A Tale of Two Forces: Chip Boom and Dollar Shift Reshape Vanguard’s Global ETF

Vanguard FTSE All-World ETF nears 52-week high as non-US stocks surge, dollar weakens, and TSMC leads a chip-driven tech boom amid tariff risks.

The Vanguard FTSE All-World UCITS ETF is navigating a market landscape that looks nothing like the past two decades. While the fund’s 64% US weighting might suggest a familiar American tilt, the forces driving its recent performance are increasingly global — and increasingly complex.

At €153.82, the ETF is trading just shy of its 52-week high of €154.04, having climbed roughly 28% from its April 2025 trough. That rally reflects a confluence of tailwinds: a resurgent non-US equity market, a weakening dollar, and a tech boom that extends far beyond Silicon Valley.

The Non-US Renaissance

For the first time since 2005, international markets are delivering a sustained outperformance over their American counterparts. The Morningstar Global Markets ex-US Index surged 32% in dollar terms last year, compared with a 17% gain for the US Market Index — a 15-percentage-point gap not seen since the days of China’s rapid expansion and a sliding greenback.

That dynamic has injected fresh life into the Vanguard fund’s non-US holdings. Japan accounts for roughly 5.5% of the portfolio, the UK 3.4%, China 3.3%, and Canada 2.4%. With the “Sell America Trade” gaining traction amid US tariff announcements, global investors and central banks are trimming their American exposure, a shift that benefits the fund’s broad geographic spread.

A weaker dollar is amplifying those returns for dollar-based investors and may signal a structural reversal after years of greenback strength. Vanguard’s own projections underscore the shift: the asset manager expects annualized returns of 4.9% to 6.9% for non-US equities over the next decade, versus just 4% to 5% for US stocks.

TSMC and the Chip-Driven Surge

Technology remains the fund’s largest sector at 21%, and no single holding better illustrates the tailwind than Taiwan Semiconductor Manufacturing Co. The chip giant posted a 58% profit surge, its fourth consecutive record quarter, as demand for AI chips continues to explode. Advanced chips now account for three-quarters of TSMC’s wafer revenue, while high-performance computing contributes 61% of total sales. Management expects revenue growth of over 30% this year.

That momentum has been a key driver for the VWCE, which trades at €153.20 and is flirting with its 52-week peak. The fund’s 10.5% emerging markets allocation — spanning China, Taiwan, India, and Brazil — provides direct exposure to this growth, though it also introduces higher volatility.

The Tariff Headwind

Yet the same global reach that fuels the fund’s upside also exposes it to mounting trade frictions. US-China trade volumes have shrunk by roughly a quarter over the past year, a decline worth about $170 billion. Additional tariffs loom, while conflicts in the Middle East and disruptions in the Strait of Hormuz are pushing up shipping costs and energy prices, stoking inflationary pressure.

The fund’s 3.4% UK weighting and 3.3% China exposure sit squarely in the crosshairs of these tensions. Financials, the second-largest sector at 18%, are also vulnerable to a slowing global economy.

Structure, Costs, and the Next Reshuffle

The ETF tracks the FTSE All-World Index, which covers approximately 4,200 stocks across 48 developed and emerging markets, representing roughly 90% of global investable market capitalization. Vanguard employs physical optimized replication, holding a representative sample of about 85% of index members.

The total expense ratio stands at 0.19%, reduced from 0.22% in October 2025. Morningstar awards the fund a Silver Medalist rating, calling it one of the cheapest options for global equity exposure. Its main European-domiciled rival, the iShares Core MSCI World UCITS ETF, lacks the emerging markets component that gives Vanguard’s offering its growth kicker.

The index undergoes quarterly adjustments, with full regional reviews every six months. The next scheduled rebalancing takes place after the close on the third Friday of June. That event will reveal how much weight has shifted between booming technology stocks and struggling industrial sectors.

For now, the fund sits at the intersection of two powerful trends: a global tech rally that shows no signs of cooling, and a rotation away from US-centric portfolios that is reshaping capital flows. Whether those forces continue to align — or begin to pull in opposite directions — will determine whether the Vanguard All-World ETF can hold its ground near record territory.