Why it could be the perfect time to buy this Vanguard ETF

I think it could be the perfect time to buy the Vanguard MSCI Index International Shares ETF (ASX:VGS) because of a couple of key reasons.

| More on:

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

I believe it could be the perfect time to buy the Vanguard MSCI Index International Shares ETF (ASX: VGS).

About Vanguard MSCI Index International Shares ETF

Firstly, let me tell you about Vanguard if you don't already know. It's one of the world's biggest providers of exchange-traded funds (ETFs). It's special because it's not trying to make heaps of money from its investors. Instead, the owners of Vanguard are the investors. Vanguard shares the profit with investors in the form of lower fees.

This particular ETF invests in the entire global share market. It's invested in almost every major share market such as the US, Japan, the UK, Switzerland, France, Canada, Germany, the Netherlands, Hong Kong, Sweden and so on.

Vanguard MSCI Index International Shares ETF also has attractive diversification in the sense of the different industries it's invested in. The biggest allocation is 20% to IT, followed by 14.7% to health care, 12.7% to financials, 10.9% to consumer discretionary, 10% to industrials, 9% to communication services and 8.7% to consumer staples.

In terms of actual holdings it's invested in almost 1,600 businesses. But its top holdings are: Apple, Microsoft, Amazon, Alphabet, Facebook, Johnson & Johnson, Nestle, Visa, JPMorgan Chase and Proctor & Gamble.

Why I think it's a good time to buy

This could be one of the easiest investments to hold for the long-term in any environment because of the Vanguard ETF's diversification. It also has a very low management fee. It's not the cheapest out there, but 0.18% per annum is great for the global nature of it.

I think it's a good time to buy for two reasons. Number one is that Vanguard MSCI Index International Shares ETF is still 11% lower than its pre-coronavirus high. Bearing in mind that interest rates are now incredibly low, that's not bad at all if you're a long-term investors. Granted, there could be more declines later this year. Particularly with the US election coming up. 

Second, the Australian dollar has significantly recovered. The Aussie dollar now buys US$0.66. During the worst part of the crash it was under US$0.60. This gives us more buying power to buy international shares compared to nearly all of April and May.

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.

More on Index investing

A male investor sits at his desk looking at his laptop screen holding his hand to his chin pondering whether to buy Macquarie shares
Index investing

3 top ASX index funds to buy now

I think these index funds are well worth a look right now.

Read more »

A male investor sits at his desk looking at his laptop screen holding his hand to his chin pondering whether to buy Macquarie shares
Index investing

If you own the Vanguard Australian Shares ETF (VAS), make sure you're doing this

This one mistake could cost ETF investors dearly.

Read more »

A young man wearing glasses writes down his stock picks in his living room.
Index investing

Should I buy the iShares S&P 500 ETF (IVV) at all-time highs or wait?

Does 'buy low, sell high' apply to index funds?

Read more »

ETF with different images around it on top of a tablet.
Index investing

Thinking about buying the Vanguard Australian Shares ETF (VAS)? Here's what you're really buying

An investment in this index fund could be VAS-tly more complicated than you'd think.

Read more »

A smiling woman with a satisfied look on her face lies on a rug in her home with her laptop open and a large cup on the floor nearby, gazing at the screen. researching new ETFs
Index investing

Should I buy the Vanguard Australian Shares Index ETF (VAS) now or wait for an ASX dip?

Here's my take on VAS' current price.

Read more »

Woman on a swing at a beach, symbolising passive income.
Index investing

If I'd put $2k in the ASX 200 at the start of 2023, here's how much I'd have now!

Did index fund investing pay off last year?

Read more »

A baby reaches into the bottom drawer of a chest of drawers.
Index investing

Is the Vanguard Australian Shares ETF (VAS) the best bottom-drawer investment?

How does this popular ETF measure up against other passive investments?

Read more »

ETF spelt out with a piggybank.
Index investing

Can the Vanguard Australian Shares Index ETF (VAS) reach $90 by Christmas?

Can this popular ETF give its investors a $90 Christmas present?

Read more »