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KAPITALKOMPASS #55: MSCI World: Broad facade, narrow risk
- service4100
- Dec 13, 2025
- 5 min read
Dear readers,
The MSCI World is often touted as a "global portfolio." In practice, however, it's now a highly correlated US/tech cluster—with all the concentration and valuation risks that entails. When a passive global index is increasingly dominated by a few AI-driven stocks, "one ETF for everything" is no longer sufficient. In this issue, we examine where the diversification illusion begins, which concentration risks you should be aware of, and what a truly global allocation can look like today—robust, balanced, and high-yielding.
MSCI World –
Country and industry weighting
Country weighting
United States | ~72% |
Japan | ~5.4% |
United Kingdom | ~3.6% |
Canada | ~3.2% |
France | ~2.6% |
Germany | ~2.3% |
Switzerland | ~2.2% |
Australia | ~1.6% |
Netherlands | ~1.2% |
Sweden | ~0.9% |
Spain | ~0.9% |
Industry weighting
Information technology | ~26% |
Finance | ~17% |
industrial companies | ~11% |
Non-basic consumer goods | ~10% |
healthcare | ~9% |
Communication services | ~9% |
Basic consumer goods | ~6% |
energy | ~4% |
Raw materials and basic materials | ~3% |
utility companies | ~3% |
property | ~2% |
AI cluster: A single driver dominates
The current concentration risk stems from a single, oversized growth driver: artificial intelligence. The heavyweights along the same value chain – semiconductors, accelerator chips, cloud/hyperscalers, foundation model providers, and AI applications – are highly correlated. Our simulation since the beginning of the AI boom at the end of 2022 illustrates the scale: the eleven key AI players have increased their market capitalization 3.1-fold in a short period, reaching a combined market capitalization of USD 13.49 trillion.
The MSCI World rose by an annualized rate of 15.96% during this period ; excluding the AI contribution, the CAGR falls to 8.91% . In other words: Almost half of the recent global market performance hinges on a single narrative.
Implications for portfolios: Anyone buying "World" via MSCI World is primarily buying an AI cluster – with concentration, valuation and regime change risks.
Why the MSCI World
The term "global portfolio" falls short
Our structural analysis reveals clear blind spots – the index only partially reflects the global real economy:
US/Tech Overweight: The index is dominated by US stocks, primarily a few mega-caps along the AI value chain. Concentration risk included.
No emerging economies like China, India & Co. are completely missing – key growth drivers of the next decade are left out.
Europe is underrepresented; quality leaders from industry, healthcare, automation and dividend culture are underweighted .
Africa & Middle East excluded. Regions with structural investment needs (energy, infrastructure) are not included .
Raw materials and basic materials (marginal commodities/materials , including critical metals and rare earths) account for around 3% – too little for a technologized economy.
Dividends are only generated by chance; income factors are not specifically controlled, but rather occur "on the side" and are industry-specific.
Conclusion: The MSCI World is not a robust global allocation as a sole solution.
Five to-dos for investors
Current state analysis: Check the top 10 positions and country/sector shares – not just the fund name.
Separate the drivers: Balance growth (AI, software, semiconductors) and stabilization components (dividend quality, infrastructure, utilities, raw materials).
Targeted increases in Europe & EM: Return drivers are now more broadly distributed than the MSCI World suggests.
Prioritize valuations and cash flows: quality over story, free cash flow over hope.
Implement rebalancing in a disciplined manner: gradually shift profits from the cluster into underrepresented segments.
One possible alternative:
Actively diversify – reduce concentration risks
Instead of blindly mirroring the "global index," we focus on a balanced allocation across regions and sectors . Our goal: to leverage growth sources, reduce dependencies, and increase cash flow stability.
1) Regional allocation (top-down)
USA – 40% growth drivers with tech and software leaders – but with upper limits per mega-cap.
Europe – 25% quality stocks from industry, healthcare, automation, dividend strength.
Japan – 8% export and robotics exposure; governance and capital return story.
Asia EM – 20% India, ASEAN, South Korea, Taiwan: Demographics, production relocation, tech hardware.
LATAM & MENA – 7% Raw materials, energy, infrastructure – diversification buffer against global shocks.
Added value: Broad growth base without the overemphasis of a single economy; robust correlation effects.
2) Industry distribution (bottom-up, less tech-dominant)
Information technology – 20% focus on profitable, cash flow-strong tech (AI enablement, software, semiconductors – with position limits).
Finance – 15% Universal banks/insurers with strong solvency; interest rate and dividend leverage.
Industry – 15% Automation, mechanical engineering, logistics – beneficiaries of “re-/near-shoring”.
Health – 15% Pharma/MedTech as a defensive revenue driver with an innovation pipeline.
Consumption is cyclical – 10% global brands, e-commerce leaders with pricing power.
Defensive consumption – 10% base consumption as an anchor of stability in weaker cycles.
Energy & Utilities – 7% Classical energy + networks/producers; inflation and infrastructure hedge.
Raw materials and basic materials – 8% copper, lithium, rare earths – critical inputs for the energy transition/electrification.
Conclusion
When the passive global index has effectively become a highly correlated AI cluster , "one ETF for everything" is no longer sufficient. Global diversification must be actively rethought : balancing regions, decoupling sector risks, and strategically integrating structural winners outside the US tech sector. This transforms perceived breadth into genuine risk diversification – and index dependence into a resilient portfolio.
Our conclusion is clear: breadth requires a structured approach – not just a well-known index. If you'd like to know how concentrated your portfolio actually is and where targeted adjustments can be made, we'd be happy to assist you.
→ Request a portfolio check now – we analyze your positions, identify concentration risks and outline a tailored, actively thought-out diversification strategy.
With best regards and happy investing,
Your service team
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Source:
Torsten Leißner