There are multiple reasons why Vanguard MSCI Index International Shares ETF (ASX: VGS) stands out as a worthwhile investment, especially for investors looking for international diversification.
VGS is an ETF that tracks the MSCI world index excluding Australia. This ETF provides investors with exposure to many of the world’s largest companies that are listed in major developed countries.
Here are three of the reasons why VGS is a great investment.
Diversification
VGS is invested in 1,505 businesses outside of Australia. Its top 10 holdings are Apple, Microsoft, Alphabet, Amazon, Facebook, Tesla, NVIDIA, JPMorgan Chase, Johnson & Johnson and Visa.
Keen investors may realise that the top 10 is made up of US stocks, these are 10 of the biggest global brands and many are household names.
However VGS isn’t just a US ETF. When breaking down the exposure into regions, 72.4% is North American, 19.3% is European, 8% is Pacific and 0.2% is Middle East.
Taking a look at its biggest holdings outside of the US, there are names such as Nestle, ASML, Roche, LVMH Moet Hennessy Louis Vuitton, Novartis and Toyota.
Fees
Fees should be a huge consideration for any investor, especially ETF investors who are buying and holding for the long term. Fees can take a serious bite out of investor returns and some investors may not realise just how painful that bite can be once we factor in compounding.
The annual management fee for VGS is 0.18%. I think this is very low for the global diversification that this ETF provides.
Easy investing
This ETF offers a huge amount of diversification with low fees and once the trade is complete it could be the epitome of hands-off investing.
In the investing world it’s normally a bad thing to ‘put your eggs into one basket’, however if an investor was looking for the ultra simple portfolio with just one name – I think VGS could be a worthy ETF.
This ETF has the potential to be a lifelong holding and remain a quality choice – global blue chips, no worries about when to buy or sell and it tracks a steady benchmark.
