The iShares MSCI World ETF (ticker: URTH) is entering the 2026 trading year with significant momentum, building on an impressive 2025 gain of approximately 22.5%. However, this robust performance masks a fundamental evolution in the fund’s character. It is increasingly transforming from a broadly diversified global portfolio into a concentrated bet on the U.S. technology sector. With Nvidia now occupying the top position, investors must confront a critical question: has the fund’s diversification been compromised?
A Costly Focus for Outperformance
This ETF’s ability to outperform broader global indices like the Vanguard Total World Stock ETF (VT) or the MSCI ACWI in 2025 can be directly attributed to what it excludes: emerging markets. While economies such as China grappled with deflation and regulatory challenges, the URTH benefited from its exclusive focus on developed markets.
Investors pay a premium for this focused exposure. With an expense ratio of 0.24%, the fund is notably more expensive than comparable “Total World” products, which charge around 0.07%. This higher fee is only justified if U.S. and Japanese markets continue to outpace global economic growth.
Valuation and Technical Positioning
The powerful rally has pushed valuations upward. The ETF is trading at a historically rich price-to-earnings (P/E) ratio of nearly 24. Investor optimism is now pinned on anticipated interest rate cuts from the U.S. Federal Reserve in the first quarter of 2026, which are expected to support these elevated multiples.
Should investors sell immediately? Or is it worth buying MSCI World ETF?
From a chart perspective, the outlook remains constructive. The fund is trading near its all-time high in the $187 to $188 range. Two factors will be decisive for its trajectory this year. First, the massive AI investments made by its top holdings must translate into broad-based earnings growth. Second, the $190 level acts as a key technical trigger. A sustained breakout above it would confirm the long-term bullish trend, while the 50-day moving average near $180 serves as the first major support level.
The New Hierarchy: A Handful of Giants Hold Sway
The recent surge is primarily driven by enormous demand for artificial intelligence, catalyzing a historic shift in the fund’s power structure. As of December 31, 2025, the ten largest holdings account for roughly 27.3% of the total fund assets. Nvidia, with a weighting of 5.45%, has dethroned traditional leaders to become the ETF’s single largest position.
This concentration introduces a significant “single-stock risk.” Furthermore, the information technology sector alone now commands almost 30% of the entire portfolio. In effect, the ETF operates as a leveraged wager on the U.S. tech ecosystem, which comprises over 70% of its geographic allocation. Investors seeking genuine global diversification may find they are holding a vehicle dominated by U.S. exposure.
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