VGS vs VTS vs IVV: Australian International ETF Comparison 2026

Which ETF is Best: VGS, VTS, or IVV?

Choosing between VGS, VTS, and IVV is one of the most common questions Australian investors face when building international exposure. All three are low-cost, ASX-listed ETFs providing access to developed markets—but they do so in meaningfully different ways.

The short answer: There's no single "best" ETF. The right choice depends on whether investors want global diversification (VGS), complete US market coverage (VTS), or specific S&P 500 exposure (IVV).

The key insight most investors miss: VGS is marketed as "international" but 73.6% is still US stocks. The real question becomes: 73.6% US or 100% US?

Quick Comparison: VGS vs VTS vs IVV

Feature	VGS	VTS	IVV
Full Name	Vanguard MSCI Index International Shares ETF	Vanguard U.S. Total Market Shares Index ETF	iShares S&P 500 ETF
Provider	Vanguard	Vanguard	BlackRock (iShares)
Management Fee	0.18% p.a.	0.03% p.a.	0.04% p.a.
Holdings	1,284 stocks	3,529 stocks	500 stocks
Geographic Focus	22 developed countries	United States only	United States only
US Exposure	73.6%	100%	100%
Dividend Yield	1.5%	1.1%	0.99%
Currency	Unhedged AUD	Unhedged AUD	Unhedged AUD
Fund Size (AUD)	$14.05B	$6.43B	$13.11B
Distribution	Quarterly	Quarterly	Quarterly

Data from official fund fact sheets, November/December 2025

What is VGS? (Vanguard International Shares ETF)

Overview

VGS tracks the MSCI World ex-Australia Index, holding approximately 1,284 stocks across 22 developed countries. Despite its "international" branding, 73.6% of holdings are US companies.

What's Inside VGS?

Geographic Breakdown:

• United States: 73.6%

• Japan: 5.6%

• Canada: 3.4%

• United Kingdom: 3.3%

• France: 2.4%

• Germany: 2.4%

• Switzerland: 2.3%

• Other: ~10%

Top 10 Holdings: NVIDIA, Apple, Microsoft, Alphabet (Google), Amazon, Meta, Tesla, Eli Lilly, JPMorgan Chase, plus other global leaders.

VGS Key Features

• Management Fee: 0.18% per annum

• Dividend Yield: 1.5% (paid quarterly)

• Fund Size: $14.05 billion AUD

• Currency: Unhedged to Australian dollar

Who Considers VGS?

Investors seeking the broadest developed market exposure in a single ETF typically consider VGS. It provides access to 22 countries' stock markets, though the US still dominates due to market capitalisation weighting.

What is VTS? (Vanguard US Total Market ETF)

Overview

VTS tracks the CRSP US Total Market Index—essentially the entire investable US stock market. With 3,529 holdings, VTS captures large, mid, small, and micro-cap companies.

What's Inside VTS?

Market Cap Breakdown:

• Large-cap: ~70-75%

• Mid-cap: ~15-20%

• Small-cap: ~10-15%

• Micro-cap: ~1-5%

Top 10 Holdings: NVIDIA, Microsoft, Apple, Alphabet, Amazon, Meta, Broadcom, Tesla, Berkshire Hathaway, JPMorgan Chase.

VTS Key Features

• Management Fee: 0.03% per annum (lowest of the three)

• Dividend Yield: 1.1% (paid quarterly)

• Fund Size: $6.43 billion AUD

• Currency: Unhedged to Australian dollar

Why is VTS So Cheap?

VTS has the lowest fee (0.03%) for three reasons:

1. Scale: The underlying US fund has over $3 trillion in assets globally

2. Simplicity: Tracking one market requires less complex management

3. Vanguard Structure: Vanguard is owned by its funds, passing cost savings to investors

Who Considers VTS?

Investors wanting complete US market exposure at the absolute lowest cost typically consider VTS. It includes everything from mega-cap tech companies down to small emerging businesses.

What is IVV? (iShares S&P 500 ETF)

Overview

IVV tracks the S&P 500 Index—the 500 largest US companies by market capitalisation. It represents approximately 88% of the US stock market's total value, focusing exclusively on large-cap, established businesses.

What's Inside IVV?

Market Focus:

• Large-cap and mega-cap companies only

• Established, profitable businesses

• The "blue chip" segment of the US market

Top 10 Holdings: NVIDIA, Apple, Microsoft, Amazon, Broadcom, Alphabet (Class A & C), Meta, Tesla, Berkshire Hathaway.

