A Year of Robust Gains for the iShares MSCI World ETF

As 2025 draws to a close, the iShares MSCI World ETF (ticker: URTH) is poised to finish the year with impressive strength. The fund has delivered an annual return in the region of 20% to 22%, propelled primarily by U.S. technology giants and a broad recovery across developed markets. However, rising volatility toward year-end signals a shifting landscape, where a potential correction in the tech sector and the growing vigor of emerging markets are challenging the traditional dominance of American heavyweights.

The final quarter of the year has been characterized by two major themes: a pivot in monetary policy and significant sector rotation. Major central banks, including the U.S. Federal Reserve, embarked on an easing cycle in 2025, implementing a third consecutive interest rate cut in December. This supportive policy backdrop has buoyed equity valuations globally.

While artificial intelligence remains a powerful thematic driver, signs of fatigue are emerging from the stretched valuations of many technology stocks. By late December, evidence is mounting that capital is being reallocated into sectors and regions offering more attractive relative valuations.

A comparative look at index performance underscores this broadening dynamic:
- The MSCI World Index (developed markets) achieved a solid double-digit return for 2025.
- Emerging markets indices, meanwhile, posted gains approaching 30% over the same period.

This divergence suggests market leadership is expanding beyond the familiar U.S. mega-cap technology names—a crucial development for a fund whose composition is heavily influenced by these very stocks.

Portfolio Composition and Key Holdings

The ETF maintains a pronounced geographic concentration, with U.S. equities accounting for approximately 70% to 72% of the portfolio. Japanese stocks represent roughly 6%, followed by the United Kingdom at about 4%. This structure inherently ties the fund's fortunes closely to the sentiment on Wall Street.

Leading Holdings (Weightings as of late December 2025):

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1. NVIDIA (~5.4%): Experiencing notable volatility after a period of powerful momentum.
2. Apple (~4.9%): Continues to be viewed as a defensive growth holding.
3. Microsoft (~4.5%): A stable core holding in enterprise IT.
4. Amazon (~2.8%): Benefiting from resilient consumer spending and its cloud business.
5. Meta Platforms (~2.0%): Strong earnings performance has solidified its weighting.
6. Broadcom (~1.7%): A key semiconductor and infrastructure holding.
7. Alphabet Class A (~1.6%)
8. Alphabet Class C (~1.3%)
9. Tesla (~1.2%): Introduces additional volatility to the portfolio.
10. JPMorgan Chase (~1.1%): The largest financial position, poised to benefit from a steeper yield curve.

Collectively, the top ten holdings constitute between 26% and 27% of the fund's assets. A significant portion of this is represented by the so-called "Magnificent Seven" cohort plus Broadcom. Consequently, URTH's near-term trajectory remains highly sensitive to the quarterly earnings reports of these technology behemoths.

At the sector level, Information Technology commands a dominant share of around 27%. Financials follow at approximately 16%, with Industrials accounting for roughly 11%.

2025 Performance Metrics and Fund Characteristics

Throughout 2025, the ETF successfully captured the equity market's upward trend while providing diversification across developed regions and industries—though it deliberately excludes exposure to emerging markets.

Key Fund Data (Late December 2025):

• Share Price: ~$187.72
• 1-Month Performance: ~+5.0% (boosted by typical pre-holiday "Santa Rally" tendencies)
• Year-to-Date Return (2025): ~20.5% to 22.3%
• 1-Year Return: ~19.6%
• Premium/Discount to NAV: A slight premium of approximately 0.09%
• Replication Method: Physical, with a historically low tracking error
• Expense Ratio: 0.24% per annum

The fund's modest premium to its net asset value, coupled with consistently high trading volumes, indicates strong liquidity and tight bid-ask spreads.

Strategic Positioning and Outlook

Categorized as a "Global Large-Stock Blend" fund, URTH's defining characteristic is its exclusive focus on developed markets. Emerging markets are intentionally omitted, requiring investors to seek separate products for that exposure.

This strategic choice positions the ETF between comprehensive global all-in-one solutions and more narrowly focused regional products. Looking ahead, a central question will be how the balance evolves between the U.S. technology titans and the strengthening performance of other regions and sectors. The fund's performance profile in the coming months will be particularly visible at this very intersection, defining its path forward.