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3w ago

Investors Shift to Equal-Weight MSCI World ETFs to Cut U.S. Exposure

Outpacing the traditional MSCI World Index this year, these funds guard against potential U.S. withholding tax hikes.

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Overview

  • Despite a drop from 74% before 2017, U.S. stocks still make up 69.4% of the MSCI World Index, led by the ‘Magnificent Seven’ at 21.8%.
  • The BNP Paribas Easy MSCI World Equal Weight Select ETF limits U.S. exposure to 35.8% and excludes the bottom 20% of companies in ESG ratings.
  • Europe-focused defense names such as Rheinmetall, Saab and Leonardo rank among the top holdings in BNP Paribas’s equal-weight ETF. Invesco’s equal-weight ETF, launched in September 2024, has attracted half a billion dollars by offering more balanced regional allocation.
  • Growing concerns over U.S. tax changes under Section 899 have driven demand for funds shielding international investors from higher withholding rates.