How is the Vanguard International Shares ETF (ASX:VGS) performing in the 2022 volatility?

The US share market has a heavy tech focus, a sector that has seen declines recently. However, the VGS ETF also offers broad diversification to other sectors. So how has it weathered the storm so far in 2022?

| More on:
A person holds strong behind their umbrella as they weather the oncoming storm.

Image source: Getty Images

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

Key points

  • Volatility has hit the global share market in 2022
  • The Vanguard MSCI Index International Shares ETF has declined by around 10% year to date
  • However, it has outperformed some of the other popular ETFs on the ASX

The Vanguard MSCI Index International Shares ETF (ASX: VGS) has been riding the wave of volatility in 2022, just like most other investments. But how has the VGS exchange-traded fund (ETF) performed?

Since the start of this year, there has been investor concern about the Russian invasion of Ukraine, worries about inflation, and what this might mean for interest rates.

Some ASX shares have fallen heavily in the first two and a half months of 2022. For example, the Xero Limited (ASX: XRO) share price has sunk 30%, the Zip Co Ltd (ASX: Z1P) share price has dropped 63%, and the Pointsbet Holdings Ltd (ASX: PBH) share price has fallen 45%.

Vanguard International Shares ETF performance in 2022

At the time of writing, the VGS ETF has fallen by 10.11% since the start of the calendar year.

This is a bigger fall than the S&P/ASX 200 Index (ASX: XJO), which has only dropped by around 2%.

But, there are other large ETFs on the ASX that have fallen more than the VGS ETF.

The Betashares Nasdaq 100 ETF (ASX: NDQ) has fallen more than 16% since the start of the year.

Meanwhile, Vanguard US Total Market Shares Index ETF (ASX: VTS) has dropped by 10.2% in 2022 so far.

What's influencing the VGS ETF performance?

There have been declines in several sectors in 2022, particularly technology. Plenty of global ETFs on the ASX provide exposure to the big tech names.

The biggest positions in the NDQ ETF, VTS ETF and VGS ETF portfolios are the big US tech names like Microsoft (NASDAQ: MSFT), Apple (NASDAQ: AAPL) and Amazon (NASDAQ: AMZN). An ETF's overall return simply tracks the combined return of the underlying positions. As the biggest holdings in some ETFs, the giant US tech stocks have the biggest influence on the returns of those ETFs.

The US share market has a heavy tech focus, so the ETFs that are more weighted to the names like Tesla (NASDAQ: TSLA) – down over 24% this year to date – have seen a more significant decline. The NASDAQ has high exposure to tech names.

However, the Vanguard MSCI Index International Shares ETF also offers broad diversification to other sectors.

Diversification

The VGS ETF is invested in around 1,500 businesses from around the world. Many countries are represented in the holdings, including the United States, Japan, the United Kingdom, Canada, France, Switzerland, Germany, the Netherlands, Sweden, and so on.

It also offers exposure to some businesses in sectors like financials and energy that have seen a rise in the share price in 2022.

The HSBC (LSE: HSBA) share price is up more than 5% since the start of the year, while the Wells Fargo (NYSE: WFC) share price is up over 1%.

In energy, the Shell (LSE: SHEL) share price has gone up 14.5%, while the ConocoPhillips (NYSE: COP) share price has jumped 35% in 2022. The oil price has risen amid the war in Ukraine.

Vanguard MSCI Index International Shares ETF management fee

Vanguard is proud of its ability to offer investors investment products with very low management fees.

The VGS ETF has an annual management fee of just 0.18%.

Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. Wells Fargo is an advertising partner of The Ascent, a Motley Fool company. John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns and has recommended Amazon, Apple, BETANASDAQ ETF UNITS, Microsoft, Tesla, and Vanguard MSCI Index International Shares ETF. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has recommended HSBC Holdings and has recommended the following options: long March 2023 $120 calls on Apple and short March 2023 $130 calls on Apple. The Motley Fool Australia owns and has recommended BETANASDAQ ETF UNITS. The Motley Fool Australia has recommended Amazon, Apple, 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.

More on ETFs

asx share price boosted by us investment represented by hand waving US flag across winning athlete
ETFs

Which ASX ETFs give Aussie investors access to US stocks?

We canvas some options to help you get your research started.

Read more »

Man holding Australian dollar notes, symbolising dividends.
ETFs

Want the latest dividend from the Vanguard Australia Shares ETF (VAS)? Here's what you have to do

If you want to bag the latest VAS dividend, here's what you need to do.

Read more »

Man holding out Australian dollar notes, symbolising dividends.
ETFs

Why these ASX income ETFs could be top options

Here's how investors can use ETFs to generate income.

Read more »

ETF written on cubes sitting on piles of coins.
ETFs

2 rewarding ASX ETFs I'd buy to build a second income

There are a few different ETFs that can provide good dividends. Here are two.

Read more »

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

The pros and cons of buying the iShares S&P 500 ETF (IVV) right now

It’s important to ask the question of whether it’s a good time to buy.

Read more »

A graphic illustration with the words NASDAQ atop a US city and currency
ETFs

How much would I have now if I'd invested $10,000 in the BetaShares Nasdaq 100 ETF (NDQ) a year ago?

Was it a good idea to buy this ETF a year ago?

Read more »

young man smiling in blue shirt
ETFs

Invest $500 in these outstanding ASX ETFs

Could these ETFs deliver the goods for investors over the long term?

Read more »

A group of young ASX investors sitting around a laptop with an older lady standing behind them explaining how investing works.
ETFs

Buy and hold these ASX ETFs until 2034

These ETFs could be great long-term options. Let's see why.

Read more »