Riding the AI Wave: iShares MSCI World ETF Nears Record Highs

The iShares MSCI World ETF (URTH) is approaching multi-year peaks, propelled by its substantial allocation to mega-cap technology stocks. This fund, which boasts $5.0 billion in assets under management, continues to attract significant investor capital.

Performance Fueled by Tech Concentration

Recent performance figures highlight the ETF’s strength. It has delivered a one-year return of 16.50%, slightly outpacing its benchmark, the MSCI World Index, which returned 16.26%. Year-to-date gains stand at 16.27%, demonstrating consistent tracking efficiency.

Longer-term metrics reveal a notable acceleration in performance. The fund’s three-year annualized return of 18.46% significantly exceeds long-term averages, while its five-year and ten-year returns of 14.73% and 10.90%, respectively, underscore this positive trend. Trading within a 52-week range of $136.34 to $179.34, the ETF’s current price near the upper bound indicates robust investor demand, though it also reflects the inherent volatility experienced.

A Portfolio Dominated by US Tech Giants

A deep dive into the holdings reveals a pronounced focus on leading US technology companies, a key factor in its recent success. The top ten positions collectively account for 26.2% of the total assets, creating a portfolio highly sensitive to movements within the tech sector.

Should investors sell immediately? Or is it worth buying MSCI World ETF?

The largest holdings are:
* NVIDIA: 5.42% weighting
* Microsoft: 4.56% weighting
* Apple: 4.43% weighting
* Amazon: 2.79% weighting
* Meta Platforms: 2.05% weighting

This tech-centric theme is further emphasized by significant positions in Broadcom (1.69%) and Alphabet (a combined 2.92%). While this concentration has proven advantageous during the artificial intelligence-driven market rally, it introduces potential risks should a sector rotation occur.

Underlying Diversification and Trading Efficiency

Despite its top-heavy tech exposure, the fund maintains a broad base of 1,326 individual holdings across 23 developed markets. The United States represents over 60% of the allocation, with the remainder providing diversification through exposure to European and Asia-Pacific equities.

The ETF is characterized by high liquidity, with an average daily trading volume exceeding 320,000 shares. It typically trades with narrow spreads to its net asset value, a sign of efficient market making. Investors also benefit from a competitive total expense ratio (TER) of 0.24%, which remains attractive within the developed markets ETF space.