What is Vanguard?
Vanguard is a funds management business that is owned by its own investors. It was founded in 1975 and now has (or had) around AU$9.7 billion. It has 192 funds in the US, and 232 funds in markets outside the US. It’s a world leader in providing low-cost ETFs.
What is VGS about?
The idea behind Vanguard MSCI Index International Shares ETF is that it aims to track the MSCI World excluding Australia. It provides exposure to many of the world’s biggest businesses in major developed countries.
What are some of the shares that it’s invested in?
It’s actually invested in 1,561 businesses, so you’re getting a huge amount of diversification with this ETF option. However, there are shares that it’s exposed to more than others. VGS ETF’s biggest 10 holdings include Apple, Microsoft, Amazon, Alphabet, Facebook, Johnson & Johnson, Visa, Nestle, JPMorgan Chase and Procter & Gamble.
One of the biggest downfalls of the ASX is that it’s focused on financial shares and resource shares.
With Vanguard MSCI Index International Shares ETF, 20.7% of the ETF is invested in IT, 14.7% is invested in health care, 12.2% is invested in financials, 10.9% is invested in consumer discretionary, 10.2% is invested in industrials, 9.1% is invested in communication services, 8.5% is invested in consumer staples, 4% is invested in materials, 3.5% is invested in utilities, 3.3% is invested in energy and 2.9% is invested in real estate.
With the above sector allocations, I think the VGS ETF offers an attractive mix of growth and defence.
Why I think Vanguard MSCI Index International Shares ETF is a great idea
It can be difficult to decide which country, sector or company to invest in with global shares. The VGS ETF offers the entire developed global share market with a single investment at a management fee cost of just 0.18% per year, which is very cheap.
It will always be invested in the best global blue chips, whether they are based in the US, Japan, the UK, France, Canada and so on. You won’t have to worry about buying and selling shares all the time. You could theoretically just stick with this investment for a lifetime as your only pick and not go far wrong. There’s a reason why many global investment managers measure themselves against this index – it’s a good, diversified, fairly steady benchmark. So why not just enjoy the returns?