The MSCI World ETF’s Growing Reliance on US Technology Giants

MSCI World ETF US4642863926

Investors in the iShares MSCI World ETF (URTH) enjoyed robust returns in 2025, with the fund delivering a total annual gain of 21.28%. This performance, however, masks a significant underlying shift in the fund's composition. What is marketed as a diversified global portfolio is increasingly becoming a concentrated bet on the US technology sector, fueled largely by the artificial intelligence boom. This concentration raises important questions about hidden risks within this popular investment vehicle.

With assets under management totaling $6.9 billion, the URTH tracks companies across 23 developed nations. A closer examination reveals a startling lack of diversification at the top. The ten largest holdings alone account for approximately 27% of the entire portfolio. This heavy reliance on a handful of US technology behemoths is unmistakable:

• NVIDIA leads with a 5.31% weighting.
• Apple follows at 4.38%.
• Microsoft holds a 3.74% share.

Overall, the technology sector now commands about 34% of the fund's allocation. While this provides direct exposure to high-growth themes like AI and semiconductors, it substantially reduces the benefits of diversification. Reflecting the market-cap weighting of its underlying index, US equities constitute over 70% of the fund's assets.

Competitive Positioning and Recent Returns

The fund's strategy has recently paid off handsomely. Beyond its strong 2025 performance, 2026 also began on a positive note, with the ETF advancing 1.71% through January 22. Over a five-year horizon, it has generated an annualized return of 12.30%, slightly outperforming its benchmark index.

When compared to similar products, the URTH carves out a specific niche:
* Market Focus: It is strictly limited to developed markets, excluding emerging economies entirely.
* Cost Structure: Its total expense ratio of 0.24% positions it as more expensive than the broader Vanguard Total World Stock ETF (VT at 0.06%) but cheaper than the iShares MSCI ACWI ETF (0.32%).
* Key Differentiator: Unlike the VT or ACWI funds, the URTH offers no exposure to emerging markets.

Forward-Looking Considerations

The next significant event for investors is the index's scheduled rebalancing in February 2026. Given the fund's substantial US tilt and tech-heavy profile, its future trajectory will be closely tied to US monetary policy and the earnings power of Silicon Valley's largest firms. For those seeking pure developed-market exposure and wishing to avoid the currency and political risks associated with emerging economies, this ETF presents a focused solution. This choice, however, comes with the acceptance of higher valuation levels inherent in its significant US allocation.