Vanguard ETFs have become a go-to choice for Australians seeking a simple, low-cost way to build long-term wealth. But with several popular options on the ASX, which Vanguard ETF deserves your money?
Three of the biggest choices are the Vanguard Australian Shares Index ETF (ASX: VAS), Vanguard MSCI International Shares ETF (ASX: VGS) and Vanguard Diversified High Growth ETF (ASX: VDHG).
Here's how they compare.
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VAS: the Australian dividend favourite
VAS aims to track the S&P/ASX 300 Index (ASX: XKO), giving investors exposure to around 300 Australian companies.
Its portfolio is heavily weighted towards the country's biggest banks and miners. Commonwealth Bank of Australia (ASX: CBA) and BHP Group Ltd (ASX: BHP) each account for more than 10%, while Wesfarmers Ltd (ASX: WES), Macquarie Group Ltd (ASX: MQG), Rio Tinto Ltd (ASX: RIO) and Telstra Group Ltd (ASX: TLS) are also major holdings.
That concentration can be a strength and weakness. Investors get exposure to established Australian businesses and their dividends, but less geographic and sector diversification.
This Vanguard ETF charges a management fee of just 0.07% per year. It has returned around 4% year to date and 3% over the past year, with a five-year total return of roughly 16%.
VGS: the global growth option
VGS offers exposure to more than 1,200 companies across developed markets outside Australia.
This Vanguard ETF has just hit a record high of $164.45, delivering a 12% gain over the past year and around 62% over five years.
The United States makes up roughly 75% of the portfolio, while information technology accounts for about 30%. Its largest holdings include NVIDIA, Apple, Alphabet, and Microsoft.
That gives investors significant exposure to powerful trends such as artificial intelligence, cloud computing, digital advertising and e-commerce.
The trade-off? VGS can be more vulnerable to falls in US technology stocks and currency movements.
VDHG: the set-and-forget option
VDHG takes a very different approach. Rather than investing in one market, it combines several Vanguard index funds under one ETF. It includes VAS and VGS, alongside exposure to smaller international companies, emerging markets and bonds.
That means investors can gain exposure to thousands of shares and bonds through a single investment. The portfolio of this Vanguard ETF is regularly rebalanced, meaning investors don't have to constantly adjust their holdings.
For someone who wants a simple buy-and-hold strategy, that's a major attraction.
VDHG has returned around 8% over the past year and 26% over five years.
Which ETF is best?
On returns, VGS is the clear winner of the three top Vanguard ETFs, with its international exposure delivering significantly stronger gains over the past five years.
But the best Vanguard ETF depends on what you're after. VAS could appeal to investors seeking Australian shares, dividends and exposure to familiar local companies. VGS looks more compelling for those chasing international diversification and stronger growth potential.
VDHG, meanwhile, may suit investors who value simplicity and broad diversification above all else, combining shares and bonds under one ETF.
So while VGS has been the standout performer, VDHG could still be the better choice for investors who want a simple, set-and-forget portfolio.
