What is the VGS ETF used for?
The Vanguard VGS ETF provides exposure to listed companies from developed markets around the world, excluding Australia. This ETF is not hedged so it is exposed to currency fluctuations.
The VGS ETF could be used to build out the core of a portfolio and to diversify away from Australian equities. It may also be suitable for investors wanting exposure to the US market, as the majority of the companies in the ETF are US-based.
Keep an eye on FUM
The Vanguard VGS ETF had $4694.02 million of money invested when we last pulled the monthly numbers. Given VGS’s total funds under management (FUM) figure is over $100 million, the ETF has met our minimum criteria for the total amount of money invested, otherwise known as FUM. We draw the line at $100 million for ETFs in the International shares sector because we believe that relative to smaller ETFs, achieving this amount of FUM de-risks the ETF.
Fees and costs for investors
Vanguard charges investors a yearly management fee of 0.18% for the VGS ETF. This means that if you invested $2,000 in VGS for a full year, you could expect to pay management fees of around $3.60.
For context, the average management fee (MER) of all ETFs covered by Best ETFs Australia on our complete list of ASX ETFs is 0.5% or around $10.00 per $2,000 invested. Keep in mind, small changes in fees can make a big difference after 10 or 20 years.
Summary
These are just some of the considerations or factors you would need to look at when weighing up the VGS ETF. Before doing anything, take a look at our Vanguard VGS report – it’s free. While you’re at it, don’t forget to search our complete list of ASX ETFs.
