Should investors consider exiting their MSCI World ETF positions due to the recent signal to sell?
Heads-up: The MSCI World ETF might be seeing rough waters ahead. Here's what it means for you as an investor and whether you should consider ditching this ETF.
The MSCI World ETF has begun to lose its upward momentum, as shown in the chart below from Tradingview. While the situation is far from catastrophic, it warrants your attention:
MSCI World taking a dive - But March could be a save
The ETF's slide caused a sell signal, as it dropped below the 50-day line, failed to recover, and even slipped below the uptrend. Although this is partially due to recent US trade policies causing corrections in the US indices, the heavy US weighting in the MSCI World meant that European stocks contributed less.
However, there's a silver lining. The large US indices, and hence the MSCI World ETF, could find support on the 200-day line (represented by the blue line in the chart below). Typically, the market tends to weaken in February but picks up in March.
Sell signal - Time to throw in the towel with the MSCI World ETF?
Despite this, long-term investors should stick to their guns, accumulating the ETF through savings plans and letting compound interest do its job. But investors with shorter horizons should watch the situation closely. If the ETF finds support on the 200-day line, all's well. However, if it can't recover swiftly and falls through, the stock market year 2025 might be rockier than anticipated due to the U.S.'s many uncertainties. In this case, taking profits could be a sensible move. But don't panic sell or unload everything. Those with ongoing savings plans should leave them be. In the long run, the MSCI World ETF remains a solid choice, but short-term volatility is a possibility, even if there might be a strong recovery in the near future. Keep an eye on U.S. policy developments for clearer indicators.
Also, check out "Revolutionary stocks I'm buying now," shares stock market guru Dr. Hendrik Leber
As an investor, you should keep a close watch on the MSCI World ETF, considering its recent sell signal and failure to recover above the 50-day line. If it fails to find support on the 200-day line and falls through, you might need to reconsider your investing strategy in the stock-market, possibly even considering exiting your position in the MSCI World ETF to mitigate potential losses, while still remaining flexible with ongoing savings plans.
