What do you get when you invest in the VGS ETF?

What kind of investments does the VGS ETF actually hold?

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Key points

  • The Vanguard MSCI Index International Shares ETF is a popular choice for many ASX investors
  • But this ETF is a wide one, with around 1,500 underlying holdings across more than 20 countries
  • The United States commands around 70% of this ETF's total holdings

The Vanguard MSCI Index International Shares ETF (ASX: VGS) is a fairly popular exchange-traded fund (ETF) on the ASX today. It is one of the index ETFs that ASX investors like to use to gain exposure to shares listed outside Australia and the ASX.

But this ETF’s name doesn’t exactly tell us what kind of shares an investment into VGS units would give an investor exposure to. So today, let’s check out what exactly it is that you get when you invest in the Vanguard International Shares ETF.

VGS is a very broad fund. It officially tracks the MSCI World ex-Australia Index, which covers the largest companies across “major developed countries” of the world.

There are more than 20 share markets that VGS covers. But it is dominated by the United States, which commands around 70% of this ETF’s total holdings. Other significant contributors include Japan (6.3%), the United Kingdom (4.5%), Canada (3.7%), and Switzerland (3%).

This inevitably means that it is the US that also dominates VGS’s underlying shares. Although this ETF holds close to 1,500 individual companies within it, the largest companies still dominate.

Take Apple Inc (NASDAQ: AAPL). This world-famous American technology giant is the largest individual holding within VGS right now. Even though it is one of almost 1,500 companies within VGS, it still commands a 4.9% weighting in the ETF’s portfolio.

What else is in the Vanguard International Shares ETF?

It’s a similar story with the other large-cap US tech shares. Microsoft Corporation (NASDAQ: MSFT), Amazon.com Inc (NASDAQ: AMZN), Tesla Inc (NASDAQ: TSLA), and Alphabet Inc (NASDAQ: GOOG)(NASDAQ: GOOGL) are VGS’s next-largest holdings. Together, these four companies represent another 10% or so of VGS’s total weighting.

So of $100 invested in VGS units right now, approximately $15 would be invested in these five big tech companies alone.

But that’s not to say there isn’t still a diverse range of international companies within this ETF. Other significant holdings include Switzerland’s Nestle, France’s LVMH, the UK’s Shell, and Japan’s Toyota. The US offers up more than just tech companies too. Farm machinery company Deere & Company is there. As is healthcare giant Johnson & Johnson. You’ll also find the Coca-Cola Company, consumer staples king Procter & Gamble, and oil titan Exxon Mobil.

So if an investor puts money into the Vanguard VGS ETF, they are certainly getting a big chunk of US tech. But they will also get a very wide range of large, dominant businesses hailing from many corners of the globe.

The Vanguard MSCI Index International Shares ETF charges a management fee of 0.18% per annum.

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. Motley Fool contributor Sebastian Bowen has positions in Alphabet (A shares), Amazon, Apple, Coca-Cola, Johnson & Johnson, Microsoft, Procter & Gamble, and Tesla. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has positions in and has recommended Alphabet (A shares), Alphabet (C shares), Amazon, Apple, Microsoft, Tesla, and Vanguard MSCI Index International Shares ETF. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has recommended Johnson & Johnson 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 has recommended Alphabet (A shares), Alphabet (C shares), 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 Scott Phillips.

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