What Was the World Equity Benchmark Series (WEBS)?

What Was the World Equity Benchmark Series (WEBS)?

Let me explain what the World Equity Benchmark Series, or WEBS, actually was. It was an international fund that traded on the American Stock Exchange, introduced back in 1996 by Morgan Stanley. Think of it as a hybrid security that combined elements of both open-end and closed-end funds.

Then, in 2000, WEBS got a new name: iShares MSCI Emerging Markets Exchange Traded Fund, or ETF. This ETF aims to match the performance of the MSCI Emerging Markets Index, which includes large- and mid-cap stocks from emerging markets.

Key Takeaways

To break it down simply, in 2000, the World Equity Benchmark Series became the iShares MSCI Emerging Markets ETF. This fund tracks the MSCI Emerging Markets Index, focusing on bigger emerging market stocks. It's a lot like the SPDR S&P 500 Trust, which is an ETF from State Street Global Advisors that follows the S&P 500 Index.

Understanding the World Equity Benchmark Series (WEBS)

You need to know the basics of fund types here. A closed-end fund is a publicly traded investment that raises a fixed amount of capital through an initial public offering. That money goes into a fund listed as a stock on an exchange—it's essentially a fixed-share portfolio you trade like any stock.

On the other hand, an open-end fund is your standard mutual fund, pooling money from investors to buy stocks and bonds, with everyone sharing gains and losses based on their stake.

With WEBS, an organization held all the securities from the MSCI country indexes, owning them in ratios matching the initial investments. You could buy, sell, or trade WEBS just like regular stocks.

This setup let you diversify internationally. WEBS covered countries like Australia, Austria, Belgium, Canada, France, Germany, Hong Kong, Italy, Japan, Malaysia, Mexico, the Netherlands, Singapore, Spain, Sweden, Switzerland, and the United Kingdom.

The rename to iShares MSCI Emerging Markets ETF was about branding consistency for all ETFs managed by Barclays Global Investors, which is now BlackRock. At the time, this included indexes for iShares MSCI versions of those countries, plus South Korea.

iShares MSCI Emerging Markets ETF and the SPDR S&P 500 Trust

Let me compare this to something familiar. The iShares MSCI Emerging Markets ETF works much like the SPDR S&P 500 Trust, an ETF from State Street Global Advisors that tracks the S&P 500. It used to be called the Standard & Poor's depository receipt, or just SPDR, nicknamed 'spider.'

Each SPDR share represents one-tenth of the S&P 500 and trades at about one-tenth its value, giving you broad market diversification.

For instance, there's also the SPDR S&P Dividend ETF, which tracks the S&P High Yield Dividend Aristocrats Index for dividend-paying S&P 500 stocks. It includes 112 companies, with performance based on net asset value per share.