IVV Key Features

• Management Fee: 0.04% per annum

• Dividend Yield: 0.99% (paid quarterly)

• Fund Size: $13.11 billion AUD (largest of the three)

• Currency: Unhedged to Australian dollar

Who Considers IVV?

Investors specifically wanting S&P 500 exposure—the most widely tracked equity index globally—typically consider IVV. It focuses on established large-cap leaders rather than including smaller, emerging companies.

VGS vs IVV: Which Should I Choose?

The Core Difference

VGS = 73.6% US + 26.4% other developed markets (Japan, Canada, UK, Europe) IVV = 100% US large-cap (S&P 500 companies only)

Key Considerations

Choose VGS when:

• Seeking geographic diversification beyond just the US

• Wanting exposure to Japanese, Canadian, UK, and European markets

• Comfortable with the 0.18% management fee for broader coverage

• Preferring "set and forget" global diversification in one holding

Choose IVV when:

• Specifically wanting S&P 500 exposure

• Preferring established mega-cap US companies

• Seeking lower fees (0.04% vs 0.18%)

• Building a portfolio with separate allocations to different regions

Can I Hold Both VGS and IVV?

Yes, but understand the overlap. Since VGS is 73.6% US stocks, holding both VGS and IVV creates significant US duplication. Investors holding both are essentially overweighting US exposure while paying for VGS's international component twice (once through VGS, once through the overlap).

Alternative approaches:

• VGS alone for global exposure

• IVV + separate European/Asian ETFs for more control over regional allocations

• VTS instead of IVV for broader US coverage

VTS vs IVV: What's the Difference?

Size and Scope

VTS = 3,529 stocks (entire US market: large, mid, small, micro-cap) IVV = 500 stocks (large-cap only: S&P 500 companies)

Practical Differences

1. Market Cap Coverage

VTS includes companies IVV doesn't:

• Mid-cap growth companies (5-10% of VTS)

• Small-cap emerging businesses (10-15% of VTS)

• Micro-cap early-stage companies (~2-3% of VTS)

IVV focuses exclusively on the 500 largest, most established companies.

2. Fee Difference

VTS: 0.03% per annum IVV: 0.04% per annum

The difference is minimal (0.01%) but over decades, VTS's lower cost adds up slightly.

3. Top Holdings Overlap

Both share the same top 10-15 holdings (NVIDIA, Apple, Microsoft, etc.) because IVV's large-caps also dominate VTS by market cap weighting. The key difference is VTS's "tail" of 3,029 additional smaller companies.

Which One: VTS or IVV?

VTS provides:

• Lower fee (0.03%)

• Broader diversification (entire US market)

• Exposure to emerging mid/small-cap companies

• Slightly higher volatility (small-caps can be more volatile)

IVV provides:

• S&P 500 brand recognition (most widely tracked index)

• Focus on proven, established businesses

• Marginally lower volatility (large-caps only)

• Specific benchmark for comparing performance

For most long-term investors, VTS's lower fee and broader coverage make it the more efficient choice. IVV suits those specifically wanting S&P 500 exposure or preferring established large-caps exclusively.

VGS vs VTS: Global or US-Only?

The Core Question

VGS = 73.6% US + 26.4% international developed markets VTS = 100% US complete market coverage

The 26.4% Difference

VGS's non-US allocation includes:

• Japan: 5.6%

• Canada: 3.4%

• UK: 3.3%

• France: 2.4%

• Germany: 2.4%

• Switzerland: 2.3%

• Other: ~9%

Is this 26.4% worth the higher fee?

VGS charges 0.18% vs VTS's 0.03%—a difference of 0.15% annually. Over time, this compounds.

Arguments for VGS:

• Geographic diversification reduces single-country risk

• Exposure to non-US sectors (Japanese manufacturing, European luxury, Canadian resources)

• Market-cap weighted global approach (reflects actual market sizes)

Arguments for VTS:

• Lower fee means more capital working for investors

• US companies already derive significant revenue internationally

• Simpler portfolio construction (add separate regional ETFs if desired)

The Fee Impact

While VGS's 0.18% fee is still low compared to active funds, the 0.15% difference from VTS compounds over decades. Investors should weigh this cost against the value of VGS's 26.4% non-US allocation based on their own diversification preferences.

Is VGS Too US-Heavy?

Understanding the 73.6% US Weight

VGS's heavy US allocation isn't bias—it's market reality. The United States represents approximately 70% of developed market capitalisation globally. VGS uses market-cap weighting, so the 73.6% US allocation simply reflects how large US markets are relative to other developed countries.

