Here is your guide to the Best International ETF in Australia for 2019.
Don’t have time to read the full guide? Jump straight to each International ETF Review using the links below:
- Vanguard VGS Review
- iShares IWLD Review
- Vanguard VTS Review
- iShares IVV Review
- iShares IOO Review
- Vanguard VGAD Review
- Compare the Best International ETFs
The Best International ETF in Australia
VGS – Vanguard International Shares ETF
VGS is quite simply a great international ETF to invest in a diverse range of companies from around the world. It ticks all the boxes:
- Low Management Fees
- High Diversification
- Includes shares from around the world
- Passively managed ETF
- Trusted provider (Vanguard)
VGS is the best international ETF available on the ASX today.
Read our review of VGS to see why!
Vanguard VGS Review
VGS continues to come out on top as the best international ETF in 2019.
Let’s review some of the key facts:
- VGS invests in 1,500+ international shares
- This ETF currently has over $1.8 billion dollars invested in it so you know it is trusted industry wide
- VGS is bench marked against the MSCI World Ex-Australia Index
- 65% of the ETF is invested in the USA
- VGS is not hedged and will fluctuate in value as foreign currencies move
- The return since inception is 12.81%
VGS Dividend Yield
The VGS Dividend Yield is 2.4% as of 30 September 2019.
This yield is trending down over time. Over the past 12 months VGS has yielded 2.82%. Over the past 3 years VGS has paid dividends at a rate of 3.08%. Since inception in 2014 VGS has yielded 3.44% per annum.
VGS pays dividends on a quarterly distribution.
Vanguard offers a dividend reinvestment plan (DRP) for VGS that you can enroll in after purchasing your shares.
VGS Management Fees are currently 0.18% per year.
This means that you pay Vanguard $1.80 for every $1,000 you invest in VGS, $18 for every $10,000 you invest in VGS or $180 for every $100,000 you invest in VGS.
VGS Fact Sheet
For the latest information check out the VGS Fact Sheet on Vanguard Australia’s website. The Fact Sheet is updated on a regular basis so check in on the Vanguard website every now and then to get the latest information.
iShares IWLD Review
IWLD is a strong contender to take home the best international ETF award. It has a low management fee, it provides passive index diversification to a huge range of international companies.
In fact if I had to force rank international ETFs I would rate IWLD as the second best international ETF on the market.
There is just one little thing holding it back.
IWLD is a fund of funds.
What does that mean? It means that IWLD doesn’t hold shares directly.
IWLD invests in other ETFs. These other ETFs then hold shares in companies listed on the stock exchange. The level of complexity of the investment structure increases compared with other ETFs. You are now an extra step away from owning the shares outright in your own name. This investment structure introduces risk relating to the USA ETF that your holdings are passing through.
To be clear, with IWLD the relationship between you and the business you are wanting to own shares in is:
You -> Australian ETF -> USA ETF -> Shares
Putting that to one side for a moment, let’s review IWLD:
- IWLD invests in 4 ETFs listed on the US & Canadian stock exchanges
- The underlying holdings of IWLD are invested in 3,800+ shares
- IWLD tracks the MSCI World Investible Market Index
- There are $100 million invested in IWLD
- 63% of the holdings are in the USA
- IWLD is unhedged and is affected by moves in international money markets
- The return since inception is 13.67%
IWLD Dividend Yield
The IWLD Dividend Yield is 2.48%
iShares does not break down the performance of their ETFs into Capital Gains and Dividend distributions so the historical dividend yield of IWLD is not readily available.
IWLD pays a half yearly dividend.
iShares offers a Dividend Reinvestment Plan (DRP) for owners of IWLD.
IWLD has a very competitive annual management fee of 0.09%
Investing in IWLD you will pay Blackrock $0.09 for every $1,000 you invest in IWLD, $9 for every $10,000 you invest or $290 for every $100,000 you invest in IWLD.
IWLD Fact Sheet
For the latest information check out the IWLD Fact Sheet on Blackrock Australia’s website.
Vanguard VTS Review
VTS remains a fan favourite and up until VGS was launched in 2014, VTS when combined with VEU was the best international ETF to invest in to get global exposure.
Let’s review what makes VTS interesting:
- VTS invests in 3,500+ international shares
- This ETF tracks the CRSP US Total Market Index
- VTS has over $1.7 billion dollars invested in it
- 100% of VTS is invested in the USA
- VTS is not hedged and its value will change based on movement in the AUD/USD exchange rate
- The return since inception is 15.81%
VTS is not the best international ETF in 2019 because it continues to be domiciled in the USA. This raises US Tax Obligations for Australian investors including payment of Estate Tax and needing to complete W8-BEN forms regularly. It also means that there is no dividend reinvestment program available.
