One popular option for Australian investors looking for diversified exposure to international stocks is the Vanguard MSCI Index International Shares ETF (ASX: VGS). VGS provides access to more than 1,400 large- and mid-cap firms across 22 developed economies by tracking the MSCI World ex-Australia Index, hence excluding Australian stocks.
Global Diversification with VGS
VGS provides investors with a straightforward avenue to participate in the performance of leading international companies. Its top holdings include globally recognized firms such as Apple, Microsoft, Amazon, and NVIDIA. This broad exposure spans various sectors, including technology, healthcare, consumer goods, and financials, offering a balanced international investment approach .
Performance Overview
As of April 30, 2025, VGS has demonstrated solid performance:
- 1-Year Total Return: 13.93%
- 3-Year Annualized Return: 15.23%
- 5-Year Annualized Return: 14.56%
- 10-Year Annualized Return: 11.82% StockAnalysisInvestSMART
These figures underscore VGS’s potential for long-term growth, making it a compelling option for investors aiming to diversify their portfolios internationally.
Cost Efficiency and Income
VGS is known for its cost-effectiveness, boasting a low management expense ratio (MER) of 0.18% . Additionally, it offers an income return (yield) of 4.01% over the past year, providing investors with a steady income stream .
Considerations for Investors
- Currency Exposure: VGS is unhedged, meaning its returns can be influenced by fluctuations in the Australian dollar relative to other currencies. While this can enhance returns when the AUD weakens, it also introduces currency risk.
- Market Volatility: As with all equity investments, VGS is subject to market volatility. Investors should be prepared for short-term fluctuations in value.
Is VGS Suitable for You?
VGS is well-suited for investors seeking:
- Long-term capital growth through international diversification.
- Exposure to a broad range of developed markets outside Australia.
- A cost-effective investment vehicle with a history of solid returns.
However, investors should assess their risk tolerance, investment horizon, and currency exposure preferences before investing. Consulting with a financial advisor can provide personalized guidance tailored to individual financial goals.