The Vanguard MSCI Index International Shares ETF (ASX: VGS) is a strong choice for Australian investors looking for international exposure in the constantly changing world of investment options. VGS was established in November 2014 and provides a balanced approach to international investment by offering a broad portfolio of foreign stocks, with the exception of Australian firms.
Global Diversification at Its Core
VGS tracks the MSCI World ex-Australia Index, encompassing over 1,400 large- and mid-cap companies across 23 developed markets. This broad exposure includes significant allocations to the United States (approximately 71.5%), Japan (6.4%), the United Kingdom (4%), and other developed economies .StockAnalysisThe Motley Fool Australia
The ETF’s top holdings feature some of the world’s most influential companies:
- Apple Inc.
- Microsoft Corporation
- Amazon.com, Inc.
- NVIDIA Corporation
- Alphabet Inc.
- Tesla, Inc.
- Meta Platforms, Inc.The Motley Fool AustraliaSelfwealthBest ETFs+10StockAnalysis+10StockAnalysis+10The Motley Fool Australia
These companies are leaders in their respective industries, contributing to the ETF’s robust performance and growth potential .The Motley Fool Australia+2The Motley Fool Australia+2The Motley Fool Australia+2
Performance Overview
VGS has demonstrated solid performance since its inception. As of November 2024, the ETF achieved a 1-year total return of 30.26%, with a 5-year annualized return of 13.42% . These figures underscore the ETF’s ability to deliver consistent growth over time.Best ETFs+2The Motley Fool Australia+2Tiger Brokers+2Intelligent Investor
Dividend Insights
While VGS is primarily focused on capital growth, it also provides income through quarterly dividend distributions. The dividend yield has varied over the years, reflecting changes in the underlying companies’ dividend policies and market conditions. For instance, the ETF’s dividend yield was reported at 3.10% as of early 2025 .StockAnalysis
It’s important to note that, since VGS invests in international companies, its dividends are unfranked, meaning they don’t carry Australian franking credits .Intelligent Investor
Cost-Effective Investment
VGS boasts a low management fee of 0.18% per annum, making it an attractive option for cost-conscious investors. This low fee structure allows investors to retain more of their returns over the long term .The Motley Fool Australia
Ideal for a Range of Investors
VGS’s broad diversification and low-cost structure make it suitable for various investment strategies:
- Beginner Investors: Those new to investing can gain exposure to a wide array of international companies without the need to select individual stocks.
- Long-Term Growth Seekers: Investors aiming for capital appreciation over time may find VGS’s historical performance appealing.
- Portfolio Diversifiers: For those looking to diversify their predominantly Australian portfolios, VGS offers international exposure to balance domestic holdings.