Global 100, Global ESG, World ex-US or Total World? Choosing the right global index fund for you

For New Zealand investors, a global index fund is a simple way to diversify beyond the local market - spreading your investments across thousands of companies, industries and economies worldwide. Kernel offers four distinct global index fund options that make global diversification simple: the Kernel Global 100 Fund, Kernel Global ESG Fund, Kernel World ex-US Fund, and Kernel Total World Fund.

While each provides international share market exposure, they are designed for different investment goals. This guide explains the differences between four of Kernel’s global equity funds and how to decide which may suit your portfolio.

Global 100 focuses on quality through scale, suited for investors who want global exposure with a deliberate tilt toward profitability and established market leadership.

Rather than investing across thousands of businesses, the fund tracks the S&P Global 100 Ex-Controversial Weapons Index, providing exposure to approximately 100 of the world's largest multinational companies, including Apple, Microsoft, Amazon, Nvidia and Nestlé.

Although the portfolio spans multiple countries and sectors, around 80% of the fund is currently invested in US-listed companies, reflecting the dominance of US businesses and making the Global 100 more concentrated than Total World or Global ESG.

• Want exposure to large, established global companies
• Are comfortable with more concentrated US equity allocation
• Want a holding with companies more resilient to the business cycle and domestic shocks

• It is not designed to represent the full global share market
• Returns may be more influenced by the performance of a smaller set of companies
• Management fee: 0.25% p.a.

For investors who want their portfolio to reflect sustainability considerations without giving up the benefits of diversification, Global ESG offers a clear middle ground.

The fund tracks the S&P World PAB ESG Ex-Non-Pharma Animal Testing Index (NZD), which adjusts company weightings based on ESG scores and alignment with the Paris Agreement. Rather than simply screening out a handful of industries, the index systematically overweights companies making stronger progress on sustainability metrics while excluding areas such as controversial weapons, tobacco, gambling and thermal coal.

• Want global diversification
• Want sustainability considerations built into their investment approach
• Prefer a rules-based ESG methodology rather than selecting companies themselves

• This fund will not look exactly like the broad market
• Some sectors, countries or companies may be underweight or excluded
• Global ESG isn't simply the Global 100 with ESG considerations, it follows an entirely different index and portfolio construction methodology
• Management fee: 0.25% p.a.

The United States makes up a large share of global equity markets. For some investors, that level of concentration is fine. For others, it can feel like too much of one country driving overall portfolio outcomes. World ex-US is designed to counter that.

Tracking the S&P World Ex-U.S, Controversial Weapons and Tobacco Index, it provides exposure to developed markets outside the United States, including regions such as Europe, Japan, Canada and Australia. This makes it useful for investors who want international diversification while reducing or avoiding US market concentration.

• Want to reduce reliance on a single market
• Already have US exposure elsewhere

• It excludes the world's largest equity market
• It does not include emerging markets
• Management fee: 0.25% p.a.

If your goal is to own the global share market in one fund, Total World is built to do exactly that.

With the broadest exposure in the Kernel fund range, the Total World Fund gives you exposure to approximately 9,500 companies across both developed and emerging markets. It invests in the Vanguard Total World Stock ETF, which tracks the FTSE Global All Cap Index. Rather than asking you to combine multiple regional funds yourself, it packages global equities into one diversified holding.

• Broad diversification at a scale that's hard to replicate with a small number of separate funds
• Exposure to emerging markets as well as developed markets
• Simple portfolio construction and ongoing management

• It does not apply a sustainability screen or thematic tilt
• It is unhedged, so returns may be affected by currency movements
• Because it is so broad, it will own both market leaders and less impressive businesses too
• It is only available to Kernel Plus and Premium members
• Management fee: 0.12% p.a.

These four Kernel global index funds offer a way to invest beyond New Zealand and participate in the growth of companies around the world. But they are not interchangeable. Each takes a different approach to global equity exposure - whether that means concentrating on the world’s largest companies, investing with ESG exclusions, reducing US exposure, or owning a broad slice of developed and emerging markets.

The best fit comes down to the role you want global shares to play in your portfolio. The Global 100 Fund may suit investors seeking focused exposure to major multinational companies, while the World ex-US Fund can be useful for investors who want international developed-market exposure while deliberately managing their allocation to the United States. The key takeaway is to understand where holdings overlap and what each addition changes in your overall mix.

Ultimately, the aim is not to find the single “best” global index fund. It is to choose an approach that matches your investment goals, preferred level of diversification and long-term plan - and then give that plan time to work.

Keep exploring each of these funds

Kernel Wealth Limited is the manager and issuer of the Kernel KiwiSaver Plan and Kernel Funds Scheme. A Product Disclosure Statement is available at Kernel Wealth | Resources & Documents. Investing involves risk including the possible loss of principal and there is no assurance that the investment will provide positive performance over any period of time. The information provided should not be relied upon as investment advice or recommendations and should not be considered specific legal, investment or tax advice.