With a market capitalisation of $13.29 billion, Vanguard MSCI Index International Shares ETF (ASX: VGS) is the biggest ETF holding diversified international shares on the ASX.
Aussies have gravitated to this particular exchange-traded fund (ETF) to add international exposure to their portfolios in recent years.
VGS ETF provides access to a mix of international shares, but there's a heavy leaning to the US market (77% of holdings in the portfolio).
The VGS ETF seeks to track the MSCI World ex-Australia (with net dividends reinvested) in Australian dollars Index.
It currently holds 1,280 shares, with eight in 10 being large-cap stocks in developed nations.
Aside from the US, VGS ETF has holdings in European nations (16%), such as the United Kingdom, France, Germany, and Switzerland, the Pacific region (7%), including Japan, Hong Kong, and Singapore, and the Middle East (0.3%), primarily Israel.
So, how well is the VGS ETF performing for Aussie investors over the medium term?
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VGS ETF returns over 5 years
Today, the VGS ETF is trading for $152.37 apiece, up 0.24%.
The exchange-traded fund set a new all-time high of $152.90 yesterday.
Let's say you invested $10,000 into this popular ETF five years ago.
On 9 October 2020, VGS closed at $81.66 apiece.
If you had put $10,000 into the VGS ETF then, it would have bought you 122 units (for $9,962.52).
There's been a capital gain of $70.71 per unit since then, which equates to $8,626.62 in dollar terms.
During this time, the VGS ETF also paid distributions four times per year. (Distributions is just another name for dividends.)
Investors have two choices in regards to dividends.
They can take the money as a cash payment, or automatically reinvest it via Vanguard's distribution reinvestment plan (DRP).
Let's assume you're a retiree who prefers to take the dividend as a cash payment.
Since 9 October 2020, VGS has paid 1,378.56 cents per unit, or $13.79 per unit in rounded dollar terms.
This means you would have received $1,682.38 worth of income over the five-year period.
Grand total…
Your capital gain of $8,626.62 plus your distributions of $1,682.38 gives you a total return in dollar terms of $10,309.
You invested $9,962.52 buying your 122 units of VGS ETF on 9 October 2020.
This means you have received a total return, in percentage terms, of 103.5% in just five years.
So today, your VGS units are now worth $18,589.14 (excluding the dividend payments that you took as cash).
