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The world equity benchmark series (WEBS) is an international fund that tracks the Morgan Stanley Capital Investment (MSCI) country indices and is traded on the American Stock Exchange. WEBS is a form of hybrid security that has features from both closed and open end funds. Investors use WEBS to have international diversity in their stock and investment holdings. MSCI global indices originated in 1969. They are widely used by investors as benchmarks by which exchange-traded funds are bought and sold.
A closed end fund is a company that is a publicly traded investment. These companies can raise a designated amount of capital with an initial public offering. The money collected goes into a fund that is then listed like a stock and traded on a public exchange. It is a specialized stock portfolio with a one-time fixed number of shares. An open end fund is a conventional mutual fund, made up of from a pool of money from many investors for investing in stocks and bonds. Investors share gains and losses in proportion to their investment in the fund.
An organization using WEBS owns each of the securities traded on the MSCI country indices. Ownership is in approximate ratio to the initial capitalization or investment. WEBS can be bought, sold, and traded like stocks. WEBS are available for 17 MSCI indices, or countries. They include most of Western Europe, Canada, Mexico, Singapore, Hong Kong, and Japan.
Standard and Poor’s Depository Receipts (SPDR) are similar to the world equity benchmark series. Commonly referred to as “Spiders,” an SPDR is a unit of an exchange-traded fund in the Standard & Poor’s 500 Stock Price Index. Investors investing in an SPDR own about one tenth the value of the S & P 500 and get a quarterly pro rata dividend. SPDRs can be traded throughout the day, unlike index-traded mutual funds, which can only be purchased and/or sold at the end of a trading day.
MSCI also maintains indices for other exchange-traded funds throughout the world that are not related to the world equity benchmark series. MSCI developed “all countries” world indices. These indices represent investment markets of forty-five developed and emerging countries around the world.
There are other exchange-traded funds like the world equity benchmark series. They serve as a guide for investors to gauge how markets around the world are performing. They also help them to track the status of their own investments and to make investment decisions. Indices benchmarks can give a total picture of how regional and international markets are functioning at any given time.