The AI Surge Reshapes a Core Global Equity ETF

As 2025 draws to a close, the iShares MSCI World ETF (ticker: URTH) is reaping the rewards of a robust year for developed market equities. Trading around $187 per share and boasting an asset base of approximately $6.6 billion, this fund continues to serve as a cornerstone for investors seeking diversified exposure to advanced economies, while sidestepping the heightened volatility often associated with emerging markets.

A defining characteristic of the current landscape, however, is the fund's increasing dependence on a narrow cohort of major U.S. technology and semiconductor stocks. This concentration is the primary narrative for URTH in 2025.

The fund's performance is being propelled by massive capital inflows into U.S. technology megacaps. Companies positioned within the semiconductor and software sectors are viewed as the principal beneficiaries of the ongoing artificial intelligence investment boom, often termed the "AI Supercycle," which is centered on AI infrastructure and data center expansion.

Key performance drivers include:
* Exceptional earnings growth from leading U.S. technology and semiconductor firms.
* Sustained, high-level investment into AI infrastructure, particularly cloud computing and data centers.
* A softer U.S. dollar, which enhances the value of overseas earnings and provides a tailwind for the ETF's international holdings.

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

Concentration Within Diversification

Although URTH provides exposure to over 1,300 individual securities across 23 developed countries, its performance is increasingly tied to a handful of giant U.S. tech stocks. The top ten holdings now account for roughly 27.2% of the entire fund's assets, marking a significant rise in concentration despite its nominally broad, diversified mandate.

This shift was underscored in December 2025, when NVIDIA Corp. (NVDA) claimed the fund's top position, surpassing previous heavyweights Apple and Microsoft. This change highlights the growing influence of the semiconductor industry within global indices, fueled directly by the persistent AI investment cycle.

Outlook and Considerations

The iShares MSCI World ETF remains a comprehensive vehicle for accessing developed equity markets. However, by the end of 2025, its fortunes are more closely linked to U.S. technology and semiconductor companies than in prior periods. This substantial weighting toward its largest constituents amplifies the potential for gains should the strong AI-driven environment persist. Conversely, it also elevates portfolio concentration risk, leaving the fund more susceptible to potential downturns or corrections within the technology megacap segment.