I’ve had a peculiar puzzle recently. What is the percentage of European companies in MSCI World index? Surprisingly I couldn’t find this anywhere, so let’s calculate it on our own .

Prelude

MSCI World publishes approximate country distribution here, but it has 6% “other” category. Then one can see a list of all companies in the index with their weight here, but this does not help either, since mapping from “company” to “region” is non- trivial.

Solution

There is MSCI World ex Europe index. Presumably it is the same as MSCI World above, but without Europe (at least that’s what name suggests). 80.37% of MSCI World ex Europe is the US [source]. For the MSCI World it is 63.81% [source]. Looks like the numbers in the PDFs change with time, so the state above is as of today (the PDFs say “Jan 31, 2020). Now we can build the following equation:

Let’s swap numerators and denominators

We know that \(\frac{\text{US}}{\text{world}}\) is 0.6381 (just ratio of the US in MSCI World):

We want \(\frac{\text{Europe}}{\text{world}}\)

In other words, the ratio of Europe in MSCI World index is 21.8%.

Sanity checking

My first attempt at calculating this was actually wrong, so let’s sanity check. This page says (as of September 2019):

  • UK - 5.47%
  • France - 3.8%
  • Switzerland - 3.15%
  • Germany - 2.86%
  • Netherlands - 1.33%
  • Others - 6.27%

\( 5.47+3.8+3.15+2.86+1.33 = 16.61 \) - looks plausible!