Vanguard MSCI Index International Shares ETF (ASX: VGS) reached a record high of $165.88 per unit on Friday.
VGS ETF tracks the MSCI World ex-Australia (with net dividends reinvested) in Australian dollars Index.
The VGS is the second-largest exchange-traded fund (ETF) by market capitalisation, according to ASX data for October.
VGS has $18.63 billion in funds under management as of 30 October. That's up 30% over 12 months, by the way.
That strong rise demonstrates the fund's popularity with Aussie investors seeking global exposure and its capital growth.
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More about VGS ETF
VGS favours large, established organisations for investment, with 80% of the portfolio in large-cap stocks.
The ETF provides geographical diversification through its exposure to about 1,300 international shares listed in 23 nations.
However, US shares dominate the portfolio at 74%.
This is followed by Europe (primarily the UK) at 15%, the Pacific (primarily Japan) at 7%, and the Middle East at 0.3%.
The VGS mix has worked very well for investors over the past few years due to its heavy allocation to US shares.
The US market benchmark S&P 500 Index (SP: INX) is on track to outperform the S&P/ASX 200 Index (ASX: XJO) for a fourth consecutive calendar year in 2026.
However, CY26 has been choppier than previous years due to market fears over hyper-scaled artificial intelligence (AI) capex.
AI and impressive US tech earnings have driven the American stock market substantially higher in recent years.
In CY25, the S&P 500 rose 16%; in CY24, it soared 25%; and in CY23, it ascended 24%, according to S&P Global data.
However, massive AI investment this year has investors worried that the returns may not be worth the incredibly large spend.
In CY26, the S&P 500 is up 11% in the year to date (YTD).
That's still mightily impressive, but it's markedly slower than previous years.
Meanwhile, other international markets have ripped, so VGS ETF has benefitted from having a quarter of its portfolio in other nations.
Here are some examples
The Japanese benchmark Nikkei 225 is up 19% YTD in CY26. VGS ETF has 6% of funds invested in Japanese companies.
Canada's benchmark, the S&P/TSX Composite, is up 14% YTD. VGS has 3% exposure to Canadian stocks.
STOXX Europe 600, which tracks 600 companies across 17 nations, is up 11% YTD. VGS has 15% exposure to European companies.
Switzerland's benchmark Swiss Market Index (SMI) is up 14% YTD. VGS has 2% exposure to Swiss companies.
You get the point.
Why is VGS ETF at a record high on Friday?
The fund's mix of three-quarters US stocks and one-quarter other international shares appears to be playing out beautifully in CY26.
A comparison between VGS and market-leading ETFs tracking All-World-ex-US and US-only markets demonstrates this well.
At the time of writing, VGS ETF is up 8.1% YTD to $165.53 per unit.
Over the same period, the Vanguard All-World ex-US Shares Index ETF (ASX: VEU) has risen 7.7% to $119.42.
And the iShares S&P 500 AUD ETF (ASX: IVV) has increased 6.1% to $74.42 per unit.
(Currency movements largely account for why IVV ETF has not risen as fast as the S&P 500 this year.)
