It’s likely that you have heard about VAS and VGS if you are looking at investment opportunities in Australia. Particularly for low-cost, long-term investing, these acronyms stand for two of the most well-liked Exchange Traded Funds (ETFs) on the Australian Securities Exchange (ASX). However, what are them and how are they different?
VAS – Vanguard Australian Shares Index ETF
ASX Code: VAS
Issuer: Vanguard
Launched: May 2009
VAS tracks the S&P/ASX 300 Index, which represents the top 300 companies listed on the Australian Securities Exchange. It gives you exposure to a wide cross-section of the Australian economy—including financials (like the Big Four banks), materials (such as BHP and Rio Tinto), healthcare, and consumer sectors.
Key Features:
- Australia-focused: 100% Australian companies.
- High dividend yield: Australian companies tend to pay good dividends, and VAS reflects this.
- Home bias: Many Australian investors choose VAS for its familiarity and dividend franking benefits.
VGS – Vanguard MSCI International Shares ETF
ASX Code: VGS
Issuer: Vanguard
Launched: November 2014
VGS tracks the MSCI World ex-Australia Index, which includes large- and mid-cap companies across developed markets like the US, UK, Japan, and Europe—excluding Australia.
Key Features:
- Global diversification: Over 1,500 companies across 20+ countries.
- Exposure to tech giants: Includes Apple, Microsoft, Amazon, and other major global players.
- Currency exposure: Since it’s not hedged, your returns are affected by currency fluctuations between the AUD and other major currencies.
VAS vs VGS: Key Differences
| Feature | VAS | VGS |
|---|---|---|
| Geographic Focus | Australia | Developed markets outside Australia |
| Number of Holdings | ~300 | ~1,500 |
| Currency Hedging | Not required (AUD-based) | Not hedged (exposed to FX risk) |
| Dividend Yield | Higher (due to Aussie stocks) | Typically lower |
| Franking Credits | Yes | No |