Vanguard’s All-World ETF Hits Record Amid AI Boom, Faces New GDP-Weighted Challenger

Vanguard FTSE All-World ETF hits record high fueled by AI and oil; Amundi launches GDP-weighted ETF to cut US tech exposure.

The Vanguard FTSE All-World UCITS ETF closed at a fresh all-time high of 163.24 euros on May 29, extending a rally that has been fuelled by artificial intelligence optimism and a calmer oil market. But even as the fund celebrates its latest peak, a structural challenger has entered the arena — offering investors an entirely different way to bet on the same global stock universe.

Amundi launched a new ETF on May 28 that tracks the same FTSE All-World index but flips the weighting methodology upside down. Instead of placing companies by market capitalisation, the Amundi FTSE All World GDP-Weighted UCITS ETF Acc weighs countries by their gross domestic product. The result is a portfolio that dramatically reduces exposure to US tech giants and boosts the heft of emerging markets and Europe.

Record Run Powered by AI and Cheaper Oil

The Vanguard fund’s latest high was driven by twin forces. First, technology earnings reignited the AI narrative. Snowflake surged 38% on May 28 after reporting a 33% revenue jump and unveiling a $6 billion deal with Amazon. Dell added more than 30% on May 29 after its adjusted earnings per share beat estimates by 64% — AI-optimised server revenue alone rocketed 757% to $16.13 billion.

Second, the oil price has eased. US Vice President JD Vance indicated the US and Iran are “very close” to an initial agreement, raising hopes that the Strait of Hormuz could reopen and that sanctions-related pressure on energy markets will abate. Brent crude has slipped below $100 per barrel, though it still sits 35% higher since the conflict in Ukraine began. Lower energy costs relieve margin pressure and dampen inflation expectations, giving central banks more room to ease.

The rally has broadened beyond mega-cap tech. Cyclical sectors, smaller companies, and international equities have all joined the move, making the advance more durable than a pure AI wager.

Concentration Under the Hood

The Vanguard ETF’s market-cap-weighted approach has delivered stellar returns in recent years but also created enormous concentration risk. NVIDIA accounts for 4.66% of the portfolio, Apple 3.90%, and Microsoft 3.02%. Together with Amazon and Alphabet, those five names dominate the fund’s return profile.

That concentration has been a blessing during the tech-led bull run. Since its summer 2025 trough, the ETF has climbed roughly 27%, with a year-to-date gain of 11.82%. The 12-month return stands at 27.21%. The relative strength index sits at 60.3, just below overbought territory, and the fund trades 11.36% above its 200-day moving average.

Yet for some allocators, the reliance on a handful of US stocks is a source of unease — especially as valuations in that corner of the market stretch further.

A Philosophical Shift

Amundi’s GDP-weighted rival offers a different risk distribution. The same $65 billion-odd universe of roughly 4,200 large and mid-cap stocks from over 45 countries is repackaged with country weights tied to economic output rather than stock market size. That slashes NVIDIA’s position to 2.38% and lifts Tencent to 2.05%. Chinese names and European industrials gain prominence, while the US share shrinks accordingly.

The trade-off comes in cost. Vanguard charges 0.19% annually; Amundi asks 0.30% — a difference of 11 basis points. For long-term investors, those fees compound.

Historically, the two weighting styles have taken turns outperforming. Market-cap strategies thrive when a handful of giants dominate the return picture, as they have in recent years. GDP-weighted approaches tend to shine when emerging markets catch up or when US tech multiples deflate.

Europe Lags, But Not by Design

The Vanguard fund’s rally masks a persistent weakness in Europe. The European Commission expects growth of just 0.9% this year, with inflation at 3%, citing the energy shock and geopolitical volatility. That drag is baked into the global index, but the GDP-weighted alternative would actually increase exposure to the region — a counterintuitive bet for many investors.

For now, the Vanguard ETF remains the default choice for cost-conscious global equity exposure. Its $39.3 billion asset base and deep liquidity make it hard to displace. But Amundi’s new product gives investors the option to unbundle country risk from company risk in a way the market-cap standard cannot.

Which philosophy wins depends on whether the next decade belongs to the tech giants or to the broader global economy. For the moment, both sides have a point.