The Vanguard MSCI Index International Shares ETF (ASX:VGS) is a strong option for Australians looking for international exposure in the ever-changing world of financial options. Over 1,400 large- and mid-cap firms from 23 developed economies make up the diversified portfolio managed by Vanguard Investments Australia (VGS), which replicates the performance of the MSCI World ex-Australia Index.
Global Diversification at Your Fingertips
VGS provides investors with access to a broad spectrum of international equities, with a significant allocation to the United States (approximately 71.5%), followed by Japan, the United Kingdom, France, and Canada. This extensive diversification across regions and sectors helps mitigate country-specific risks and offers exposure to various economic cycles. The Motley Fool Australia
The ETF’s top holdings include renowned global corporations such as Apple Inc., Microsoft Corporation, Amazon.com, Inc., NVIDIA Corporation, and Alphabet Inc. These companies are leaders in their respective industries, contributing to the robust performance of the fund. StockAnalysis+1StockAnalysis+1
Performance and Returns
Since its inception in November 2014, VGS has delivered an average annual return of approximately 13.09%, reflecting its strong performance over the years. In the past year alone, the ETF achieved a total return of 14.28%, underscoring its resilience and growth potential.The Motley Fool Australia+2StockAnalysis+2The Motley Fool Australia+2
Dividend Income and Yield
VGS distributes dividends quarterly, providing investors with a regular income stream. As of early 2025, the ETF offers a dividend yield of around 3.11%, with an annual dividend of 4.19 AUD per share. It’s important to note that, since VGS invests in international companies, the dividends are unfranked, which may have tax implications for Australian investors. StockAnalysisIntelligent Investor
Cost-Effective Investment
One of VGS’s appealing features is its low management fee of 0.18% per annum. This cost efficiency makes it an attractive option for long-term investors seeking global diversification without incurring high fees. Best ETFs+2The Motley Fool Australia+2Best ETFs+2
Considerations for Investors
While VGS offers numerous benefits, investors should consider the following:
- Currency Risk: As VGS is unhedged, fluctuations in the Australian dollar can impact returns.
- Sector Concentration: The ETF has significant exposure to the technology sector, which may lead to higher volatility.
- Dividend Characteristics: The unfranked nature of dividends may affect after-tax income for Australian investors.