iShares MSCI ACWI ETF

ACWI

Market cap $22.9B

U.S. valuations are historically high, with average P/E ratios near 30x, which could lead to disappointing returns over the medium term. ACWI offers global diversification, but still allocates over 60% to the U.S., the top holdings are concentrated in expensive mega-cap tech stocks. The top 20 holdings are trading at an average P/E ratio of 43x, while the average holding demands a 30x earnings multiple.

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Global equities hit a record high as AI optimism, easing trade tensions, and solid global data drive ETF momentum worldwide.

ACWI offers unmatched global equity diversification, covering 85% of global market cap across 23 developed and 26 emerging markets at a low 0.32% fee. This ETF is ideal for investors seeking broad, hassle-free exposure to global equities, serving as a strong portfolio core or anchor. While ACWI guarantees average market returns, it removes the need to time regions or sectors, providing peace of mind and simplicity.

Wall Street experienced massive volatility in the first quarter of 2025, largely due to trade uncertainty. International economies and gold outperformed.

A more balanced portfolio can handle somber U.S. equity performance, as long as strong equity returns from abroad continue.

I am upgrading ACWI from a hold to a buy, citing its decent valuation and improved risk/reward profile despite recent market volatility. ACWI's P/E ratio has retreated to under 18, and its forward 12-month yield is 1.83%, outperforming the S&P 500's yield. The ETF is well-diversified, with less concentration in US stocks and significant international equity positions, enhancing its stability.

ACWI has a high exposure to value stocks, providing stability but underperforming growth-oriented funds like ACWI. ACWV's higher exposure to defensive sectors and lower exposure to technology limits its ability to outperform ACWI in the long run. ACWV is ideal for risk-averse investors seeking stability, but less suitable for those aiming for strong long-term returns.

I maintain a hold rating on ACWI due to its lukewarm valuation and anticipated near-term volatility, especially with bearish seasonal trends and technical signals. ACWI trades near 18x earnings, with 2025 earnings growth expected at 13.6% in 2025, but its valuation is on the high side. The ETF offers better equity and style diversification compared to the S&P 500, with significant exposure to Information Technology and Financials sectors.

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