If you're a fan or investor in ASX exchange-traded funds (ETFs), chances are you are either invested in the Vanguard MSCI International Shares Index ETF (ASX: VGS), or are at least well familiar with it. This ASX index fund is one of the most popular of its kind on the Australian share market.
In fact, with more than $19 billion in funds under management, it is currently the second most popular ETF product on our market, only behind its domestic-focused stablemate, the Vanguard Australian Shares Index ETF (ASX: VAS).
So there are more than a few Australians who have entrusted their wealth to this ASX ETF. That's understandable. After all, Vanguard is a name without peer in the passive investing space. And VGS offers incredible diversification, scope, and scale, all in one easy ETF. If you aren't familiar, the Vanguard International Shares ETF offers ASX investors access to a massive portfolio of global shares. VGS' portfolio is made up of more than 1,200 individual stocks. These are drawn from advanced economies all over the world, including Canada, Japan, the United Kingdom, France, Spain, Singapore, Hong Kong, Finland, and Israel. However, the lion's share (currently 74.1%) hails from the United States.
This means that the largest US stocks, such as Apple, NVIDIA, Amazon, Alphabet, and the rest of the Magnificent 7, are the largest holdings in this ETF. Despite more than 1,200 holdings, NVIDIA and Apple together take up more than 11% of the entire VGS portfolio. Indeed, the top ten holdings together account for almost a third of the entire VGS portfolio. As such, this fund isn't as diverse as one might initially expect.
Vanguard's VGS: Worth an extra 0.1%?
But let's talk fees. Vanguard is known, and well-regarded, for its not-for-profit structure. This enables the provider to offer some of the lowest ETF fees on the market across its various products. VGS is no different, charging investors 0.18% per annum. That's $18 a year for every $10,000 invested.
That kind of fee may seem minuscule. It is certainly competitive by international ETF standards. However, 0.18% can still eat up meaningful returns if investors have large amounts of capital invested for many years. That's why an alternative fund might be worth a look if you already own VGS units, or are thinking about buying into an ASX ETF of this nature.
Arguably, VGS' biggest threat is the BetaShares Global Shares ETF (ASX: BGBL). This ETF functions in a very similar manner to the Vanguard International Shares ETF. It offers over 1,300 individual stocks, all hailing from a similar mix of advanced economies. Apple, Nvidia, and the rest of VGS' top stocks are also the largest holdings in BGBL.
It appears the only notable difference between BGBL and VGS is the fee. As we've already touched on, Vanguard's VGS charges investors 0.18% per annum. However, Betashares' BGBL offers more than a 50% discount over that, asking just 0.08% per annum.
For many investors, this might not be enough to dissuade them from the venerated Vanguard name. Or indeed make a tangible difference to returns. However, if you are a passive investor who just wants to buy and hold a broad-based index fund for a decade or more, it might be worth considering if that higher fee is worth the Vanguard name. After a decade or two, the difference could easily be worth more than $10,000 if you're investing six figures or more.
The post Own the Vanguard International Shares ETF (VGS)? This rival ASX ETF is half the price appeared first on The Motley Fool Australia.
Motley Fool contributor Sebastian Bowen has positions in Alphabet, Amazon, Apple, and Vanguard Australian Shares Index ETF. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has positions in and has recommended Alphabet, Amazon, Apple, and Nvidia. The Motley Fool Australia has recommended Alphabet, Amazon, Apple, 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.
The Motley Fool's purpose is to help the world invest, better. Click here now for your free subscription to Take Stock, The Motley Fool's free investing newsletter. Packed with stock ideas and investing advice, it is essential reading for anyone looking to build and grow their wealth in the years ahead. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson. 2026