Vanguard FTSE All-World ETF: June 2026 update

• Vanguard is a pioneer in index investing and launched its first ETF in 2001

• This ETF offers exposure to a broad range of countries all over the world

• It has tracked the FTSE All-World Index closely since launch

How it fits in a portfolio

An ETF is a basket of investments that often includes company shares or bonds. They tend to track the performance of an index such as the FTSE All-World Index and trade on stock exchanges, like shares. This means that their price fluctuates throughout the day.

Find out more about ETFs

The Vanguard FTSE All-World ETF invests in a range of large and medium-sized companies across the globe from developed and emerging markets. Emerging markets offer investors greater potential for growth, but they can be subject to more price volatility and are higher risk than their more developed counterparts.

An ETF is one of the simplest ways to invest and can be a low-cost starting point for an investment portfolio aiming to deliver long-term growth. Like most global funds, this ETF has a large amount invested in US companies, so it could help diversify a portfolio focused on other regions like Europe or emerging markets.

Manager

Vanguard is a pioneer when it comes to passive investing, having created the first retail index fund 50 years ago. It now runs some of the largest index funds and ETFs in the world. Given its size, it has a big investment team with the expertise and resources to help its ETFs track indices and markets as closely as possible, while having scale to keep costs down.

Vanguard ETFs are run by a large, global team. They’re spread across three investment hubs around the world – the US, UK and Australia. This team-based approach means there’s no named manager on the ETF. As a collective team, Vanguard has run this ETF for 14 years.

Vanguard also has a trading analytics team, which is responsible for ensuring that the ETFs buy and sell investments efficiently and at a competitive cost. This involves analysing data from different brokers and banks. Lower costs should help the ETFs track their benchmarks as tightly as possible.

Process

This ETF aims to track the performance of the FTSE All-World Index. It does this by investing in most of the companies in the index but not every single one. The ETF was made up of 3,770 companies at the end of May 2026 versus 4,264 in the index. The team tends to exclude some of the smaller companies in the index as they can be difficult or more costly to buy and sell, which can negatively impact performance. This is known as partial replication and helps keep performance close to the index while keeping costs as low as possible.

The ETF currently invests 32.5% in the technology sector. This is partly from the large amount (61.6%) invested in the US market where there are household names like Apple and Microsoft. The next largest sectors are financials and industrials, which made up 15.1% and 12.9% of the ETF respectively at the end of April. The ETF also invests in countries like Japan, the UK, Canada, China and Taiwan.

Reducing costs is a key part of keeping the tracking difference between the ETF and the benchmark to a minimum. In any ETF, factors like taxes, dealing commissions and spreads, and the cost of running the ETF all drag on performance. To help keep these costs down, the team aims to make large investments in companies instead of lots of small transactions.

Vanguard will also lend some of the investments in the ETF to other providers in exchange for a fee, which can be used to offset some of the costs. It will lend securities to only a limited number of high-quality approved dealers. Vanguard indemnifies the fund against any loss from this process, meaning that there should be no negative impact on investors. However, stock lending adds risk.

As this ETF is listed offshore, investors are not usually entitled to compensation from the UK Financial Services Compensation Scheme.

Culture

Vanguard is currently the second largest asset manager in the world and runs around $12trn of assets globally. The group aims to put the client at the forefront of everything it does, which drives its focus on quality, low-cost index products.

John Bogle founded Vanguard in 1975, and it’s owned by investors. This allows Vanguard to redirect its profits to investors in the form of lower fees, instead of paying dividends to external shareholders. Bogle believed in creating products that simply track the performance of a market rather than taking a shot at picking individual companies which may beat them.

The team running this ETF works closely with other equity research and risk departments across the business. They have daily and weekly meetings to discuss ongoing strategy, which could add good support and challenge on how to run the ETF effectively.

ESG Integration

Vanguard is predominantly a passive fund house. Although it has offered exclusions-based passive funds for many years, it’s lagged peers in offering passive funds that explicitly integrate Environmental, Social and Governance (ESG) criteria by tracking indices that tilt towards companies with positive ESG characteristics, and away from those that don’t.

Vanguard’s Investment Stewardship team carries out most of the firm’s voting and engagement activity. Its stewardship activity is grounded in the firm’s four principles of good governance: board composition and effectiveness, board oversight of strategy and risk, executive pay and shareholder rights.

The Investment Stewardship team produces frequent insights on their engagement activity at both a corporate and governmental level. Investors can also access fund-by-fund proxy voting records, although voting rationales are not provided. That said, voting and engagement case studies can be found in the firm’s annual Investment Stewardship report and quarterly Engagement and Voting reports.

Vanguard courted controversy in 2022 when it left the Net Zero Asset Managers’ Initiative, a group of asset managers that have committed to achieving net zero carbon emissions by 2050. It claimed that its decision would improve clarity for investors and allow it to speak independently. We view this as a disappointing backward step. Furthermore, in 2024 and 2025, it was reported that Vanguard failed to support a single shareholder proposal requiring more action from investee companies on environmental and social matters.

The Vanguard FTSE All-World ETF tracks an index that doesn’t specifically integrate ESG considerations into its process. The ETF can therefore invest in shares issued by companies in any sector in line with the benchmark.

Cost

The ETF currently has an ongoing annual fund charge of 0.19%. The annual charge to hold ETFs in the HL ISA, SIPP or Fund & Share Account is 0.35% (capped at £150 p.a. in each account) and 0.25% in the HL Lifetime ISA (capped at £45 p.a.). There are no charges from HL to hold ETFs within the HL Junior ISA. As ETFs trade like shares, both a buy and sell instruction will be subject to the HL share dealing charges.

We recently made some changes to the amount clients pay to invest with us. Find out more about these changes

Learn more about the difference between ETFs and index tracker funds

Performance

Since launch in May 2012, this ETF has done a good job of tracking the performance of the FTSE All-World Index. Over the last 10 years, the ETF has gained 258.56%* compared to 259.23% for the index. As expected of ETFs, it’s slightly behind the benchmark over the long term because of the costs involved in running it. However, the tools used by the managers have helped to keep performance tight to the index. Remember, past performance isn’t a guide to future returns.

Over the past 12 months, the ETF has gained 30.24%. Although most global stock markets performed well, it’s been a volatile year with tariff uncertainty, trade tensions and ongoing conflicts in Ukraine and the Middle East.

The US stock market was a significant contributor to returns, reflecting how much of the global market it makes up. Performance was driven by strong gains in technology companies, as investors continued to focus on the long-term potential of artificial intelligence (AI). More recently, investors have become cautious about how AI could disrupt some companies, particularly in the software sector which saw sharp share price falls at the beginning of 2026. Although the sector has rebounded a little since the falls, it remains behind the wider stock market so far in 2026.

South Korea and Taiwan were some of the best performing markets, largely driven by their technology sectors. Both countries are home to leading semiconductor companies, Samsung Electronics and SK Hynix in South Korea and Taiwan Semiconductor Manufacturing Company (TSMC), which have benefited from strong demand for AI chips. This has boosted their profits and share prices.

Given Vanguard’s size, experience and expertise running ETFs, we expect this ETF to continue to track the FTSE All-World Index closely in the future, though there are no guarantees.