Is the Vanguard MSCI Index International Shares ETF (ASX: VGS) the best long-term investment right now?
Vanguard MSCI Index International Shares ETF
Diversification
The more shares you have exposure to the lower the risk of individual companies. This is useful with the coronavirus impacts. This ETF is invested in almost 1,600 businesses across the world.
It's not just the number of businesses that provide good diversification, but it's also the underlying geographic spread. The ETF is invested across the US, Japan, the UK, Switzerland, France, Canada, Germany, the Netherlands, Hong Kong, Spain and so on.
I think ETF is invested in many of the world's best businesses. Some of its holdings are: Microsoft, Apple, Amazon, Alphabet, Facebook, Visa and so on. Being invested in the best should mean solid long-term returns.
The fees
When you're invested in an exchange-traded fund (ETF) which tracks an index you want to make sure that it has low fees. The lower the fee the more of the net returns that are left in your hands. Vanguard is one of the best ETF providers in the world.
Vanguard MSCI Index International Shares ETF has an annual management fee of 0.18% per annum. It's not the lowest there is, but it's very low compared to most active fund managers.
Is it a dividend share?
An ETF simply passes through the income it receives from its holdings. A lot of the ETF's holdings don't pay a big dividend. Even so, at the end of March 2020 it had a dividend yield of 2.8% which isn't bad compared to the official central bank interest rates.
Is it a buy?
Vanguard MSCI Index International Shares ETF could be one of the best ideas as a 'buy and hold' forever pick without having to do much research on it. Its holdings will regularly change to reflect the growing companies taking up larger positions in the portfolio over time.
I'd be happy to invest in it today because it's down 15% (including the weakening of the Australian dollar). But there could be more declines to come. So I'd keep some cash on the side.
