Key takeaways: 

• The Vanguard MSCI Index International Shares ETF invests in around 1,500 companies exclusively in developed countries, while the iShares Global 100 ETF targets 100 globally important multinationals across developed and emerging economies. 

• Although VGS has a shorter tenure as an ASX-listed ETF, the fund’s net assets are more than twice those of IOO, which listed in 2007. 

• The iShares IOO ETF charges a higher management fee of 0.40% per annum, compared with 0.18% for Vanguard VGS, but the former has delivered higher average returns over the last 12 months, three years, and five years. 

• In terms of recent distributions, VGS has paid unitholders on a quarterly basis, while IOO targets semi-annual distributions. 

Past performance is not an indicator of future performance, and it is important to undertake your own research.  

As we bring our ETFs Around the World series to a close, it’s time we zone out and look at the broader global equities space.  

According to S&P Dow Jones Indices, the ASX represents around 2% of the global equity market. That means investors have a wealth of opportunities at their fingertips if they look beyond the local market. We’re looking at two funds covering a diverse basket of shares spanning multiple regions.  

The Vanguard MSCI Index International Shares ETF (ASX: VGS) and the iShares Global 100 ETF (ASX: IOO) offer varying approaches to investing in global markets, but both provide access to sectors that are not as well represented on the ASX. What other similarities might they share? How do they differ? Let’s take a look. 

Fund Objective 

First up, the Vanguard MSCI Index International Shares ETF seeks to track the return of the MSCI World ex-Australia (with net dividends reinvested) in Australian dollars Index, before considering fees, expenses, and tax. 

With a targeted approach focusing on the long-term growth potential of global economies ex-Australia, Vanguard suggests the fund is most suited to “buy and hold investors seeking long-term capital growth, international diversification and who have a higher tolerance for the risks associated with investing in the share market.” The fund targets around 1,500 companies from developed countries, excluding Australia. 

Meanwhile, the iShares Global 100 ETF seeks to track the returns of the S&P Global 100 Index, before fees and expenses, which covers companies located in both developed and emerging markets. 

Given the fund’s focus centres on 100 multinational blue-chip global equities of “major importance”, the fund manager advises that IOO is “likely to be appropriate for” investors who intend to use the ETF as a core position in their portfolios or less, those seeking capital growth, and with a medium to high risk-return profile over at least five years. 

Fund Profiles  

Based on the ASX’s Investment Products monthly update for November 2024, both funds have continued to grow their net assets through the year. 

As at the end of November 2024, the Vanguard MSCI Index International Shares ETF, which was admitted to the ASX exactly ten years ago, was responsible for managing $10.0 billion in funds under management (FUM). Despite listing more than seven years earlier in 2014, the iShares Global 100 ETF was holding $4.1 billion in net assets at the end of last month. 

Over the course of November, VGS also yielded both higher FUM growth and higher net inflows. In the case of the Vanguard fund, FUM grew by $458.2 million over the month, including $77.8 million in net inflows. On the other hand, IOO’s FUM increased by $95.5 million last month, of which, $30.2 million came courtesy of fund inflows. 

Meanwhile, the total number of trades in VGS last month across all ASX trading (broker) participants was more than double that of IOO, coming in at 48,750 versus 21,772. Furthermore, the average trade size in VGS was $9,667 compared with $6,563 for IOO. Monthly liquidity for the pair was 4.72% and 3.47%, respectively. 

Fund Holdings 

While VGS and IOO share several common holdings, the duo offers vastly different levels of diversification and sector exposure. 

Based on the most recent data available for the Vanguard MSCI Index International Shares ETF, this fund featured a total of 1,427 holdings as at October 31, 2024. According to Vanguard, 80.9% of said assets were large-cap shares, and regional exposure was as follows: North America 77.2%; Europe 16.1%; Pacific 6.5%; Middle East 0.2%. 

