Is the Vanguard MSCI Index International Shares ETF (ASX: VGS) the best long-term investment?
Regular investors are steadily choosing exchange-traded funds (ETFs) as their preferred way to invest in the share market. Investing passively allows people to achieve the average return of the market (which is usually very good) for a low price. It’s also simple and hardly takes any time at all.
Perhaps the best idea could be to invest in one of the most diverse ETFs like Vanguard MSCI Index International Shares ETF which invests in shares all around the world.
This ETF owns 1,590 holdings, meaning it owns more than three times the amount of businesses in the S&P 500, which is extremely diverse itself.
The Vanguard MSCI ETF is invested in most of the major share markets with 64.9% allocated to the US, 8.3% to Japan, 5.5% to the UK, 3.9% to France, 3.6% to Canada, 3.3% to Switzerland, 2.9% to Germany, 1.3% to the Netherlands, 1.2% to Hong Kong, 1% to Spain and so on.
You’re essentially investing in the entire world’s share market. Not only are you investing in businesses that are listed in many different countries, but those companies then generate their earnings from many other countries as well.
Perhaps unsurprisingly, the biggest holdings in the ETF are the American tech giants of Microsoft, Apple, Amazon, Alphabet and Facebook. Some of the non-US top share holdings are Nestle, Novartis, Roche, Toyota, HSBC, BP, Royal Dutch Shell, TOTAL, SAP, AIA, Astrazeneca, LVMH and the Royal Bank of Canada.
The ETF has an annual management fee of only 0.18% per annum, it’s not the lowest but it’s still low compared to most managers, which leaves most of the returns in the hands of shareholders.
If I could only buy one ETF it may well be this one because of how diverse it is. Except for the odd market meltdown I don’t think you could go too wrong owning with this one over the coming decades.
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Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia has recommended Vanguard MSCI Index International Shares ETF. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.