VAS vs VGS: Which Vanguard ETF has made investors richer?

Vanguard ETFs have become the go-to choice for Australians looking to build long-term wealth, and it's easy to see why.

By offering low fees, instant diversification, and a simple buy-and-hold approach, Vanguard ETFs have helped millions of investors avoid the stress of picking individual winners and losers.

But not all Vanguard ETFs have performed equally.

Let's see how two of the provider's biggest funds – the Vanguard Australian Shares Index ETF (ASX: VAS) and the Vanguard MSCI Index International Shares ETF (ASX: VGS) – stack up.

VAS keeps it close to home

The Vanguard Australian Shares Index ETF tracks the S&P/ASX 300 Index (ASX: XKO), giving investors exposure to roughly 300 of Australia's largest listed companies. Think of it as buying a slice of the local sharemarket in one trade.

Its biggest holdings include Commonwealth Bank of Australia (ASX: CBA), BHP Group Ltd (ASX: BHP), Wesfarmers Ltd (ASX: WES), Macquarie Group Ltd (ASX: MQG), and Telstra Group Ltd (ASX: TLS). Unsurprisingly, banks and miners dominate the portfolio of this Vanguard ETF.

That brings two advantages: exposure to many of Australia's highest-quality companies and an attractive stream of dividend income.

The downside? Australia's sharemarket isn't particularly diversified. Financials and resources account for a large chunk of the index, so investors are making a fairly concentrated bet on just a handful of sectors.

The good news is cost. VAS charges a management fee of just 0.07% a year.

Performance has been respectable rather than spectacular. The ETF has returned around 2% over the past 12 months and approximately 55% over ten years.

Income remains one of its biggest selling points, with investors recently receiving a distribution of 48.99 cents per unit.

VGS looks to the world

The Vanguard MSCI Index International Shares ETF takes a very different approach. Instead of focusing on Australia, this Vanguard ETF invests in more than 1,300 large and mid-sized companies across developed markets worldwide.

Its biggest holdings include Microsoft and Nvidia, alongside many of the world's leading technology, healthcare, consumer, and industrial businesses.

That global diversification has been a major winner in recent years. While VGS charges a slightly higher management fee of 0.18%, investors have been more than compensated.

The Vanguard ETF has gained around 10% over the past year and has delivered an impressive 181% return over the past ten years, comfortably outperforming VAS over the same period.

It also recently paid a distribution of 80.11 cents per unit.

Foolish Takeaway

Both Vanguard ETFs deserve their place in a long-term portfolio, but they serve different purposes.

VAS offers dependable exposure to Australia's biggest dividend-paying companies, while VGS provides access to many of the world's fastest-growing businesses.

If recent performance is the scoreboard, VGS has comfortably come out on top. However, many investors choose to own both Vanguard ETFs, combining Australian income with global growth to create a more balanced portfolio.

The post VAS vs VGS: Which Vanguard ETF has made investors richer? appeared first on The Motley Fool Australia.

Motley Fool contributor Marc Van Dinther has positions in BHP Group. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has positions in and has recommended Macquarie Group, Microsoft, Nvidia, and Wesfarmers. The Motley Fool Australia has positions in and has recommended Telstra Group. The Motley Fool Australia has recommended BHP Group, Macquarie Group, Microsoft, Nvidia, Vanguard Msci Index International Shares ETF, and Wesfarmers. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

The Motley Fool's purpose is to help the world invest, better. Click here now for your free subscription to Take Stock, The Motley Fool's free investing newsletter. Packed with stock ideas and investing advice, it is essential reading for anyone looking to build and grow their wealth in the years ahead. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson. 2026