While the iShares MSCI World ETF (URTH) offers investors exposure to developed markets across the globe, a closer examination of its holdings reveals a portfolio heavily skewed toward the United States. This fund, which tracks the MSCI World Index, holds over 1,300 individual stocks. However, approximately 70% of its total assets are invested in American equities. This concentration is further highlighted by the fact that its ten largest positions alone account for nearly 28% of the fund.
A Top-Heavy Portfolio Led by Tech
The recent reshuffling at the top of the portfolio underscores the dynamic nature of the U.S. technology sector. Following the MSCI index rebalancing on November 25, 2024, the fund added Spotify Technology, reflecting the ongoing significance of digital service providers. The current lineup of the fund’s largest holdings is dominated by familiar U.S. tech giants, with one notable exception:
- Nvidia (NVDA): ~5.3% – The AI chipmaker now occupies the leading position.
- Apple (AAPL): ~5.0% – Recently slipped to second place.
- Microsoft (MSFT): ~4.2%
- Alphabet (GOOGL/GOOG): ~4.1% (combined share classes)
- Amazon (AMZN): ~2.6%
- Broadcom (AVGO): ~2.1%
- Meta Platforms (META): ~1.7%
- Tesla (TSLA): ~1.5%
- JPMorgan Chase (JPM): ~1.0% – The sole non-technology company in the top ten.
- Eli Lilly/Berkshire Hathaway: ~0.9%
This overwhelming U.S. focus means that other major developed nations represent only minor allocations. Japan follows as the next largest country weighting at just 5-6%, while the United Kingdom, France, and Canada each hover around 3%. Consequently, the “World” in the fund’s name can be somewhat misleading; in practice, investors are acquiring a diversified U.S. index fund with a supplementary international component.
Performance and Practicalities
With assets under management of $6.6 billion, the ETF provides precise tracking of its benchmark. It carries an expense ratio of 0.24%.
Should investors sell immediately? Or is it worth buying MSCI World ETF?
Recent performance figures (as of December 2024) illustrate the benefits and limitations of its structure:
* 1 Week: -0.02%
* 1 Month: -0.37%
* 3 Months: +5.90%
* Year-to-Date: +19.72%
* 1 Year: +16-18%
The strong returns in 2024 have been fueled primarily by the U.S. bull market, though they slightly trail those of pure U.S. indices. The international holdings provide a modest dampening effect on performance during uptrends and are unlikely to offer substantial diversification in the event of a sustained U.S. market downturn.
For investors, the fund remains efficiently tradable. Its average trading volume is more moderate than behemoths like VTI or SPY, with the bid-ask spread typically ranging between $0.02 and $0.05.
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