To gain international exposure outside of the USA an investment in VTS needs to be combined with an investment in VEU.
So long as you are willing to deal with US Taxation issues and go without a dividend reinvestment program, then you can consider VTS in your ETF portfolio.
VTS Dividend Yield
The VTS Dividend Yield is 1.9% as of 30 September 2019.
This yield remained steady for a number of years but has been trending down lately. Over the past VTS has yielded 2.14%, over 10 years the yield was 2.24% and since inception the yield has been 2.23%
VTS pays dividends on a quarterly basis.
There is no dividend reinvestment program (DRP) available for VTS because it is not domiciled in Australia. All dividends are distributed as cash payments and if you want to reinvest the dividend you will need to pay brokerage fees.
VTS has the lowest Management Fee on the market in terms of international ETFs at only 0.03%.
This means that you pay Vanguard $0.30 for every $1,000 you invest in VTS, $3 for every $10,000 you invest in VTS or $30 for every $100,000 you invest in VTS.
VTS Fact Sheet
To stay up to date with any changes read the VTS Fact Sheet available on the Vanguard Australia website.
iShares IVV Review
IVV benefited from a change that iShares made in late 2018 to move many of their US domiciled ETFs to Australia. Although IVV invests solely in the S&P 500, because it is Australian based the tax treatment is the same as any other Australian domiciled ETF.
See ya later W-8BEN forms!
Reviewing the facts and figures for IVV we see that:
- IVV invests in the top 500 stocks in the USA
- This ETF tracks the S&P 500, the world’s most well known stock market index
- There is over $3 billion dollars invested in the IVV ETF
- IVV is fully invested in the US Market
- The IVV ETF is unhedged and will change in value when the AUD/USD exchange rate changes
- The return since inception is 4.78%
IVV is not the best international ETF because it only invests in the USA.
However if you are looking to invest solely in the S&P 500 then IVV may be perfect for you because IVV is the Best American ETF on the ASX.
IVV Dividend Yield
The IVV Dividend Yield is 2.09% as of 30 September 2019.
iShares does not break down the performance of their ETFs into Capital Gains and Dividend distributions so the historical dividend yield of IVVis not readily available.
IVV distributes dividends on a quarterly basis.
There is a dividend reinvestment plan available for IVV.
IVV has a very low management fee charging only 0.04% per year.
This means that you pay iShares $0.40 for every $1,000 you invest in IVV, $4 for every $10,000 you invest in IVV or $40 for every $100,000 you invest in IVV.
IVV Fact Sheet
The IVV Fact Sheet is available for review on the iShares Australia website. Have a read of it before making any decision to invest.
iShares IOO Review
IOO was previously a US domiciled ETF until late 2018 when iShares converted several of their ETFs to become Australian Domiciled. IOO benefited from this change and no longer requires investors to submit W-8BEN forms. Being domiciled in Australia reduces the risk of exposure to changes in the US taxation system.
Great move iShares!
Let’s take a look at what IOO is all about:
- IOO invests in 100 of the largest stocks from around the world
- The ETF tracks the S&P Global 100 Index which is designed to measure the performance of blue chip international companies
- IOO has over $1.6 billion dollars invested in the ETF
- 66% of the ETFs holdings are in the USA
- IOO is not hedged and its price will fluctuate with changes in global currencies
- The return since inception is 2.62%
IOO Dividend Yield
The IOO Dividend Yield is 1.86%
iShares does not break down the performance of their ETFs into Capital Gains and Dividend distributions so the historical dividend yield of IOO is not readily available.
IOO pays out dividends on a half yearly basis.
You can enroll in the IOO Dividend Reinvestment Plan once you become invested.
IOO charges a somewhat hefty management fee for a passive ETF at 0.40%
This means that you pay iShares $4.00 for every $1,000 you invest in IOO, $40 for every $10,000 you invest in IOO or $400 for every $100,000 you invest in IOO.
IOO Fact Sheet
The latest IOO Fact Sheet is always available for review and download on the Blackrock Australia website.
Vanguard VGAD Review
VGAD is a very similar ETF to VGS in many ways, but with one major difference.
It is a hedged ETF!
That means that VGAD is relatively unaffected by fluctuations in the exchange rate of the Aussie dollar.
Now let’s review the ETF in more detail:
- VGAD invests in 1,500+ global shares
- The ETF currently has just over $650 million invested
- VGAD is also bench marked against the MSCI World Ex-Australia Index, however this index is hedged in AUD
- 65% of the ETF invests in USA shares
- VGAD is a hedged international ETFs – one of the only ones!
- The return since inception is 8.48%
VGAD Dividend Yield
The VGAD Dividend Yield is 2.4% as of 30 September 2019.
This dividend yield has been trending up over time. Over the past 3 years VGAD paid a yield of 2.27% and since inception the yield has been 1.72%.
