The Vanguard MSCI Index International Shares ETF (ASX: VGS) could be a good option to consider for the long-term.
The exchange-traded fund (ETF) offers a few different things that investors may want to look for.
It’s offered by Vanguard, which has a goal of trying to provide as low cost investment options for investors as it can.
This particular investment option may tick some of the boxes.
Here are a few different reasons why it could be worth considering:
The investment objective of this ETF is to track the return of the MSCI World ex-Australia Index.
It provides exposure to many of the world’s largest companies listed in major developed countries.
There are many different countries represented in the holdings including the US, Japan, the UK, Canada, France, Germany, Switzerland, the Netherlands, Sweden, Hong Kong, Italy, Spain, Denmark, Finland, Singapore, Belgium, Norway, Israel and Ireland.
It can be helpful at mitigating country-specific risk when it’s invested in so many regions, although the US allocation is still at a hefty 68%.
High quality holdings across different sectors
Vanguard is able to share some portfolio characteristics statistics. It says that the return on equity (ROE) ratio was 15.9% and the earnings growth rate was currently 12% as at 31 March 2021.
Some, or many, of the world’s strongest businesses can be found in this portfolio. The biggest 10 weightings are: Apple, Microsoft, Alphabet, Amazon.com, Facebook, JPMorgan Chase, Tesla, Johnson & Johnson, NVIDIA and Berkshire Hathaway.
It has a total of around 1,500 holdings, so there is substantial diversification.
In terms of sector allocation, the biggest weighting is to information technology (21.4%).
Vanguard MSCI Index International Shares ETF’s low management fees
Vanguard’s owners are the investors themselves. The investment management outfit shares the profit with investors by lowering the management costs as much as it can.
Whilst not the lowest on the ASX, the annual cost is lower than many other ETFs out there at 0.18% per annum.
Past performance is not an indicator of future performance.
However, the longer-term returns of the ETF have been double digit numbers.
Over the past three years, Vanguard MSCI Index International Shares ETF has delivered an average return per annum of 13.7%. Over the last five years it has delivered an average return per annum of 12.9%.
A substantial amount of that return was capital growth, though there are distributions paid too. According to Vanguard, the equity yield as at 31 May 2021 was 1.6%.