The Vanguard MSCI Index International Shares ETF (ASX: VGS) delivered a total gross return of 13.34% in 2025.
This comprised 9.81% in capital growth and a dividend yield of 3.53%, less fees.
By comparison, the iShares Core S&P 500 AUD ETF (ASX: IVV) rose 8.24% and delivered a total return of 10.13%.
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Why did VGS ETF do better than IVV last year?
The US stock market has delivered unbelievable returns over the past three years.
This has largely been due to the performance of global tech giants listed in the US.
While VGS is overweight in US stocks, about 30% of its investments are in other global markets that are starting to surge.
This, along with a weaker US dollar against most developed-nation currencies, is why the VGS ETF outperformed ASX IVV last year.
A review of the 2025 performance of various global indices outside the US depicts the trend.
Other global markets surge in 2025
Last year, the S&P 500 Index (SP: INX) gave a total return of 17.88% (the IVV ETF returned less than this due to the currency exchange).
A total return of almost 18% in a year is an outstanding return in anyone's language.
The VGS ETF is comprised of 73.6% US stocks, so the S&P 500's performance heavily influenced its 2025 return.
But look what other global indices did.
The S&P Japan 500 Index delivered a total return of 25.12%, outperforming the S&P 500 by more than 7%.
Japan is the second biggest geographic exposure in the VGS ETF at 5.6%.
Canada's benchmark, the S&P/TSX Composite Index, delivered a total return of 31.68%. That's almost 14% more than US stocks.
Canada is the third largest geographic exposure in the VGS ETF at 3.4%.
The S&P United Kingdom Index returned 25.71%, outperforming the S&P 500 by almost 8%.
The United Kingdom is the fourth-largest geographic exposure in ASX VGS, at 3.4%.
The S&P Europe 350 Index returned 20.5%. Grouped together, European stocks make up 15.9% of the VGS ETF.
The S&P Pan Asia BMI Index, which incorporates Japan, China, South Korea, Taiwan, and Australia, returned 27.31%.
Grouped together, the Pacific represents 6.5% of the VGS ETF's geographic mix.
Diversity advantage of ASX VGS
While heavily invested in US stocks, the Vanguard MSCI Index International Shares ETF provides exposure to other international shares.
That diversification is proving useful, with experts suggesting markets outside the US could outperform over the next decade.
Top broker Goldman Sachs says international markets will likely outperform US shares over the next 10 years.
Peter Oppenheimer, chief global equity strategist at Goldman Sachs Research, said:
We expect higher nominal GDP growth and structural reforms to favor emerging markets, while artificial intelligence's long-term benefits should be broad-based rather than confined to US technology stocks.
A declining US dollar could also favor non-US equities, adding an extra layer of opportunity for globally diversified portfolios.
Goldman favours emerging markets and Asia ex-Japan over the 10-year outlook.
Here are the broker's predictions:
| Region | Average return over 10 years | Drivers |
| US | +6.5% | Driven primarily by EPS growth, with valuations trending lower and dividends remaining modest |
| Europe | +7.1% | Balanced contributions from earnings and shareholder distributions, including about a 3% dividend yield |
| Japan | +8.2% | Underpinned by EPS growth of 6% and and policy-led improvements in dividends and buybacks |
| Asia ex-Japan | +10.3% | Aided by about 9% EPS growth and 2.7% dividend yield, partly offset by valuation derating |
| Emerging markets | +10.9% | Led by strong EPS growth in China and India. We also see improving shareholder returns supported by policy reforms |
Source: Goldman Sachs
Another top global broker, UBS, foresees stronger earnings growth in China and Europe than the US over the next two years.
In a recent article, UBS recommended that investors "add exposure to global equities amid [a] supportive backdrop".