VGAD pays out dividends on a half yearly distribution.
Vanguard offers a dividend reinvestment plan (DRP) for VGAD that you can enroll in through ComputerShare after investing.
The VGAD Management Fee is currently 0.21%. This is slightly higher than VGS because of the costs involved in hedging.
Investing in VGAD you will pay Vanguard $2.10 for every $1,000 you invest in VGAD, $21 for every $10,000 you invest or $210 for every $100,000 you invest in VGAD.
VGAD Fact Sheet
Keep on top of any changes to the VGAD ETF by regularly visiting the Vanguard Australia website to review the VGAD Fact Sheet.
The Best International ETF Comparison
VGS vs VTS
If you aren’t sure whether to invest in VGS or VTS consider these points:
- VGS invests in international shares but VTS only invests in American shares. You need to invest in both VTS & VEU to get a similar level of diversification that VGS provides
- VTS charges a lower annual management fee than VGS
- VGS is Australian Domiciled but VTS is American Domiciled
- VTS exposes you to the US Tax system, death duties and the W-8BEN form whereas VGS operates under Australian Tax law
- VGS has more funds under management than VTS
- VTS holds 3,500+ shares vs VGS which holds 1,500+ shares
Check out the Vanguard VGS Review
Take a look at the iShares VTS Review
Recommendation: VGS is the better International ETF due to it’s wider international ETF holdings and simpler tax structure
VGS vs IWLD
Can’t make up your mind whether to buy VGS or IWLD?
- VGS invests directly in shares whereas IWLD is a fund of funds that invests in other ETFs
- Both ETFs have very similar dividend yields because both invest in a similar range of international companies
- IWLD invests in 3,800+ shares compared with 1,500+ for VGS. Micro-cap and Nano-cap companies make up the difference. These are numerous low value companies that have low impact on returns
- At 0.09% IWLD’s management fee is half that of VGS’
Have a read of the Vanguard VGS Review
Consider the iShares IWLD Review
Recommendation: It’s a close call and both VGS and IWLD are excellent international ETFs. I rate VGS as the top ETF due to it holding shares directly as opposed to holding US ETF funds, which is how IWLD is structured.
VGS vs IVV
Before deciding whether to buy IVV or VGS remember:
- IVV only invests in the S&P 500 whereas VGS invests in a diversified portfolio of international shares
- IVV charges a much lower ongoing management fee than VGS
- VGS has fewer dollars invested in it than IVV
- Both VGS and IVV pay dividends quarterly and both ETFs have a Dividend Reinvestment Plan (DRP) available
Read the detailed Vanguard VGS Review
Consider our iShares IVV Review
Recommendation: It’s VGS again! IVV only invests in the S&P 500 so it isn’t a fully international ETF. However, IVV is the Best USA ETF on the ASX if that is what you are looking for.
VGS vs IOO
ETF Comparison: IOO or VGS?
- IOO invests in the top 100 blue chip international companies and VGS invests in 1,500+ globally diversified companies
- VGS charges a 0.18% management fee but IOO charges more than double that at 0.40% per year
- IOO pays dividends twice per year whereas VGS pays dividends every quarter
- Both IOO and VGS have a dividend reinvestment plan available
Have you read the Vanguard VGS Review
Take a look at the iShares IOO Review
Recommendation: VGS hands down! You are invested in 15 times the number of international companies for half the price. And the dividends flow more frequently too!
VGS vs VGAD
Let’s compare VGS and VGAD to see which is the best international ETF:
- Both VGS and VGAD track the MSCI World Ex-Australia Index, although VGAD tracks this Index hedged into AUD
- VGS issues dividends quarterly whereas VGAD only pays out twice per year
- VGAD is a hedged ETF and will be unaffected by international foreign exchange movements, however VGS is an unhedged ETF and will move with global money markets
- VGS has a slightly lower management fee than VGAD, reflecting the increased costs of hedging required for VGAD investors
Recommendation: VGS is the better international ETF unless you specifically want to be hedged. You are invested in exactly the same companies, but there are added costs to hedge your holdings which lead to a higher management fee for holders of VGAD.
VDHG vs VGS
I often get asked which is better, VGS or VDHG?
It isn’t really fair to compare these two ETFs as they serve two different purposes.
- VGS is an internationally diversified ETF
- VDHG is an all-in-one ETF portfolio that includes investments in International shares, Australian shares, Australian bonds and International bonds
Read our Vanguard VGS Review
Recommendation: VDHG is better suited to people who want to buy a single ETF to achieve a fully diversified investment portfolio. VGS on the other hand focusses on investing in only international companies from the developed world. They are two very different ETFs.
Now you know which international ETF is the best on the ASX and why. Go on and check out my reviews of all of the different Best Australian ETFs of 2019 for different market sectors.