On the other hand, as at December 11, 2024, there were 102 unique holdings within the iShares Global 100 ETF, plus cash and/or derivatives products. In terms of geographic exposure, IOO’s net assets were weighted as follows: United States 81.98%; United Kingdom 4.04%; Switzerland 2.93%; France 2.56%; Germany 2.19%; Japan 2.14%; Other 1.59%; Netherlands 1.13%; China 1.11%; Cash and/or Derivatives 0.34%. 

As expected, with significantly more holdings, VGS is more diversified than IOO in terms of exposure, and this also extends to the top 10 holdings for each fund. In the case of Vanguard VGS, the top 10 accounted for 24.3% of the fund’s net assets as at October 31, 2024. Even though IOO shared most of the same top 10 names as VGS, the corresponding figure was 58.58% as at December 11, 2024. 

^ = as at October 31, 2024 - rounded to two decimal places 

* = as at December 11, 2024 - rounded to two decimal places 

In keeping with the above, it is worth noting that IOO is also more heavily invested in the Information Technology sector. VGS, while still heavily exposed to this sector, instead offers greater exposure to Financials, Health Care, and Industrials. 

^ = as at October 31, 2024 - rounded to one decimal place 

* = as at December 11, 2024 - rounded to two decimal places 

Performance and Distributions 

As at October 31, 2024, the Vanguard MSCI Index International Shares ETF had returned 29.37% over the prior 12 months.  

Looking further back, the average annual return for VGS over the previous three-year period was 11.45%, and the five-year return was 13.33%. Since inception, the fund returned 13.12% per annum up to the end of October. 

For the iShares Global 100 ETF, data is available as of November 30, 2024. Up till this date, the fund had achieved returns of 32.08%, 14.90% per annum, and 16.42% per annum over the previous 12 months, three years, and five years, respectively.  

Lastly, the fund’s return since inception is lower than that of VGS, averaging 5.69% per annum. Offering context to this figure, it is worth noting that the IOO ETF has traded as a listed security for seven more years than Vanguard’s VGS ETF. 

Historically, the two funds have paid distributions to unitholders at different intervals. Vanguard has paid quarterly distributions in relation to its VGS fund, while iShares has paid semi-annual distributions to unitholders in IOO. 

As is always the case with any ETF, the amount and timing of distributions will vary from period to period, and there may even be periods where no distributions are made. 

Fees 

In terms of fees, as at November 11, 2024, Vanguard has a management fee of 0.18% per annum for its VGS ETF. In comparison, the corresponding fee for the iShares Global 100 ETF is 0.40% per annum.  

While the above difference is notable, investors should assess all aspects of the two products rather than make a comparison based on fees alone, because as is the case with these two funds, IOO has still managed to outperform VGS over various timeframes despite higher expenses associated with the fund. 

Management fees are calculated in relation to the net asset value (NAV) of each fund daily, and prospective investors should note that other fees may apply.  

Please refer to the relevant Product Disclosure Statements for up-to-date details on costs and expenses, which may be deducted from the fund’s assets as and when they are incurred.  

Summary 

Vanguard’s MSCI Index International Shares ETF and iShares’ Global 100 ETF both offer exposure to global markets. However, the former is diversified across more than 1,400 companies, while the latter is concentrated across approximately 100 shares, with a heavy emphasis on tech and the top 10 holdings in the fund. What’s more, despite a shorter tenure on the ASX, VGS oversees more than twice as many net assets as IOO. 

Over the last 12 months, three years, and five years, iShares IOO has achieved superior average annual returns when compared with VGS, despite a higher management fee of 0.40% per annum versus 0.18%. Said returns include distributions, of which Vanguard targets quarterly payments to unitholders, while iShares instead pays semi-annual distributions. 

For more information, you can read about the Vanguard MSCI Index International Shares ETF here, and the iShares Global 100 ETF here. Before investing in any ETFs, you should consult the respective product’s Product Disclosure Statement, which will be available on the fund’s website.