What's Powering Global ETFs to New Record Highs?

Global equities have been on a surge fueled by a combination of softening rhetoric from President Trump on tariffs, fading recession fears, strong first-quarter earnings across major economies and renewed enthusiasm for artificial intelligence. Additionally, the surge in tech stocks and a weaker dollar have helped lift broader indices.

The MSCI All-Country World Index, which tracks equities across 47 countries, has climbed to its highest level ever, underscoring renewed investor confidence despite trade tensions and political uncertainty. This marks the first time the index has reached a new high since February.

In fact, many global ETFs touched a new 52-week high in the latest sessions. These are iShares MSCI ACWI ETF ACWI, Vanguard Total World Stock ETF VT, iShares MSCI World ETF URTH, iShares Global Equity Factor ETF GLOF and SPDR Global Dow ETF DGT. 

We have highlighted several reasons for the strong performance:

Resilient Global Economy

Despite geopolitical headwinds, economic data from the United States, Europe, and parts of Asia continue to show surprising strength. U.S. job growth remains solid, inflation is cooling gradually, and consumer spending has remained resilient. China’s latest stimulus measures have also started to buoy manufacturing and real estate activity.

Europe & the United States Fuel Rally

Europe is gaining investors’ favor, driven by lower valuations and clearer monetary policy signals. Meanwhile, Wall Street recorded a historically strong May with the S&P 500 posting its best May performance since 1990 (read: 6 Factors to Play Europe ETFs Now).

Easing Trade Tensions

After the initial shock of the tariffs, there were signs of de-escalation. Last month, the United States temporarily slashed tariffs on Chinese goods from 145% to 30%, while China will lower its retaliatory duties on U.S. goods from 125% to 10%. The temporary reduction in rates will run for 90 days. Meanwhile, Trump also postponed the implementation of a 50% tariff increase on all EU products, from June 1 to July 9. With this, the trade negotiations between the two countries have accelerated (read: EU-US Trade Deal Hopes to Boost These ETFs). 

Additionally, the U.S. Court of International Trade (CIT) blocked much of Trump’s existing tariff policy, citing legal concerns. The ruling provided a short-lived boost to equities as the rally faded after a federal appeals court paused the CIT’s decision, prolonging uncertainty over the legal future of the administration’s “Liberation Day” tariffs.

AI Optimism

The AI boom remains a dominant investment theme. With NVIDIA (NVDA) reclaiming the title of the world’s most valuable company and enterprise adoption of generative AI accelerating, technology stocks are leading the charge. The “Magnificent Seven” - Apple (AAPL), Microsoft (MSFT), Alphabet (GOOG, GOOGL), Amazon (AMZN), NVIDIA, Tesla (TSLA) and Meta Platforms (META) – roared in the recent weeks, pulling indices higher (read: ETFs to Bet On as NVIDIA Reclaims Market Cap Crown).

Weaker Dollar Boosts International Markets

A weakening U.S. dollar has further boosted the value of international equities, making them more attractive to global investors. This has particularly benefited emerging market stocks and multinational corporations, improving earnings translation and trade competitiveness.

ETFs at New Highs

iShares MSCI ACWI ETF (ACWI) – 52-week High: $125.54

iShares MSCI ACWI ETF offers exposure to a broad range of international developed and emerging market companies by tracking the MSCI ACWI Index. It holds a broad basket of 2,258 stocks with American firms accounting for 64% share, while Japan, the United Kingdom and China occupy the next spots. iShares MSCI ACWI ETF has AUM of $21.6 billion and charges 32 bps in annual fees. It has a Zacks ETF Rank #3 (Hold).

Vanguard Total World Stock ETF (VT) - 52-week High: $125.54

Vanguard Total World Stock ETF invests in both foreign and U.S. stocks and tracks the FTSE Global All Cap Index, which covers both well-established and still-developing markets. It holds a broad basket of 3,141 stocks with American firms accounting for 64.6% share, followed by Europe (15.4%). With AUM of $46 billion, Vanguard Total World Stock ETF charges 6 bps.

iShares MSCI World ETF (URTH) - 52-week High: $165.61

iShares MSCI World ETF offers exposure to a broad range of developed market companies around the world by tracking the MSCI World Index. It holds a broad basket of 1,330 stocks with American firms accounting for 71.2%, followed by Japan (5.5%). iShares MSCI World ETF has amassed $4.8 billion in its asset base and charges 24 bps in annual fees. 

iShares Global Equity Factor ETF (GLOF) - 52-week High: $46.91 

iShares Global Equity Factor ETF offers exposure to a portfolio of 613 global developed market and emerging market large- and mid-cap stocks based on an index that focuses on five well-known investment factors: value, quality, momentum, low size, and low volatility. It follows the STOXX Global Equity Factor Index, charging investors 20 bps in annual fees. American firms take the largest share at 59.4%, while Japan, China and the United Kingdom round off the next three. iShares Global Equity Factor ETF has amassed $127.9 million in its asset base.

SPDR Global Dow ETF (DGT) - 52-week High: $147.95 

SPDR Global Dow ETF follows the Global Dow Index, which offers exposure to companies based on size and reputation as well as their importance in the global economy. It holds 154 stocks in its basket, with American firms accounting for 51.1%, followed by Japan (10%). SPDR Global Dow ETF charges 50 bps in annual fees and has accumulated $356 million in its asset base.

Bottom Line

As long as economic fundamentals remain solid and central banks stay accommodative, equities could continue their upward march. However, trade policies continue to remain an overhang.

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This article originally published on Zacks Investment Research (zacks.com).

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