What are you really buying when you buy the Vanguard MSCI Index International Shares ETF (VGS)?

One of the most popular exchange-traded funds (ETFs) on the Australian share market is the Vanguard MSCI Index International Shares ETF (ASX: VGS).

At the last count, a total of $6.1 billion was invested in the ETF. As a comparison, that is more than the market capitalisations of Bendigo and Adelaide Bank Ltd (ASX: BEN) and Harvey Norman Holdings Limited (ASX: HVN).

Investors appear to see the VGS ETF as a great way to add some quality international exposure to their portfolios. That’s because the fund is invested across approximately 1,500 of the world’s largest listed companies.

But which are the key holdings in the VGS ETF?

At present, the 10-largest holdings in the VGS ETF are as follows:

Other holdings include non-US giants such as ASML, BP, LVMH Moet Hennessy Louis Vuitton, Nestle, Nono Nordisk, Roche, Shell, and Toyota.

Has it been a good option for Aussie investors?

The good news is that investing in the VGS ETF has proven to be very fruitful for investors. Since its inception in November 2014, the fund has generated a total return of 12.3% per annum.

If it were to continue at this rate until November 2023, it would mean that a $20,000 investment at inception would have grown to be worth almost $57,000.

That’s almost triple your original investment, which I would say is more than deserving of a thumbs up.