The Australian share market offers plenty of good companies, but it represents only a small slice of the global investment opportunity.
The Vanguard MSCI Index International Shares ETF (ASX: VGS) gives investors a simple way to look much further afield.
So, would I buy the VGS ETF today?
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What does the VGS ETF own?
The VGS ETF holds around 1,250 companies from developed markets outside Australia.
The United States accounts for close to three-quarters of the fund, with smaller exposures to countries including Japan, the United Kingdom, Canada, France, Switzerland, and Germany.
Its largest holding is NVIDIA, which has become a key supplier of the advanced chips used for artificial intelligence.
Apple and Microsoft are also among the largest positions. These businesses give investors exposure to smartphones, personal computing, cloud services, software, cybersecurity, and artificial intelligence.
Amazon adds exposure to online retail and cloud computing, while Alphabet earns money from search advertising, YouTube, cloud services, and other digital products.
I like that one ASX investment can provide access to so many businesses that are difficult to find locally.
Why would I buy it?
I think the main attraction is that investors do not need to predict which company or industry will lead the market over the next decade.
The VGS ETF owns current giants such as Broadcom and Meta Platforms, but the portfolio will change as markets evolve.
Companies that grow in value can become larger holdings, while declining businesses gradually lose influence. New market leaders can enter the index without investors needing to identify them in advance.
That makes the fund a straightforward way to participate in global business growth.
The management fee is 0.18% per annum, which I think is reasonable for exposure to more than 1,000 international shares.
What should investors consider?
The VGS ETF is diversified across many companies, but its largest positions and heavy US exposure still influence returns.
Technology valuations are relatively high, and a sell-off involving NVIDIA, Apple, Microsoft, or other major holdings could pull the fund lower.
It also excludes Australian shares and emerging markets. Investors seeking exposure to China, India, Taiwan, or other developing economies would need to look elsewhere.
Currency movements can affect returns as well because the fund is not hedged to the Australian dollar. A rising Australian dollar can reduce the value of overseas investments when translated back into local currency, while a weaker dollar can provide a boost.
I would therefore expect periods of volatility in its performance, even though the fund owns hundreds of established businesses.
Foolish takeaway
Yes, I would buy the VGS ETF today with a long investment horizon.
It provides broad access to global companies including NVIDIA, Apple, Microsoft, Amazon, and Alphabet, while also owning hundreds of businesses beyond the familiar technology giants.
I particularly like that the portfolio can evolve as new companies rise and older market leaders fade.
The VGS ETF will still experience market falls, currency movements, and periods when its largest holdings look expensive. However, I think its diversification, low fee, and exposure to many of the world's strongest businesses make it an excellent buy-and-hold investment.
