As 2025 draws to a close, the iShares MSCI World ETF (URTH) is navigating a significant market transition. The fund’s bedrock remains the cohort of mega-cap technology stocks often dubbed the “Magnificent Seven.” However, a noticeable shift in investor capital is underway, moving toward cyclical sectors such as financials and industrials. This rotation finds its catalyst in the Federal Reserve’s recent decision to cut interest rates by 25 basis points, a move that has reinvigorated market risk appetite.
The anticipation of a global soft landing in 2026 is driving investment into areas poised to benefit most from reduced borrowing costs. Concurrently, the MSCI World Index’s semi-annual rebalancing in November uncovered a noteworthy trend: several mid-cap companies from the technology and healthcare sectors have graduated to large-cap status. This progression underscores the index’s continued emphasis on growth-oriented holdings.
The Persistent Dominance of US Equities
The URTH ETF maintains a heavily concentrated exposure to US mega-cap stocks, which now account for over 72% of its geographic weighting. A substantial degree of asset concentration is evident, with the fund’s top ten holdings representing approximately 27.8% of its total assets. This focus provides potent momentum but simultaneously introduces notable concentration risks.
This skew is inherent to the fund’s design, as it tracks the MSCI World Index. By definition, this index captures the largest publicly traded companies across developed markets, resulting in a structural overweight to American technology giants. Consequently, representation from European and Asian equities remains significantly lower.
Should investors sell immediately? Or is it worth buying MSCI World ETF?
Assessing the Sustainability of the Shift
The current pivot from pure growth stocks toward financial and industrial shares may represent more than a fleeting trend. For banks, lower interest rates initially compress net interest margins, but they are also expected to stimulate loan demand. Industrial firms, meanwhile, stand to gain from more favorable financing conditions for capital expenditures and expansion.
The longevity of this rotation hinges on two key factors: whether the Federal Reserve maintains its monetary easing path through 2026, and if the global economy achieves the projected soft landing. Should inflationary pressures reassert themselves unexpectedly, this sectoral shift could reverse abruptly.
In essence, the ETF continues to reflect the dynamics of the global equity landscape—capturing both the opportunities and the risks inherent in a market dominated by a concentrated group of US leaders.
Ad
MSCI World ETF Stock: Buy or Sell?! New MSCI World ETF Analysis from January 31 delivers the answer:
The latest MSCI World ETF figures speak for themselves: Urgent action needed for MSCI World ETF investors. Is it worth buying or should you sell? Find out what to do now in the current free analysis from January 31.
MSCI World ETF: Buy or sell? Read more here...
