Frankfurt. Standard stock market funds usually follow a simple rule: the higher the value of the freely traded shares, the larger the share in the portfolio. For example, if US stocks rise more than those from the rest of the world, the US weight also increases. In the MSCI World industrialized countries index it is currently more than 70 percent.
The French fund giant Amundi has been offering investors an alternative for a few weeks now: a world ETF weighted according to gross domestic product (GDP). This reduces the concentration risk, especially on the US stock market. But experts see new problems – and an alternative.
With the “Amundi FTSE All World GDP-Weighted Ucits ETF” (ISIN: IE000KCKFHE8), investors have been able to invest in a portfolio weighted by gross domestic product since mid-May. The ETF replicates the FTSE All-World GDP-Adjusted stock market index. The portfolio is built in three steps:
According to the provider, it is the first GDP-weighted ETF to be launched according to the widespread Ucits guidelines. However, the approach is not entirely new. With the “L&G Gerd Kommer Multifactor Equity” (ISIN: IE0001UQQ933), the asset manager Gerd Kommer offers a stock market fund that at least partially takes the state's economic strength into account. The “Arero” fund from the Deutsche Bank subsidiary DWS also bases its equity investments on the regional gross domestic product.
The idea: The approach should reflect the actual influence on the real economy and give higher weight to those countries that are underrepresented in other ETFs in terms of their economic strength. At the same time, the concentration risk should decrease. Arne Scheehl, product developer at Amundi, says: “The product is highly diversified, invests in developed and emerging markets and is not as top-heavy as normal world ETFs.”
Some investment experts have long warned about the high proportion of US stocks and individual stocks in global standard ETFs. Compared to the FTSE All World Index, there are significant differences in the GDP-weighted FTSE approach. As of the end of August, the share of US stocks has halved from more than 62 to around 31 percent. The share of emerging countries such as China and India is increasing. The proportion of German stocks is also increasing, from just under two to almost five percent.
This means that the importance of tech stocks is also decreasing. According to the provider, using the GDP approach, the sector makes up less than a quarter of the portfolio instead of a third - and therefore has the same share as financial stocks. The weight of the largest individual stock, Nvidia, was recently only half as large as in the FTSE All World Index at just over two percent.
Jannes Lorenzen, managing director of the JustETF portal, particularly points to the “very clear shift” in US stocks. In his opinion, the Amundi ETF makes fundamental sense and is particularly interesting for investors who want to reduce the proportion of US stocks.
However, the GDP approach would not have been calculated in recent years. According to the provider, the corresponding FTSE index would have recently achieved an average dollar return of 9.3 percent over five years. For the FTSE All World Index it was 11.4 percent. During the period, US stocks, particularly in the technology sector, rose particularly strongly, while emerging market stocks performed weaker.
Nevertheless, two periods speak in favor of the approach: Before the financial crisis, the GDP index would have clearly beaten the standard version, as FTSE analysts Andreas Schroeder and Janki Khatri have evaluated. And the GDP approach also performed better in 2025. In both periods, emerging market stocks rose comparatively strongly.
While market capitalization-based approaches allocate more capital to stock markets that have already risen, the GDP approach works the other way around, reducing the weight of countries whose stock markets are growing faster than the economy, according to FTSE analysts. The GDP approach can therefore have a countercyclical effect.
Ali Masarwah, head of the fund consultant Envestor, is still skeptical about the approach. He sees a BIP ETF as a so-called one-stop shop that promises investors a single product for the entire portfolio. “When you try to optimize something, you open up other construction sites,” he says.
The GDP approach reduces the US weight. But China receives a large share in return. In the Amundi ETF it is currently more than 15 percent. “Investing in Chinese stocks carries very different political risks than investing in many other countries,” says Masarwah. This particularly applies to state-controlled banks.
Amundi product developer Scheehl also admits the high proportion of Chinese stocks. “If investors use a GDP-weighted approach, they end up with less US and more China,” he says. “Investors should be aware of these effects.”
Lorenzen sees two further disadvantages. On the one hand, the fees are higher than with other large world ETFs. The Amundi ETF has management fees of 0.3 percent annually. According to JustETF, the largest stock exchange fund for the FTSE All World Index comes in at 0.14 percent. There are also transaction costs, which Amundi estimates at 0.1 percent. This value is also higher than the standard Vanguard ETF.
The difference in management fees is “not nothing” over an investment period of 20 or 30 years, says Lorenzen. “That costs returns.”
On the other hand, economic strength says nothing about how many companies in a country can actually be invested in on the stock market, says Lorenzen. “Therefore, there is a risk of investing very concentratedly in these stocks in an economically strong country with a low proportion of listed companies.”
Masarwah sees a better alternative: “Investors can invest in more targeted ways with multiple ETFs than with one GDP-weighted ETF.” With five stock exchange funds, you can map industrial and emerging markets separately, cover small caps, add Europe and reduce the US weighting with an ex-USA ETF. Investors could then weight the individual components so that they fit their own preferences. Ex-USA ETFs, for example, offer access to a market capitalization-weighted portfolio that excludes the USA.
According to Scheehl, the argument against the approach of using several ETFs to reduce the US weight is that investors will then have to regularly rebalance their portfolio. This also has a tax effect for private investors. “The GDP-weighted ETF has advantages in terms of handling,” he says.
“Nobody should buy a GDP ETF just because of the hope of outperformance,” says Lorenzen. But if you want to reduce risks in your portfolio, you can take a look at the Amundi product: "With GDP-weighted indices, the extreme concentration of individual countries is mitigated. A collapse in US stocks would currently affect a GDP-weighted ETF significantly less than standard ETFs."
