The $35 Billion ETF That’s About to Get a Whole Lot More Global

The €35B Vanguard FTSE All-World ETF hits record highs, driven by TSMC and AI boom, as emerging markets outperform developed stocks amid a weak dollar.

A quiet revolution is reshaping the world’s most popular stock market tracker. The Vanguard FTSE All-World UCITS ETF, which has amassed nearly €35 billion in assets, is climbing toward fresh records even as tectonic shifts in global capital markets threaten to upend its carefully balanced portfolio.

The fund touched €154.08 on Tuesday, matching its 52-week high and extending a 12-month gain of roughly 28 percent. Over the past 30 days alone, the price has surged almost 10 percent. But beneath the surface, the forces driving this rally are far from uniform — and they point to a fundamental reordering of the global investment landscape.

The Chip Giant Fueling the Fire

Taiwan Semiconductor Manufacturing Company has emerged as the single most powerful engine under the ETF’s hood. The chipmaker posted a 58 percent jump in first-quarter profit, with revenue climbing to nearly $36 billion. Management’s full-year forecast of more than 30 percent growth has sent a powerful signal through the fund, which counts TSMC alongside tech titans Microsoft, Meta, and Nvidia among its heavyweight holdings.

The semiconductor boom is inextricably linked to the artificial intelligence frenzy that continues to grip markets. But the rally is no longer a purely American story. International stocks outside the US have been drawing steady inflows for months as investors hunt for cheaper valuations, a rotation that has given the Vanguard fund an extra tailwind.

Emerging Markets Steal the Show

The numbers tell a stark story. The MSCI Emerging Markets Index delivered a total return of 33.6 percent in 2025, crushing the S&P 500’s 17.9 percent and the MSCI World’s 21.6 percent. That outperformance has carried into 2026, with emerging-market stocks up roughly 5 percent in dollar terms since January. Since the start of 2025, the cumulative gap between EM and developed markets has widened to around 15 percentage points.

A weakening US dollar has been a key catalyst. Non-US stocks beat their American counterparts by 6.6 percentage points in local currency terms last year — and by a whopping 13.9 percentage points when converted back into dollars. Emerging markets are historically the biggest beneficiaries of a soft dollar, as many of their companies borrow in greenbacks while earning in local currencies.

J.P. Morgan sees the strongest opportunities in South Korea, Taiwan, and parts of China, noting that many of these economies are now less capital-dependent than in previous cycles. The International Monetary Fund expects emerging markets to grow 3.9 percent in 2026, compared with just 1.4 percent for developed economies. Analysts are forecasting roughly 17 percent earnings growth for EM stocks this year, up from an estimated 12 to 14 percent in 2025.

A Portfolio in Flux

The FTSE All-World Index, which the Vanguard fund tracks, is about to undergo concrete changes that will further tilt its composition toward the developing world. On September 21, 2026, FTSE Russell will begin a phased inclusion of Vietnam into its global equity benchmarks. In the same month, Greece will be reclassified from “Advanced Emerging” to developed-market status.

These adjustments come as the fund’s semi-annual rebalancing approaches in September, when the index provider will recalibrate regional and sector weights. The timing is critical: the recent tech-driven price surges could permanently alter the portfolio’s structure, and the new additions will test whether capital flows follow the index changes in a meaningful way.

The Price of Dominance

Yet even as the ETF rides high, competitive pressures are mounting. With a total expense ratio of 0.19 percent, the Vanguard fund now sits at the upper end of the fee spectrum for its category. The newly launched Xtrackers FTSE All-World UCITS ETF charges just 0.12 percent annually — the lowest in the segment. The fee range across competing products now spans from 0.12 to 0.19 percent.

Political risks remain a persistent shadow. US trade policy is in flux following recent Supreme Court rulings, with new hearings on tariffs scheduled for late April that could hit many industries represented in the index. The March selloff — triggered by rising energy prices and Middle East tensions — served as a sharp reminder that no rally is immune to geopolitical shocks.

For now, investors are betting that the AI-driven earnings momentum and the structural shift toward faster-growing emerging markets will outweigh the headwinds. The September rebalancing will be the next major test of whether that bet holds.