This ETF has had a strong start this month…
The post Why is the Vanguard MSCI Index International Shares ETF (ASX:VGS) off to such a great start in November? appeared first on The Motley Fool Australia. –
The Vanguard MSCI Index International Shares ETF (ASX: VGS) has had a blazing start to the month of November on the ASX boards. VGS units are up a healthy 4.1% since the start of the month, rising from $100.35 at the end of October to the $104.50 per unit the shares are asking today (at the time of writing). That’s a pretty impressive performance for this ASX exchange-traded fund (ETF), especially considering the S&P/ASX 200 Index (ASX: XJO) has ‘only’ managed a gain of roughly 1.8% over the same period.
VGS is one of the ASX’s most popular ETFs. It covers a truly massive underlying portfolio of more than 1,500 shares. These hail from advanced economies around the world, dominated by the United States with 69% of the portfolio’s exposure in US shares. Other significant contributors are the markets of Japan, Canada, the United Kingdom, and Europe.
But even though this ETF has more than 1,500 individual holdings, the top 5 companies in its basket still command 14.55% of the ETF’s total weighting. Those top 5 companies are Apple Inc (NASDAQ: AAPL), Microsoft Corporation (NASDAQ: MSFT), Amazon.com Inc (NASDAQ: AMZN), Facebook-owner Meta Platforms Inc (NASDAQ: FB) and Google-owner Alphabet Inc (NASDAQ: GOOG)(NASDAQ: GOOGL).
So let’s see how these companies have performed since the start of the month.
VGS ETF rises on strong performance of its largest shares
Apple is up 0.43% since 31 October at last night’s closing price of US$150.444 a share.
Microsoft is up 1.62% at last night’s US$336.99 a share.
Amazon has put on 3.46% at US$3,448.98 a share.
Meta Platforms has added 4.65% to its value since the start of the month, and was asking US$338.62 a share at last close.
And Alphabet (Class C) is up 0.73% to last night’s close of US$2,987.03 a share. Incidentally, last night also saw Alphabet hit a market capitalisation of US$2 trillion for the first time.
It’s also prudent to point out that VGS’s sixth-largest holding by market cap is none other than Tesla Inc (NASDAQ: TSLA), which has gained 4.31% since the start of the month as well.
So, we have all 6 of VGS’s largest holdings reporting some solid share price growth over November so far. This would likely have played a big role in VGS’s appreciation over the month to date.
Another factor that is probably helping is the Australian dollar. The Aussie has fallen from more than 75 US cents at the start of the month to today’s level of 74.01 US cents. That’s a drop of around 1.35%.
This is significant because most of VGS’s assets are priced in US dollars. That means that when our dollar falls in value against the US dollar, the value of those assets in Australian dollars rises, helping to give the VGS unit price something of a tailwind.
It’s likely a combination of these factors that have resulted in VGS having such a flying start to November.
VGS has returned an average of 16.14% over the past 3 years and 15.96% over the past 5. The Vanguard MSCI Index International Shares ETF charges a management fee of 0.18% per annum.
Should you invest $1,000 in VGS right now?
Before you consider VGS, you’ll want to hear this.
Motley Fool Investing expert Scott Phillips just revealed what he believes are the 5 best stocks for investors to buy right now… and VGS wasn’t one of them.
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John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to Meta Platforms CEO Mark Zuckerberg, is a member of The Motley Fool’s board of directors. Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. Motley Fool contributor Sebastian Bowen owns shares of Alphabet (A shares), Meta Platforms, Inc., and Tesla. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and has recommended Alphabet (A shares), Meta Platforms, Inc., and Vanguard MSCI Index International Shares ETF. The Motley Fool Australia has recommended Alphabet (A shares), Alphabet (C shares), Amazon, Apple, Meta Platforms, Inc., 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.