How far it has fallen
The largest fall in the MSCI World index, measured in US dollars, was 57.82%, from 31 October 2007 to 9 March 2009. In the calendar year 2008 the index lost 40.71%.[1] A fund that tracks the index would have fallen about as much. Falls of that size are rare, but smaller falls happen regularly.
What diversification does and does not do
A global index holds well over a thousand companies in 23 countries.[1] If one of them fails, you barely notice. That is the risk an index fund removes. What remains is market risk: when share prices fall across the board, the fund falls with them.
Time changes the picture
Over a single year the outcome is uncertain. Over long periods the direction has been upward: across 125 years, global shares returned roughly 5% a year after inflation.[2] That is history, not a promise. It is the reason money you need within a few years does not belong in shares.
What you control
- Your time horizon. Invest only money you can leave for many years.
- Your buffer. Savings outside the market mean you are not forced to sell in a fall.
- Your own behaviour. Morningstar estimates that the average dollar in US funds earned about 1.2 percentage points a year less than the funds themselves over the ten years to 2025, because of badly timed buying and selling.[3]
- The fee. It is the one cost you know in advance.
If you live outside the United States, the value of a global fund also moves with exchange rates, because most of the companies are priced in other currencies.
Common questions
Can an index fund fall to zero?
For a broad global index fund that would require every company in the index to become worthless at once. Large falls are a normal part of investing in shares; a total loss in a broad index has not happened.
How long does a recovery take?
It varies. After the 2007–2009 fall it took several years before the index was back at its earlier level. Nobody can say how long the next one will take, which is why the time horizon matters.
Sources & further reading
We cite independent authorities so you can verify everything yourself. Last reviewed 15 Sept 2026.