The MSCI World ETF Approaches Peak Valuation Amid Key Index Review

MSCI World ETF US4642863926

The iShares MSCI World ETF (URTH) continues its strong performance into January, trading within striking distance of its all-time highs. Its net assets, nearing the $7 billion threshold, underscore the significant capital inflows into developed equity markets. However, with stretched valuations and a scheduled index review, questions about sustainability arise.

Recent returns have been robust. According to official data, the ETF posted a total return of 21.28% in 2025. This marks a third consecutive year of substantial gains, following returns of 23.93% in 2023 and 18.72% in 2024. Since the start of the year through late January, the fund has added approximately 2.90%.

This performance is set against a backdrop of elevated valuations, reflective of developed markets overall. BlackRock data as of January 28 shows the fund trades at a price-to-earnings (P/E) ratio of 26.44 and a price-to-book ratio of 3.94.

Key Fund Details (Late January):
- Assets Under Management: ~ $6.97 billion
- Number of Holdings: 1,321
- Expense Ratio: 0.24%
- Trailing 12-Month Yield: 1.49% (distributions semi-annual)

Concentration Risk: A Portfolio Dominated by Tech Giants

A defining characteristic of the ETF is its pronounced concentration in major U.S. technology stocks. The top ten holdings collectively account for 27.31% of the fund's assets, based on the December 31, 2025 fact sheet.

Leading individual positions include:
- NVIDIA: 5.45%
- Apple: 4.85%
- Microsoft: 4.11%
- Alphabet (combined A & C shares): 4.04%
- Amazon: 2.67%
- Broadcom: 1.87%
- Meta: 1.72%
- Tesla: 1.53%
- JPMorgan Chase: 1.07%

This focus is mirrored at the sector level, where Information Technology represents roughly 27% of the portfolio, followed by Financials at about 17%.

Upcoming Index Review Pivotal for Future Composition

All eyes are on the forthcoming quarterly review of the underlying MSCI World Index. MSCI published its schedule in November, setting concrete dates for the next adjustment:
- Review Announcement: February 10
- Effective Date: March 2

This review has garnered additional attention due to MSCI's recent policy decisions regarding Digital Asset Treasury Companies (DATs). Following investor feedback, MSCI will continue to include companies with substantial cryptocurrency holdings in its indices. However, it plans to introduce limits on share count adjustments for new share issuances by these firms.

Trading Profile and Ratings

The ETF employs a physical replication strategy, directly holding the index constituents. BlackRock cites a 30-day median bid-ask spread of 0.03% and an average daily trading volume exceeding 415,000 shares as of late January.

Morningstar assigns the fund a Bronze Medalist rating alongside a 5-star overall rating.

With the February 10 announcement date imminent, market participants are focused on potential changes to the index's composition and constituent weightings, which could influence the ETF's trajectory.