Why it could be the perfect time to buy this Vanguard ETF

I think it could be the perfect time to buy the Vanguard MSCI Index International Shares ETF (ASX:VGS) because of a couple of key reasons.

| More on:

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

I believe it could be the perfect time to buy the Vanguard MSCI Index International Shares ETF (ASX: VGS).

About Vanguard MSCI Index International Shares ETF

Firstly, let me tell you about Vanguard if you don't already know. It's one of the world's biggest providers of exchange-traded funds (ETFs). It's special because it's not trying to make heaps of money from its investors. Instead, the owners of Vanguard are the investors. Vanguard shares the profit with investors in the form of lower fees.

This particular ETF invests in the entire global share market. It's invested in almost every major share market such as the US, Japan, the UK, Switzerland, France, Canada, Germany, the Netherlands, Hong Kong, Sweden and so on.

Vanguard MSCI Index International Shares ETF also has attractive diversification in the sense of the different industries it's invested in. The biggest allocation is 20% to IT, followed by 14.7% to health care, 12.7% to financials, 10.9% to consumer discretionary, 10% to industrials, 9% to communication services and 8.7% to consumer staples.

In terms of actual holdings it's invested in almost 1,600 businesses. But its top holdings are: Apple, Microsoft, Amazon, Alphabet, Facebook, Johnson & Johnson, Nestle, Visa, JPMorgan Chase and Proctor & Gamble.

Why I think it's a good time to buy

This could be one of the easiest investments to hold for the long-term in any environment because of the Vanguard ETF's diversification. It also has a very low management fee. It's not the cheapest out there, but 0.18% per annum is great for the global nature of it.

I think it's a good time to buy for two reasons. Number one is that Vanguard MSCI Index International Shares ETF is still 11% lower than its pre-coronavirus high. Bearing in mind that interest rates are now incredibly low, that's not bad at all if you're a long-term investors. Granted, there could be more declines later this year. Particularly with the US election coming up. 

Second, the Australian dollar has significantly recovered. The Aussie dollar now buys US$0.66. During the worst part of the crash it was under US$0.60. This gives us more buying power to buy international shares compared to nearly all of April and May.

Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia has recommended Vanguard MSCI Index International Shares ETF. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

More on Index investing

Index investing

$1,000 invested in the iShares S&P 500 ETF (IVV) at the start of 2021 is now worth…

This high-flying ETF has banked some stunning returns...

Read more »

A recreational fisherman holds a fishing rod with his hands apart indicating it was this big with a smile on his face.
Index investing

$10,000 invested in the Vanguard Australian Shares Index ETF (VAS) at the start of 2020 is now worth…

The returns of this popular index fund might surprise you...

Read more »

A young office worker is surrounded by peers who are clapping and congratulating her.
ETFs

What are the most popular ASX ETFs in Australia?

You might own one or more of these popular ETFs...

Read more »

A young woman drinking coffee in a cafe smiles as she checks her phone.
Index investing

Own the Vanguard International Shares ETF (VGS)? You banked 30% in 2024

This ETF was a lucrative one to own last year...

Read more »

Happy young couple saving money in piggy bank.
Index investing

$20,000 invested in the ASX 200 at the start of 2024 is now worth…

Investors have made more from dividends than growth over the past year...

Read more »

Businessman using a digital tablet with a graphical chart, symbolising the stock market.
Share Market News

What is the Dow Jones Index and which 30 companies make the grade?

Here is a brief history of the world's oldest share market index.

Read more »

Young boy in business suit punches the air as he finishes ahead of another boy in a box car race.
Index investing

Want to outperform 82% of professional fund managers? Buy these ASX ETFs

It's easier than you'd think to beat most ASX fund managers.

Read more »

Man smiling at a laptop because of a rising share price.
Index investing

The ultimate guide to investing in the Vanguard Australian Shares Index ETF (VAS) for maximum returns

This strategy should get you the best bang for your buck with VAS.

Read more »