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!
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.
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.
| Rank | Company name | Weighting |
| 1 | Apple Inc | 4.88% |
| 2 | Microsoft Corp | 4.37% |
| 3 | Nvidia Corp | 4.29% |
| 4 | Amazon.com Inc | 2.51% |
| 5 | Meta Platforms Inc | 1.8% |
| 6 | Alphabet Inc (GOOGL) | 1.4% |
| 7 | Alphabet Inc (GOOG) | 1.21% |
| 8 | Broadcom | 1.1% |
| 9 | Tesla Inc | 1.08% |
| 10 | Eli Lilly & Co | 1.08% |
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.
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