VGS vs IVV: Which ETF would I buy with $10,000?

The Vanguard MSCI Index International Shares ETF (ASX: VGS) and the iShares S&P 500 ETF (ASX: IVV) are two ASX exchange-traded funds (ETFs) I would happily buy for the long term.

Both provide instant exposure to some of the world’s biggest companies, but they go about it differently.

If I had $10,000 and could choose only one today, which would I buy?

What do you get with the VGS ETF?

The biggest reason to buy the VGS ETF is diversification.

It invests in around 1,300 stocks across approximately 23 developed countries outside Australia, rather than concentrating entirely on a single overseas market.

The United States still plays a major role, which is why NVIDIA, Apple, and Microsoft sit among its largest holdings. Fellow technology giants Amazon and Alphabet also feature prominently.

But the Vanguard MSCI Index International Shares ETF also spreads investors’ money across markets, including Japan, the United Kingdom, Canada, France, and Switzerland.

I like that approach because investors are not relying entirely on the US stock market continuing to lead global returns.

For someone who wants one broad international ETF, the VGS ETF would be an excellent choice in my view.

What about the IVV ETF?

The iShares S&P 500 ETF takes a narrower approach.

It tracks Wall Street’s S&P 500 Index (SP: .INX), giving investors exposure to around 500 large US companies. Its biggest underlying holdings currently include NVIDIA, Apple, Microsoft, Amazon, Alphabet, Broadcom, and Meta Platforms.

There is clearly plenty of overlap with the VGS ETF.

The difference is that the IVV ETF puts more weight behind these US businesses rather than diluting their influence with companies from other developed markets.

I like that. The US remains home to many of the companies leading major areas of growth, including artificial intelligence, cloud computing, semiconductors, digital advertising, and software.

Of course, that greater exposure to the US also means accepting more concentration. If American shares underperform other developed markets for an extended period, the VGS ETF could benefit from having more money invested elsewhere.

However, I am willing to take that risk because I think the strength of the US businesses inside the IVV ETF gives the fund a compelling long-term growth outlook.

Which ASX ETF would I buy?

The VGS ETF would be my choice for someone prioritising broader international diversification, and I like that it reduces reliance on one country.

But if I had $10,000 and could buy only one, I would choose the IVV ETF.

I am comfortable taking greater exposure to the US market because of the quality and growth potential of the stocks inside it.

The post VGS vs IVV: Which ETF would I buy with $10,000? appeared first on The Motley Fool Australia.

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• How much must I invest in IVV ETF shares to earn a $1,000 passive income in 2027?
• Own US ETFs like IVV or NDQ? Here’s why your dividends are so low
• Invested in ASX IVV or other iShares ETFs? Here’s your next dividend
• 10 top ASX ETFs to watch in 2027
• How I’d build a $50,000 ASX share portfolio today

Motley Fool contributor Grace Alvino has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Alphabet, Amazon, Apple, Broadcom, Meta Platforms, Microsoft, Nvidia, and iShares S&P 500 ETF. The Motley Fool Australia has recommended Alphabet, Amazon, Apple, Meta Platforms, Microsoft, Nvidia, Vanguard Msci Index International Shares ETF, and iShares S&P 500 ETF. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.