The Vanguard MSCI Index International Shares ETF (ASX: VGS) is one of the most popular index funds on the ASX. In fact, it is currently the second-most popular ASX index fund that doesn't track Australian shares.
It's not hard to see why. The VGS exchange-traded fund (ETF) gives ASX investors exposure to the stock markets of more than 20 countries around the world. By buying this index fund, you'll be buying companies hailing from advanced economies like Canada, Japan, the United Kingdom, France, Singapore, Finland and Israel.
In saying that, the Vanguard International Shares ETF is still dominated by American companies The United States makes up more than 70% of VGS' weighted portfolio, and its largest companies are also VGS' top holdings. They include the 'magnificent seven' tech giants like Apple, Amazon, NVIDIA and Tesla.
So ASX investors can access a range of the world's largest companies hailing from the most successful economies, all in one VGS ticker code. It's not hard to see why so many ASX investors find this instant diversification appealing for their ASX portfolios.
But let's talk numbers.
Most of us would be aware that 2024 was a lucrative year for the Australian, American and global share markets in general. Let's see how this percolates into the VGS ETF.
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What did the VGS ETF deliver for ASX investors in 2024?
So, VGS units began 2024 at $110.57 each on the ASX. On New Year's Eve last week, those same units closed at $140.10 each. So already, we're off to a great start with the Vanguard International Shares ETF growing by 26.71%, as you can see below:
But we haven't accounted for the dividend distributions this index fund paid out last year yet. Like many ASX ETFs, VGS pays out a dividend distribution every three months. Over 2024, the fund's four quarterly distributions amounted to an annual total of $4.19 per unit.
For an investor who bought VGS units right at the end of 2023, this would have equated to a distribution yield worth 3.79%. Adding that to our capital growth of 26.71%, we get a final return of 30.5% for 2024.
That means an investor who put $10,000 into VGS units at the start of the year would have had approximately $13,050 to their name by New Year's Day last week. Not a bad return for a simple index fund, one could argue. Let's see how the Vanguard International Shares ETF fares in 2025.
