Is the VGS ETF the best for passive investing?

Is the Vanguard MSCI Index International Shares ETF (ASX: VGS) the best option for passive investing on the ASX? There are plenty of ETFs to consider.

About VGS

The VGS ETF is about giving investors exposure to leading businesses listed across many major developed countries.

It actually owns positions in over 1,500 businesses. So it offers a lot of diversification.

In terms of sector allocation, the biggest exposure is to IT with an allocation of around 23%. There are other sectors with allocations of more than 10%: healthcare, consumer discretionary, financials and industrials.

Looking at the biggest individual positions the VGS ETF owns businesses like Apple, Microsoft, Amazon, Alphabet, Facebook, Johnson & Johnson, Tesla, Nestle, Visa and Procter & Gamble.

There is a heavy focus on ‘US’ businesses in the top holdings because that’s generally where the largest global companies are listed. However, there are other ones like SAP, ASML, Novartis and LVMH.

Other similar ETFs

There are plenty of ETFs based on the global share market like iShares Global 100 ETF (ASX: IOO) and BetaShares Global Sustainability Leaders ETF (ASX: ETHI).

How has the ETF performed?

Source: Best ETFs VGS 5-year share price chart.

The past five years have seen a couple of volatile periods including the end of 2018 and the COVID-19 crash. Even so, the average return per year over the past five years has been 9.65% (which includes the decline due to COVID-19).

Is VGS the best ETF for passive investing?

VGS ETF offers a lot of very useful diversification. It provides exposure to businesses right across the world – that’s probably better than being invested in just one share market like iShares S&P 500 ETF (ASX: IVV), however VGS ETF’s annual management fee of 0.18% is more than IVV ETF.

Over time the ETF’s holdings will change and that will allow investors to stay invested in VGS ETF without worrying about those holdings becoming irrelevant to the business world.

I think it’s one of the best options for passive investing with its strong diversification. It won’t ever shoot the lights out, but it should be able to keep going higher with a decent dividend yield.

But there are plenty of other ETFs out there for growth and/or dividends. Check out our list of ASX ETFs.

From 200+ ETFs in Australia, our top investment analyst has just identified his #1 ETF for 2021 and beyond.

Low fees? Check.

Long-term growth potential? Check.

Regular cash returns? Check!

This ETF makes investing in ETFs "Super-Easy".

Simply click here or enter your email address below to access the full ETF report, ticker code, and step-by-step investment guide. Our expert's #1 ETF report is completely free.

No gimmicks, no payment, no credit card info. Just enter your email address below and we'll send you the report right away.

From 200+ ETFs in Australia, our top investment analyst has just identified his #1 ETF for 2021 and beyond.

Low fees? Check.

Long-term growth potential? Check.

Regular cash returns? Check!

This ETF makes investing in ETFs "Super-Easy".

Simply click here to access the full ETF report, ticker code, and step-by-step investment guide. Our expert's #1 ETF report is completely free.

No gimmicks, no payment, no credit card info. Just click the link below and enter your email address. We'll send you the report right away.

CLICK HERE TO GET THE REPORT

Unsubscribe anytime. Read our TermsFinancial Services GuidePrivacy Policy. We’ll never sell your email address. Our company is Australian owned.

At the time of publishing, the author of this article does not have a financial or commercial interest in any of the companies mentioned.

Information warning: The information on this website is published by The Rask Group Pty Ltd (ABN: 36 622 810 995) is limited to factual information or (at most) general financial advice only. That means, the information and advice does not take into account your objectives, financial situation or needs. It is not specific to you, your needs, goals or objectives. Because of that, you should consider if the advice is appropriate to you and your needs, before acting on the information. If you don’t know what your needs are, you should consult a trusted and licensed financial adviser who can provide you with personal financial product advice. In addition, you should obtain and read the product disclosure statement (PDS) before making a decision to acquire a financial product. Please read our Terms and Conditions and Financial Services Guide before using this website. The Rask Group Pty Ltd is a Corporate Authorised Representative (#1280930) of AFSL #383169.

Keep reading:

General Financial Advice warning
The information on this website is general financial advice only. That means, the advice does not take into account your objectives, financial situation or needs. Because of that, you should consider if the advice is appropriate to you and your needs, before acting on the information. In addition, you should obtain and read the product disclosure statement (PDS) before making a decision to acquire a financial product. If you don’t know what your needs are, you should consult a trusted and licensed financial adviser who can provide you with personal financial product advice. Please read our Terms & Conditions and Financial Services Guide before using this website.

© Rask Australia 2020

Join 20,000+ smart investors

Join the Rask Australia mailing and we’ll send you free investment reports, podcasts, expert insights, investing courses, ASX news and lots, lots more. All free. 

Unsubscribe anytime. Read our TermsFinancial Services GuidePrivacy Policy. We’ll never sell your email address. Our company is Australian-owned.

feedback-icon

What can we do better?

Howdy, ASX investor.

I really care about your experience today.

Please, let me know if you have any suggestions we can use to improve our site and help others invest in ETFs. 

Cheers! 

Owen Rask