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?

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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.

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