Sentosa, and Laopu Gold will be the top additions to the MSCI Emerging Markets Index [1].

The revisions come amid ongoing market recalibrations. As of July 31, the MSCI Emerging Markets Index's largest country exposures were China (29.2%), Taiwan (19.5%), India (16.9%), and South Korea (11%). The inclusion of China Citic Bank and Laopu Gold will slightly increase China's already substantial weighting, while Dian Swastatika Sentosa will increase Indonesia's share [2].

For ETFs that directly mirror MSCI indexes, such as the iShares MSCI ACWI ETF ACWI, iShares MSCI World ETF URTH, and iShares MSCI Emerging Markets ETF EEM, the rebalance may trigger temporary price dislocations as portfolio managers adjust their positions. However, long-term holders of these ETFs are unlikely to experience significant changes in their risk-return profiles due to the fractional impact of any addition or removal on the total portfolio [2].

Investors should note that the changes may offer tactical trading opportunities for active traders. The high-profile addition of SoFi Technologies, a fintech company, may attract additional attention from growth-oriented ETF observers. Affirm's inclusion might enhance its exposure among institutional buyers, while the buy-now-pay-later space confronts stricter credit conditions. Rocket Lab, with its focus on space technology, caters to investor interest in these sectors [2].

For emerging markets, the inclusion of China Citic Bank highlights China's sustained leadership in the index despite weakening economic growth. The addition of Dian Swastatika Sentosa signals investor appetite for Southeast Asia's energy and infrastructure sectors, while Laopu Gold may gain from increased gold demand in volatile macro conditions [2].

The MSCI ACWI covers over 2,800 firms in 47 developed and emerging markets, making any addition or removal a fractional part of the total portfolio. Therefore, long-term holders of these ETFs are unlikely to experience significant changes in their risk-return profiles [2].

In conclusion, the upcoming MSCI rebalance offers both short-term trading opportunities and long-term implications for investors. While active traders may benefit from price dislocations, long-term investors should focus on the incremental changes in their exposure to sectors and geographies [2].

References:
[1] https://www.businesstoday.com.my/2025/08/08/msci-to-revamp-global-indexes-with-98-changes/
[2] https://www.benzinga.com/etfs/emerging-market-etfs/25/08/47099124/msci-set-to-shakes-up-global-etf-lineups-sofi-affirm-rocket-lab-join