Want to follow the herd and buy the Vanguard MSCI Index International Shares ETF (VGS)? Here are the stocks you'd own

The ASX VGS attracted more cash inflows than any other Vanguard ETF during the September quarter.

| More on:
A group of people push and shove through the doors of a store, trying to beat the crowd.

Image source: Getty Images

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

The Vanguard MSCI Index International Shares ETF (ASX: VGS) attracted $861 million in net cash inflows from Australian investors in the September quarter.

Vanguard said the ASX VGS attracted more funds than any other exchange-traded fund (ETF) in its stable.

Overall, Australian investors ploughed $12.7 billion into ASX ETFs in the September quarter.

The VGS ETF took 6.7% of that total investment.

That's pretty impressive for a single ETF given there are about 350 of them trading on the ASX today!

Why do investors love the ASX VGS?

The popularity of the Vanguard MSCI Index International Shares ETF reflects a strong trend of investors preferring international shares ETFs, particularly those tracking an index, to Australian shares in 2024.

Data shows international shares ETFs have attracted more than 56% of total cash inflows this year.

Vanguard reckons investors are chasing strong returns from US shares, which have outperformed ASX shares by a big margin in recent times.

In FY24, the S&P 500 Index (SP: .INX) rose by 22.7% and the Nasdaq Composite Index (NASDAQ: .IXIC) rose by 28.61% over the financial year.

By comparison, the S&P/ASX 200 Index (ASX: XJO) increased by 7.83% (however, total returns, including dividends, were more impressive at 12.1%).

If you're thinking of following the herd and investing in the ASX VGS, here's what you need to know.

What you need to know about this ASX ETF

Created with Highcharts 11.4.3Vanguard Msci Index International Shares ETF PriceZoom1M3M6MYTD1Y5Y10YALL22 Oct 201422 Oct 2024Zoom ▾20152016201720182019202020212022202320242016201620182018202020202022202220242024www.fool.com.au

Like most of Vanguard's ETFs, the Vanguard MSCI Index International Shares ETF seeks to track the returns of an index, before fees.

That index is the MSCI World ex-Australia (with net dividends reinvested), in Australian dollars Index.

There are three major reasons to invest in the Vanguard MSCI Index International Shares ETF.

The first is geographical diversification given its international focus. The ETF is invested in stocks listed in the United States, Europe, the Pacific, the Middle East, and other parts of the world.

However, US shares dominate the portfolio at 73%, followed by Japan (6%), the UK (4%) and Canada (3%).

The second reason to invest is the exposure to more than 1,300 companies listed in developed nations.

The third reason is the ETF's focus on the world's largest businesses, all of which have broad, global earnings bases. About 80% of the ASX VGS's holdings are large-cap stocks.

This provides peace of mind for investors who prefer the lower risk of investing in mega businesses.

In terms of sector exposure, the top five sectors of the ETF are technology (25%), financials (15%), healthcare (12%), industrials (11%), and consumer discretionary (10%).

This ASX ETF is not hedged, which means it is exposed to the fluctuating values of foreign currencies.

The Vanguard MSCI Index International Shares ETF has a very large number of holdings, which means a lower weighting for each individual company. This means your money is spread more thinly across a larger number of businesses.

As you can see below, the largest stock that the ETF holds has less than a 5% weighting.

Top 10 holdings of the ASX VGS

RankCompany nameWeighting
1Apple Inc 4.88%
2Microsoft Corp4.37%
3Nvidia Corp4.29%
4Amazon.com Inc2.51%
5Meta Platforms Inc1.8%
6Alphabet Inc (GOOGL)1.4%
7Alphabet Inc (GOOG)1.21%
8Broadcom1.1%
9Tesla Inc1.08%
10Eli Lilly & Co1.08%

What about performance?

The ASX VGS began trading in November 2014.

Since then, it has returned a gross average of 13% per year.

The ETF pays distributions quarterly. You can choose to receive the cash or participate in the dividend reinvestment plan (DRP) instead if you're keen to further grow your investment.

The management fee is 0.18% per annum.

The ASX VGS is trading for $130.24 per share at the time of writing.

Should you invest $1,000 in Auckland International Airport Limited right now?

Before you buy Auckland International Airport Limited shares, consider this:

Motley Fool investing expert Scott Phillips just revealed what he believes are the 5 best stocks for investors to buy right now... and Auckland International Airport Limited wasn't one of them.

The online investing service he’s run for over a decade, Motley Fool Share Advisor, has provided thousands of paying members with stock picks that have doubled, tripled or even more.*

And right now, Scott thinks there are 5 stocks that may be better buys...

See The 5 Stocks *Returns as of 30 April 2025

John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to Meta Platforms CEO Mark Zuckerberg, is a member of The Motley Fool's board of directors. Motley Fool contributor Bronwyn Allen has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has positions in and has recommended Alphabet, Amazon, Apple, Meta Platforms, Microsoft, Nvidia, and Tesla. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has recommended Broadcom and has recommended the following options: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. The Motley Fool Australia has recommended Alphabet, Amazon, Apple, Meta Platforms, Microsoft, Nvidia, and Vanguard Msci Index International Shares ETF. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

More on ETFs

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

$10,000 invested in the ASX 200 5 years ago is now worth…

Guess how much $10,000 invested in the ASX 200 five years ago is worth today!

Read more »

ETF written in yellow with a yellow underline and the full word spelt out in white underneath.
ETFs

10 ASX ETFs to buy in May with $10,000

These funds offer investors access to many of the best companies in the world.

Read more »

Businessman working and using Digital Tablet new business project finance investment at coffee cafe.
ETFs

MOAT ETF is up 10% in 2 weeks. Is this ASX ETF still good value?

Let's see if it is too late to buy this popular fund.

Read more »

A group of young people lined up on a wall are happy looking at their laptops and devices as they invest in the latest trendy stock.
ETFs

3 ASX ETFs for beginner investors to buy

Getting started with investing can feel overwhelming — especially if you're not sure which individual stocks to pick or when…

Read more »

Smiling woman holding Australian dollar notes in each hand, symbolising dividends.
ETFs

$10,000 invested in VEU ETF a year ago is now worth…

Worried about US stocks? This ASX ETF allows you to invest everywhere globally whilst avoiding the US.

Read more »

A man points at a paper as he holds an alarm clock.
ETFs

I would buy and hold these quality ASX ETFs for a decade or more

Here's why these funds could be quality long term picks for investors.

Read more »

A happy young couple lie on a wooden deck using a skateboard for a pillow.
ETFs

5 fantastic ASX ETFs to buy for easy investing

Looking for an easy way to invest? Here are five funds to consider buying.

Read more »

A woman relaxes on a yellow couch with a book and cuppa, and looks pensively away as she contemplates the joy of earning passive income.
ETFs

3 ASX ETFs to buy for passive income in May

Don't like stock picking but want passive income? Here are three funds that could help you.

Read more »