The iShares MSCI World ETF: Concentration Concerns Amid a Record Run

MSCI World ETF US4642863926

As 2026 gets underway, the iShares MSCI World ETF is trading near its all-time peak, propelled by significant momentum. However, this rally masks a notable portfolio shift that is raising questions about diversification. The fund’s heavy reliance on U.S. equities, and now a single AI champion, presents investors with a classic dilemma: the pursuit of returns versus the perils of overconcentration.

The fund’s strategy, focusing exclusively on developed markets, delivered a total return exceeding 23% for investors in 2025. It now holds approximately $6.8 billion in assets, benefiting from capital flows into perceived safe havens. A geographical breakdown reveals a pronounced tilt: U.S. equities constitute about 70% of the portfolio, followed by Japan (6%) and the United Kingdom (4%). In effect, the fund increasingly resembles a U.S. technology portfolio with an international overlay.

The most striking change, however, is visible in its top holdings. Reflecting the massive investment cycle in artificial intelligence hardware, Nvidia has executed a historic changing of the guard. With a weighting of 5.31%, it now stands as the fund’s largest single position, surpassing Apple (4.55%) and Microsoft (4.00%). This shift has amplified concentration risk, with the ten largest positions collectively accounting for nearly 27% of the total fund volume.

Valuation and Cost Considerations

Trading around $188, the ETF is within striking distance of its 52-week high. This outperformance comes at a valuation premium, with the underlying index’s price-to-earnings (P/E) ratio approaching 24—a level that appears to price in an almost flawless economic scenario.

On fees, the product’s total expense ratio of 0.24% is higher than competitors like the Vanguard Total World fund (0.07%). The iShares ETF justifies this through its deliberate exclusion of emerging markets, a strategy that has historically reduced volatility by sidestepping geopolitical risks associated with regions such as China.

Technical Levels and Forward Catalysts

From a chart perspective, a short-term resistance zone exists between $188 and $190, with solid support established near $175. The immediate trajectory will likely be determined by the upcoming earnings season for major technology firms in late January. Any earnings disappointments could trigger a correction, given the elevated valuations across the sector.

Conversely, a weakening U.S. dollar in the first quarter could provide a tailwind. The fund’s non-U.S. holdings, representing roughly 30% of the portfolio, would act as a buffer and potentially generate additional currency gains for investors.