A Shift in Focus: The iShares MSCI World ETF’s Growing Reliance on US Tech

MSCI World ETF US4642863926

The iShares MSCI World ETF (ticker: URTH) is entering the new year with its performance increasingly dictated by US technology stocks. A notable shift has occurred within the fund, where US equities now constitute approximately 70% of its holdings. This heavy weighting, spearheaded by NVIDIA as its new largest position, makes the ETF's profile resemble that of an "S&P 500 plus" strategy. Concurrently, the fund maintains a strict mandate focused solely on developed markets, deliberately distinguishing itself from global investment solutions that include exposure to emerging economies.

With assets under management of around $6.7 billion and an expense ratio of 0.24%, URTH is positioned as a core portfolio component for many investors, though it faces competition from lower-cost alternatives.

The most striking recent development is a change in leadership among the fund's largest holdings. For the first time, neither Apple nor Microsoft holds the top spot; that position now belongs to NVIDIA, a result of the chipmaker's substantial share price advance through the end of 2025.

Top 10 Holdings (Weights as of January 1, 2026):
* NVIDIA Corp: 5.45%
* Apple Inc.: 4.85%
* Microsoft Corp: 4.12%
* Amazon.com Inc: 2.67%
* Alphabet Inc (Class A): 2.18%
* Broadcom Inc: 1.88%
* Alphabet Inc (Class C): 1.84%
* Meta Platforms: 1.73%
* Tesla Inc: 1.54%
* JPMorgan Chase: 1.06%

The portfolio shows a pronounced concentration on US mega-cap companies within technology, communication services, and consumer cyclical sectors. The information technology sector alone accounts for roughly 26–29% of the fund. When adding stocks like Alphabet, Meta, Amazon, and Tesla, a significant tilt toward growth-oriented US corporations becomes evident.

NVIDIA's rise to a 5.45% weighting increases the fund's sensitivity to semiconductor industry cycles and investments in AI infrastructure. Broadcom's establishment in the top ten, with a 1.88% share, further symbolizes the breadth of the AI hardware rally.

Geographically, the United States commands about 69.8% of the allocation. Japan follows at a distant 5.5%, with the United Kingdom at 3.5% and Canada at 3.0%. In practice, the "World" in the fund's name largely reflects the US market plus other established markets in Europe, Australia, and the Far East.

Strategy and Competitive Positioning

URTH tracks the MSCI World Index, which covers roughly 85% of the free-float adjusted market capitalization across 23 developed nations. Emerging markets such as China, India, or Brazil are entirely excluded. In a climate of geopolitical tension and perceived higher risk in emerging markets, this offers a clearly defined developed-markets approach.

However, the primary driver of the fund's recent trajectory has been the diverging performance of the US technology sector compared to the rest of the world. The powerful rally in US equities has pushed the fund's US allocation toward the 70% mark. Consequently, international holdings act more as a currency and sector diversifier rather than as independent growth pillars. A recently weaker US dollar could provide a tailwind for the approximately 30% non-US components when their foreign earnings are converted back into dollars.

URTH occupies a specific niche: global developed markets without emerging market exposure. Its main competitors are:
* Vanguard Total World Stock ETF (VT)
* iShares MSCI ACWI ETF (ACWI)

Selected Comparative Data:
* Expense Ratio: URTH 0.24% vs. VT 0.06% and ACWI 0.32%
* Assets Under Management: URTH ~$6.7 billion, VT ~$60.1 billion, ACWI ~$25.4 billion
* Index Focus: URTH (developed markets only); VT & ACWI (include emerging markets)
* 2025 Performance (YTD): URTH +22.57%, VT +23.26%, ACWI +23.22%
* US Weighting: URTH ~70%, VT ~63%, ACWI ~64%

URTH is notably more expensive than VT. This higher cost reflects its deliberate exclusion of emerging markets and its more concentrated structure—VT holds over 9,000 positions compared to roughly 1,300 in URTH. VT's broader diversification and EM stake reduce its US weighting to about 63%.

The slight performance advantage of VT in 2025 (approximately 23.3% vs. 22.6%) suggests that either emerging markets gained ground toward year-end or smaller-cap stocks, which have greater representation in VT, contributed additional returns.

Performance Metrics and Forward Outlook

URTH concluded 2025 on a positive trend, powered chiefly by its US exposure.

Key Metrics (Current Data):
* Share Price: approximately $186.31
* 1-Year Return: between +18.65% and +20.85% (depending on calculation period)
* 2025 Year-to-Date Performance: about +22.57%
* 3-Month Momentum: +3.03%
* Tracking Error: minimal deviation from the MSCI World Index
* Liquidity: lower trading volume than giant ETFs like VT, but tight bid-ask spreads and sufficient activity for retail investors

The ETF typically trades at a slight premium to its net asset value (around +0.11%), indicating steady demand. Compared to the S&P 500 Index, URTH has lagged somewhat, as it lacks a pure US focus. Nevertheless, it has significantly outperformed many developed-market ex-US strategies over the past year.

Looking ahead, three central factors will likely influence URTH's trajectory:

1. Technology Sector Valuations: NVIDIA and the remaining "Magnificent Seven" stocks collectively represent over 20% of the fund. A de-rating of US tech valuations would therefore impact URTH more severely than globally diversified, value-oriented ETFs.
2. US Dollar Trajectory: A continuation of dollar weakness against currencies like the euro and yen would boost the US-dollar value of the portfolio's international segment. In this scenario, URTH could benefit relative to purely US-focused indices like IVV or VOO.
3. Index Rebalancing and the AI Rally: As a market-cap-weighted index, the MSCI World adjusts its weightings automatically. If the AI boom expands from semiconductors into software or industrial stocks, the concentration within the top ten holdings could decrease. Conversely, if the focus remains intensely on a few semiconductor leaders, the cluster risk in this segment would continue to rise.

From a chart perspective, key levels to watch are the 52-week high near $188 and a support zone around $180. A decisive move above $188 would confirm the prevailing uptrend, while a sustained break below $180 might signal a consolidation phase.