The Vanguard MSCI Index International Shares ETF (ASX: VGS) is an ASX-listed exchange-traded fund (ETF) that gives investors exposure to the global share market with its holdings spread across major developed countries.
Investors have lots of different options to choose from, with a number of them offering similar sorts of investment exposure. Therefore, the ones with the lowest management fees might be able to enable stronger investment returns, though the gross return is important as well.
First, let's remind ourselves what the ASX VGS ETF is invested in.
Vanguard MSCI Index International Shares ETF breakdown
As of 30 April 2023, it had 1,471 holdings, with big names like Apple, Microsoft and Alphabet. Almost 70% of the portfolio is invested in the United States, with other countries including Japan, the United Kingdom, France, Canada and Switzerland.
The overall management fee for the VGS ETF? It's 0.18% per annum. The lower the fee, the less it detracts from gross returns, enabling investors to keep more of their money in their pockets.
The competitors
One of the most popular ASX ETFs on the ASX is the iShares S&P 500 ETF (ASX: IVV). This one is invested in 500 of the biggest and most profitable companies listed in the US. There are no Japanese or other listings in this fund's portfolio.
The IVV ETF has positions in names like Apple, Microsoft, Alphabet, Berkshire Hathaway, Telsa, Nvidia and so on. This one has a management fee of just 0.04% per annum.
Vanguard US Total Market Shares Index ETF (ASX: VTS) is invested in nearly 4,000 US shares, so there's plenty of diversification here. It invests in large US stocks down to the small caps and has an annual management fee of just 0.03%.
But, you'll notice that while both of these are cheaper, they don't offer the same exposure and diversification to the rest of the global share market.
One alternative way to gain that non-US diversification would be to invest in the Vanguard All-World ex-U.S. Shares Index ETF (ASX: VEU). This ETF invests in companies operating in both major developed and emerging countries.
It has just over 3,700 holdings in numerous countries, including Japan, the UK, China, France, Canada, Switzerland, Germany, Australia, India, Taiwan, South Korea, Brazil, Saudi Arabia and so on.
The management cost for the VEU ETF is 0.08% per annum.
Foolish takeaway
If investors just want an all-in-one choice, then the Vanguard MSCI Index International Shares ETF provides global diversification for a cheap fee.
However, investors can gain cheaper exposure through a combination of the VEU ETF with the VTS ETF or the IVV ETF. It depends on how many different investments people want to have.
