The iShares MSCI World ETF’s Deepening Reliance on US Tech Giants

MSCI World ETF US4642863926

As 2026 begins, the iShares MSCI World ETF (URTH) is exhibiting a pronounced strategic pivot within its holdings. The fund's trajectory is now more closely tied to the fortunes of a handful of US technology behemoths, particularly those driving artificial intelligence, than to the broad performance of the global economy. This shift is underscored by Nvidia's ascent to become the fund's largest individual holding, surpassing both Apple and Microsoft.

The most significant development is the growing concentration at the top of the portfolio. The ten largest positions now collectively account for approximately 26.8% of the fund's total assets. Consequently, the ETF's returns are increasingly dictated by a small cluster of major technology stocks and the AI infrastructure theme, rather than a diversified spread across global economic cycles.

Leading Holdings (as of January 13, 2026):

1. Nvidia Corp – 5.33% (Information Technology)
2. Apple Inc – 4.57% (Information Technology)
3. Microsoft Corp – 3.92% (Information Technology)
4. Amazon.com Inc – 2.75% (Consumer Discretionary)
5. Alphabet Inc Class A – 2.30% (Communication Services)
6. Alphabet Inc Class C – 1.94% (Communication Services)
7. Broadcom Inc – 1.88% (Information Technology)
8. Meta Platforms Inc – 1.61% (Communication Services)
9. Tesla Inc – 1.49% (Consumer Discretionary)
10. JPMorgan Chase & Co – 1.05% (Financials)

When combined, the two Alphabet share classes represent a 4.24% weighting, effectively making it the third-largest position after Nvidia and Apple.

Geographic and Sector Exposure

Geographic focus is unmistakable: the United States now constitutes an estimated 70–72% of the fund. This weighting means URTH increasingly resembles a US large-cap growth product supplemented with European and Japanese multinationals, rather than a evenly distributed global portfolio.

The sector allocation reinforces this tilt:

• Information Technology: 26.7%
• Financials: Approximately 15%
• Health Care: Approximately 11%

This heavy tech exposure amplifies the fund's sensitivity to interest rate expectations and the cyclical dynamics of the semiconductor industry.

Performance Metrics and Fund Structure

URTH has continued its upward trend at the start of 2026, buoyed by strong investor risk appetite surrounding AI and robust US economic indicators.

Key Figures (as of January 13, 2026):

• Year-to-Date Return: +2.43%
• 1-Year Return: +21.3%
• Share Price: Approximately $189.95
• 3-Year Annualized Return: Roughly 10.5%

Liquidity and Trading:
The ETF maintains good tradability, with a 30-day average volume of about 450,000 shares. Tight bid-ask spreads and minimal deviations from the net asset value (NAV) facilitate efficient execution for both retail and institutional investors.

Index Tracking Strategy:
URTH employs a "representative sampling" methodology instead of full physical replication. This approach lowers transaction costs but can result in minor tracking differences versus the benchmark MSCI World Index. These discrepancies are typically small, usually remaining under 0.10%.

Competitive Landscape: Costs and Breadth

Within the global equity ETF segment, URTH competes directly with broadly diversified products like the Vanguard Total World Stock ETF (VT) and the iShares MSCI ACWI (ACWI). A notable drawback for URTH is its higher expense ratio coupled with a narrower market coverage.

Comparative Analysis (Select Metrics):

Metric	iShares MSCI World (URTH)	Vanguard Total World (VT)	iShares MSCI ACWI (ACWI)
Expense Ratio	0.24%	0.06%	0.32%
Assets Under Management	~$6.97 Billion	~$61.4 Billion	~$25.9 Billion
Index Coverage	Developed Markets Only	Developed + Emerging	Developed + Emerging
Number of Holdings	~1,320	~9,950	~2,300
Top 10 Concentration	~26.8%	~19%	~25%
YTD Return	+2.43%	+2.50%	+2.43%

Cost Considerations:
VT is significantly more cost-effective with an expense ratio of 0.06%, compared to 0.24% for URTH. ACWI is more expensive at 0.32% but also provides global coverage inclusive of emerging markets.

Diversification Differences:
Both VT and ACWI include exposure to emerging markets such as China, India, and Brazil, offering a wider spectrum of global economic participation. URTH's exclusion of these markets reduces certain geopolitical risks but also limits access to potentially higher-growth economies.

Scale and Liquidity:
With over $61 billion in assets under management, VT is substantially larger than URTH's ~$7 billion. This scale provides additional capacity for very large orders, though URTH remains a well-established and liquid product in its own right.

Outlook for Q1 2026: Three Key Drivers

Three primary factors are poised to influence the fund's performance in the coming quarter.

1. The AI Earnings Test

With Nvidia as its top holding, a material portion of URTH's performance is linked to the momentum of AI investment. The upcoming February earnings season will be a critical gauge. Should major cloud and platform providers like Microsoft, Google (Alphabet), and Amazon show signs of moderating their data center and AI infrastructure spending, it could pressure the fund's heavily weighted tech holdings.

2. Quarterly Index Rebalancing

The scheduled MSCI index review in February may lead to further shifts in the benchmark's composition. If US tech stocks maintain their outperformance, passive strategies like URTH will be compelled to purchase more of these shares, potentially driving valuations even higher. URTH currently trades at a price-to-earnings ratio of approximately 25, which limits its tolerance for earnings disappointments.

3. The Currency Factor

Given its more than 70% exposure to US assets, URTH effectively acts as a long US dollar position for international investors. If the US Federal Reserve adopts a notably more accommodative policy stance later in the year while the European Central Bank remains steadier, a weaker US dollar could noticeably dampen the ETF's returns when converted into other currencies.

Conclusion: A Transformed Core Holding

While the iShares MSCI World ETF remains a core component for exposure to developed equity markets, its character has visibly evolved into a top-heavy, technology-centric product. The combination of a high US weighting, dominant AI and tech holdings, and a valuation level around 25 times earnings makes its near-term path particularly dependent on the impending earnings season, the February MSCI rebalancing, and the trajectory of the US dollar throughout 2026.