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Is Vanguard International Shares ETF (ASX:VGS) the best on the ASX?

green etf represented by letters E,T and F sitting on green grass
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The Vanguard Msci Index International Shares Etf (ASX: VGS) is one of the most popular exchange-traded funds (ETFs) on the ASX today. In fact, outside the iShares S&P 500 ETF (ASX: IVV), this ETF was the most popular choice for ASX investors wanting to get exposure to international shares. As of September last year anyway. Today, it has $2.75 billion in assets under management.

But is this ETF still a good choice today? Let’s see how it measures up.

So the Vanguard International Shares ETF tracks the MSCI World ex-Australia. This index follows most of the world’s largest companies that are listed in major advanced economies around the world. 

If you’re after diversification, this ETF brings it to the table in spades. It holds 1,530 individual companies within it, spanning more than 20 different countries. The United States dominates these holdings naturally, with almost 68% of the total share. But other markets that are well represented include Japan, the United Kingdom, France, Canada, Germany, Switzerland and Hong Kong. 

Breaking the Vanguard down

It’s also reasonably spread out over a range of sectors. Information technology dominates with 22.3% of the fund’s holdings, reflecting the size of the US FAANG stocks that sit atop the American markets. We can see this if we look at VGS’s largest individual holdings. These are (in order) Apple Inc (NASDAQ: AAPL), Microsoft Corporation (NASDAQ: MSFT), Amazon.com, Inc. (NASDAQ: AMZN), Alphabet Inc (NASDAQ: GOOG)(NASDAQ: GOOGL) and Facebook, Inc. Common Stock (NASDAQ: FB).

But the financial, health care and consumer discretionary sectors are also well covered with 13.1%, 12.6% and 12.2% of holdings respectively.

But let’s turn to the meat and potatoes this fund’s performance.

So the Vanguard International Shares ETF has returned an average of 12.62% per annum since its inception in 2014. It has also returned an average of 13.16% per annum over the past 3 years. And an average of 13.76% over the past 5. Over the past 12 months, it has given its investors a return of 23.6%. That reflects the bounceback in global markets from the pandemic

In terms of fees, this ETF isn’t quite as cheap as some other index ETFs like the iShares S&P 500 ETF at 0.04% or the Vanguard Australian Shares Index ETF (ASX: VAS)  at 0.1%. However, its fee is still relatively low at 0.18% per annum. That represents a cost of $18 a year for every $10,000 invested.

With $2.75 billion inside this fund, it’s clear that ASX investors find VGS a popular choice for international shares exposure.

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John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. Teresa Kersten, an employee of LinkedIn, a Microsoft subsidiary, is a member of The Motley Fool’s board of directors. Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to its CEO, Mark Zuckerberg, is a member of The Motley Fool's board of directors. Sebastian Bowen owns shares of Alphabet (A shares) and Facebook. The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns shares of and recommends Alphabet (A shares), Amazon, Apple, Facebook, and Microsoft and recommends the following options: long January 2022 $1920 calls on Amazon, short March 2023 $130 calls on Apple, short January 2022 $1940 calls on Amazon, and long March 2023 $120 calls on Apple. The Motley Fool Australia has recommended Alphabet (A shares), Amazon, Apple, Facebook, iShares Trust - iShares Core S&P 500 ETF, and Vanguard MSCI Index International Shares ETF. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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