Alternative Investment: This Index Outperforms the MSCI World

Investors are increasingly exploring opportunities beyond traditional stock markets to enhance their returns. Recent analysis reveals that investments in companies not listed on exchanges can often yield higher profits compared to conventional stocks. For retail investors, new avenues are emerging that offer more promising investment prospects.

The stock markets have been performing exceptionally well, providing investors with substantial returns. However, it is important to note that publicly traded companies represent only a fraction of the global economic landscape. In fact, only twelve percent of companies generating over EUR100 million in annual revenue are publicly listed. In Germany, this figure is even lower, with less than two percent of companies meeting this threshold being listed on stock exchanges. This indicates that more than 98 percent of firms with significant revenues remain largely inaccessible for investment.

One of the reasons for this limited access is that many companies prefer to maintain privacy regarding their operations and financial details. To address this issue and improve funding options while expanding investment opportunities for private investors, the European Union revised the regulatory framework for the European Long-Term Investment Fund (ELTIF) last year.

Critics of traditional indices like the MSCI World argue that they may not provide the broad diversification that many investors believe. While the MSCI World is a favored index among ETF investors, it may not represent the best choice for those seeking a well-rounded investment portfolio. There are alternative indices that could potentially offer better returns.

As the investment landscape evolves, the opportunity to invest in a wider array of companies becomes increasingly feasible. This shift reflects a growing recognition of the need for more diverse investment strategies that go beyond conventional stock market offerings.