Global Rotation Fuels Vanguard All-World ETF as Non-US Markets Take the Lead

Vanguard's All-World ETF sees tailwinds as international equities outperform US stocks, driven by valuation gaps and policy shifts. Fund holds 62% US, 38% ex-US.

The Vanguard FTSE All-World UCITS ETF USD Accumulation is quietly rewriting its narrative. After years of being overwhelmingly driven by Wall Street’s megacaps, the fund is now catching a tailwind from a long-awaited rotation into international equities. The shift is not just a fleeting market mood — it reflects a structural reassessment of where the best risk-adjusted returns lie over the next decade.

Vanguard’s own 2026 outlook puts the spotlight squarely on non-US markets. The asset manager projects annualised returns of 4.9% to 6.9% for international equities over the next ten years, compared with just 4% to 5% for US stocks. That gap, driven by valuation disparities and the potential for catch-up performance, has profound implications for a fund that holds roughly 62% of its weight in American shares. The remaining 38% — spread across Europe, Asia-Pacific and emerging markets — is where the incremental opportunity now sits.

For the VWCE, this is a matter of simple geometry. The fund mirrors the FTSE All-World Index, which covered 4,254 stocks from more than 45 countries at the end of February, representing 90% to 95% of global investable market capitalisation. That breadth means the ETF automatically participates when capital flows away from the US and into other regions, without having to make active calls.

The figures bear out the argument. On Monday the ETF traded at €158.32, marginally below Friday’s close, but the monthly gain stood at a healthy 2.78%. Year-to-date the advance measured 8.45%, though some calculations put it at 8.25% — a minor data discrepancy that does little to obscure the solid upward trend. The fund sits comfortably above both its 50-day moving average of €150.34 and its 200-day line of €145.43, while the relative strength index of 59.5 signals steady momentum without overheating.

The rotation has been fed by tangible policy developments. The recent meeting between Donald Trump and Xi Jinping raised hopes that the US-China trade conflict — with its tariffs, export curbs and semiconductor restrictions — will not escalate further. Goldman Sachs has suggested that China could respond to a de-escalation by purchasing more US agricultural goods, energy and aircraft, a move that would benefit emerging markets broadly. Chinese technology stocks, in particular, have shown catch-up potential, and corporate earnings in the region have been surprising to the upside. Meanwhile, South Korea’s capital-market reforms are beginning to bear fruit, adding another layer of support to the non-US thesis.

The fund itself remains one of the largest UCITS equity ETFs available to European investors, with assets under management of nearly €38 billion. That scale has been reinforced by steady inflows: in early February alone, roughly €433 million poured into the VWCE. The ongoing cost is 0.19% per annum, and dividends are automatically reinvested, making the product a straightforward vehicle for global equity exposure.

The next major milestone is the index’s half-yearly review in September 2026, which will provide a fresh snapshot of how global market weights are shifting. For now, the message from the markets is clear: after a long period of US dominance, diversification is once again being rewarded. The Vanguard All-World ETF, in its quiet, passive way, is perfectly positioned to capture that transition.