iShares Core MSCI World UCITS ETF (IRRRF) is a fully diversified exchange-traded fund launched and managed by BlackRock Asset Management Ireland Limited. The fund has assets under management (AUM) of $59.5 billion that it has invested in public shares of large and mid-cap companies on stock exchanges around the world. This ETF has been trading as an OTC stock since July 292016, more than five years ago.

iShares Core MSCI World UCITS ETF is also listed on the London Stock Exchange (LSE) under the symbols SWDA and IWDA. While SWDA is traded in British Pound (GBP), IWDA is traded in US Dollar (USD). This product is also listing on Euronext Amsterdam, Bolsa Mexicana De Valores, Borsa Italiana, SIX Swiss Exchange and Deutsche Boerse Xetra. Since this ETF diversifies its investments across all major stock markets, investors around the world may be interested in investing in this ETF in their home currency.

iShares Core MSCI World UCITS ETF invests in shares of a huge 1,542 companies, with US-based companies accounting for approximately 69 % of total portfolio. Another 20 % is invested in companies based in Japan, UK, Canada, France and Switzerland. This ETF rebalance its portfolio at the end of each quarter.

Managing this level of diversified holdings is an extremely difficult task and can increase the fund’s management costs. However, this fund was able to operate with a low expenditure rate of 0.2%. It is one of the few funds that pays no dividends, which is not a consideration for investors seeking income. It was formerly known as iShares III Public Limited Company – iShares MSCI World UCITS ETF, which was established on September 25, 2009 and was domiciled in Ireland.

This ETF has virtually no significant holdings, as its investments are spread over 1,542 companies each in a very small proportion. The fund seeks to replicate the performance of the MSCI World Index using a representative sampling methodology. In representative sampling, a few stocks in the benchmark are selected to include stocks from all sectors, all geographic regions and all types of market capitalization. Thus, the iShares Core MSCI World UCITS ETF becomes a representative index (and not a replica) of the MSCI World index.

iShares Core MSCI World UCITS ETF price returns were strong. Over the past 5 years, the price of IRRRF has increased by 78.4% compared to 88.6% of the S&P 500 index. Over the past 3 years, IRRRF has seen price growth by 46.7%. Over the same period, the S&P 500 index grew by 51%. Thus, the IRRRF managed to generate a price CAGR of around 13% in the medium term. However, the last year has been very bad for this ETF and failed to generate even 4% growth.

A very small proportion of IRRRF’s portfolio (22.5%) is invested in core or basic industries – materials, utilities, energy, real estate, and basic consumer goods – that derive their income from the basic needs of people (e.g. food, house, gas, minerals, electricity). This ETF has important investments in stocks from the financials (14%), healthcare (12%), consumer discretionary (11.5%) and industrials (10%) sectors. Together, these sectors constitute 47.5% of IRRRF’s total equity holdings.

Most of the investments (30%) are made in information and communication technology (ICT) stocks. Five of its seven largest holdings (more than 1% of the portfolio) belong to the ICT sector – Apple Inc. (AAPL), Microsoft Corporation (MSFT), Alphabet Inc. (GOOG) (GOOGL), Meta Platforms, Inc. (FB ) and Nvidia Corporation (NVDA). The other two are automotive giant Tesla, Inc. (TSLA) and e-commerce giant Amazon.com, Inc. (AMZN), which have strong ties to the tech sector. Although this ETF is quite well diversified, a 30% investment in technology stocks presents the risk of a sudden drop due to the poor performance of this sector.

Since the operation of these companies is not an integral part of human existence, these stocks tend to be affected more due to economic growth and downturn. In general, these stocks are more volatile. Over the past five years, unemployment, rising tariffs, inflation, COVID-related supply chain disruptions and labor shortages have had significant impacts on a few of these non-essential sectors, the impact of which has not yet been overcome. However, the extreme level of diversification has helped this fund to largely negate the impact of the pandemic and all other macroeconomic setbacks.

iShares Core MSCI World UCITS ETF holdings averaged PER of 19.4 and a P/P ratio of 3. Price multiples place this ETF slightly on the higher side of valuation. Although the stock is trading at around a 7% premium to its 52-week low, there still appears to be downside potential as indicated by the simple moving averages (SMA). The long-term 200-day SMA (85.35) is partially above the short-term moving averages of the 50-day SMA (83.02) and 10-day SMA (83.94).

In order to be on the safe side in such circumstances, I generally hedge these stocks with call and put options with terms of six months or more. In order to protect my investments from an unlikely fall, I prefer to buy a put option at a strike price closest to the current market price, so that my main investment does not suffer a loss of more than 10-15%. But, unfortunately, IRRRF has no options. This limits the potential for safeguarding or protecting investments in iShares Core MSCI World UCITS ETF.

A very interesting fact about iShares Core MSCI World UCITS ETF shares is that the price has remained unchanged for the past 10 days and only one share has been traded for the entire period. Also previously, this stock price remained unchanged at frequent intervals. However, such a long interval is rare. This means that investors aren’t too eager to buy these stocks, and existing investors aren’t in a rush to liquidate their holdings.

The advantage of iShares Core MSCI World UCITS ETF is that in the medium term, this diversified ETF has been able to follow the price growth of the S&P 500 index. However, it will take a few more years to see its long-term growth. term. Based on the performance so far and the depth of its diversification, I can’t find any reason why this ETF won’t be able to continue its historic growth and generate something close to double-digit price growth over a time horizon. longer time frame. .

But at the same time, this fund neither allows me to earn stable dividend income nor to hedge my exposure with call and put options. Thus, this ETF increases my investment risk. Although it appears to have long-term growth potential due to its extreme level of diversification (geographic, sector and fund size), as a risk-neutral person, for the time being, I would prefer to stay spread of iShares Core MSCI World UCITS ETF due to the concentration of technology stocks, the absence of a dividend as well as the unavailability of hedging options.