Most ASX investors would know that the past week has been a brutal one for ASX shares and the Australian share market. But it's not just our markets that are in a world of pain right now. So today, let's check out the damage with the Vanguard MSCI Index International Shares ETF (ASX: VGS).
This exchange-traded fund (ETF) from provider Vanguard is one of the best barometers for global shares around. The Vanguard International Shares ETF is a massive fund in scope and scale. It holds shares from all kinds of advanced economies around the world. Here you'll find shares from Canada, the United Kingdom, Japan, France, Switzerland, Sweden, Germany, Israel, Singapore and Hong Kong.
But most of its major constituents come from the United States. This ETF's top holdings are names that will probably be familiar to most readers. They include the likes of Apple, Microsoft, Amazon, Tesla and Exxon Mobil.
As such, this ETF is a popular and effective choice for any investor wishing to diversify their ASX share portfolio using a single, simple index fund.
So let's look at the damage that the past week or so has done to this ETF. Since 7 March, the Vanguard International Shares ETF has fallen from $98.60 a unit to the $95.60 we see today. That's a hefty loss of 3%.
Thus, many investors might be wondering if this is a buying opportunity for this popular ETF.
Is it time to buy the Vanguard International Shares ETF?
Well, I would argue that it is. Whenever a quality index fund experiences a significant drop in value, it can be a good chance to pick up additional units. Index funds are not individual companies. They hold an ever-changing basket of shares, weighted by market capitalisation.
In this ETF's case, these sources are from around the world, but the same principle applies. Because an index fund is periodically rebalanced to ensure it always has the largest companies within it, losers are weeded out over time, while winners are added.
Because of this nature, investing in index funds using a dollar-cost-averaging strategy is usually a popular and effective way of building wealth. That would work well for most investors. But the principles of 'buy low sell high' still apply here too.
If you can handle the emotional baggage of buying more of an investment when it falls in price, then you should do so. As the great Warren Buffett once said, "Whether we're talking about socks or stocks, I like buying quality merchandise when it is marked down".
So I think it is indeed a great time to buy the Vanguard International Shares ETF right now. Remember, this index fund has returned an average of 11.09% per annum since its inception in 2014. Past performance is no guarantee of future results, of course. But it still leads me to believe that the cheaper you can get this ETF, the better.
