So 2021 was a great year for ASX shares. Over the year just passed, the S&P/ASX 200 Index (ASX: XJO) managed a rough 13% rise. That explains why the ASX’s most popular exchange-traded fund (ETF), the Vanguard Australian Shares Index ETF (ASX: VAS), managed a healthy 16.7% or so return over 2021. But what about Vanguard’s second-most popular ASX ETF, the Vanguard MSCI Index International Shares ETF (ASX: VGS)?
This Vanguard ETF is a different kettle of fish to VAS or the ASX 200. That’s because it doesn’t hold or invest in ASX shares at all. Instead, VGS holds an enormous basket of international shares that are domiciled in advanced economies around the world. More than 70% of its weighted holdings are US companies, but this ETF also has exposure to Japan, Canada, the United Kingdom, Europe, Hong Kong and Singapore.
As you might expect, its largest holdings are also US-dominated. We have Apple Inc (NASDAQ: AAPL) taking out the top spot, with Microsoft Corporation (NASDAQ: MSFT), Amazon.com, Inc. (NASDAQ: AMZN) and Tesla Inc (NASDAQ: TSLA) behind it.
But overall, the Vanguard International Shares ETF holds close to 1,500 individual companies from around the world. That’s some hefty diversification!
But time to get out of the weeds and into the numbers. So how did VGS perform over 2021?
How did the VGS ETF stack up over 2021?
Well, units of this ETF began last year at a price of $84.12 each. They finished up last Friday at $106.90 per unit. That’s a capital gain of 27.08%. But we also need to take into account VGS’s dividend distributions.
VGS pays a quarterly dividend distribution, which amounted to approximately $1.87 per unit over 2021. That gives the Vanguard International Shares ETF a yield of 1.75% on its 2021 closing unit price. So, you can bump up that 27.08% return to roughly 28.8%.
That’s objectively a very pleasing return for any investment over one year. But it would be especially pleasing for investors given that the ASX 200 and the Vanguard Australian Shares ETF returned less than half of that figure last year.
So there you have it, VGS’s performance for 2021. It will be interesting to see if this popular ASX ETF can beat out VAS and the ASX 200 again in 2022.
The post Here’s why 2021 was a stellar year for the Vanguard International Shares ETF (ASX:VGS) appeared first on The Motley Fool Australia.
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Teresa Kersten, an employee of LinkedIn, a Microsoft subsidiary, is a member of The Motley Fool’s board of directors. John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Motley Fool contributor Sebastian Bowen owns Tesla. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns and has recommended Microsoft and Vanguard MSCI Index International Shares ETF. The Motley Fool Australia has recommended Amazon, Apple, 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 Bruce Jackson.
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