Different Perspectives

"The US allocation is appropriate":

• Market-cap weighting reflects economic reality

• US companies dominate global markets (tech, finance, healthcare)

• Fighting market weights often underperforms over time

"The US allocation is too high":

• Single-country concentration risk

• Prefer equal-weighted or tilted allocations

• Believe other regions offer better future opportunities

What Can Investors Do?

If comfortable with 73.6% US: VGS works well as a single global holding.

If wanting less US exposure:

• Combine VGS with emerging markets ETFs (shifts allocation)

• Use specific regional ETFs (Europe, Asia) alongside smaller US allocation

• Consider equal-weighted or strategic allocation approaches

If wanting more US exposure: VTS or IVV provide 100% US coverage.

VGS vs VTS vs IVV: Which Has the Highest Return?

The Performance Question

This article does not compare historical returns because past performance does not indicate future results. All three ETFs track developed equity markets that have historically grown over time, but future returns are unpredictable.

What Drives Returns?

For VGS: Returns depend on global developed market performance, with 73.6% driven by US markets and 26.4% by other developed countries.

For VTS: Returns track the entire US stock market across all capitalisations.

For IVV: Returns track the S&P 500 large-cap index specifically.

Factors Beyond the ETF Itself

Returns for Australian investors also depend on:

• Currency movements (AUD/USD exchange rate fluctuations)

• Market conditions (bull vs bear markets)

• Economic cycles (interest rates, growth, inflation)

• Time horizon (short-term volatility vs long-term growth)

The Right Question

Instead of "which has the highest return," investors should ask:

• Which allocation suits my portfolio strategy?

• Which geographic exposure do I want?

• Which fee am I comfortable paying for that exposure?

VGS vs VTS vs IVV: Dividend Yield Comparison

Current Dividend Yields

• VGS: 1.5% dividend yield

• VTS: 1.1% dividend yield

• IVV: 0.99% dividend yield

Why the Differences?

VGS's higher yield (1.5%):

• Includes international companies with traditionally higher dividend policies (European, UK, Australian companies)

• Non-US markets often have more mature, dividend-focused businesses

VTS's mid-range yield (1.1%):

• Includes mid and small-cap companies that reinvest profits for growth

• Balances dividend-payers with growth-focused businesses

IVV's lower yield (0.99%):

• S&P 500 large-caps increasingly favour share buybacks over dividends

• Tech-heavy composition (companies like Alphabet, Meta reinvest rather than pay dividends)

Important Context

Dividend yield should not be the primary selection criterion. Total return (capital growth + dividends) matters more than yield alone. Lower-yielding ETFs may deliver stronger capital appreciation, resulting in better total returns over time.

Additionally, distributions from these ETFs are subject to Australian tax and US dividend withholding tax (typically 15%).

Currency Risk: How AUD/USD Affects Returns

All Three Are Unhedged

VGS, VTS, and IVV are all unhedged to the Australian dollar. This means currency movements directly impact returns for Australian investors.

How Currency Risk Works

Scenario 1: AUD weakens (USD strengthens)

• US stocks return +10% (in USD)

• AUD/USD falls from $0.65 to $0.55 (AUD weakens ~15%)

• Australian investor return: approximately +25% (stock gain + currency gain)

Scenario 2: AUD strengthens (USD weakens)

• US stocks return +10% (in USD)

• AUD/USD rises from $0.65 to $0.75 (AUD strengthens ~15%)

• Australian investor return: approximately -5% (stock gain - currency loss)

These are hypothetical illustrations only. Actual currency movements vary and cannot be predicted.

Currency-Hedged Alternatives

For investors wanting to remove currency risk:

• VGAD: Currency-hedged version of VGS

• IHVV: Currency-hedged version of IVV

• No hedged VTS equivalent currently available on ASX

Currency hedging adds cost (typically 0.10-0.15% extra in fees) and introduces different considerations. Choosing between hedged and unhedged involves evaluating currency views, time horizon, and risk tolerance—topics beyond this comparison's scope.

Can I Hold VGS, VTS, and IVV Together?

Understanding the Overlap

Holding all three creates significant duplication:

VGS contains:

• 73.6% US stocks (overlaps with VTS and IVV)

• 26.4% non-US developed markets (unique)

VTS contains:

• All S&P 500 companies (complete overlap with IVV)

• Plus 3,029 additional US mid/small/micro-cap companies

IVV contains:

• 500 large-cap US companies (all included in VTS)

The Result

Holding all three would:

• Overweight US exposure significantly (paying fees multiple times for same stocks)

• Dilute VGS's international diversification

• Create inefficient portfolio construction

Better Approaches

For global + US exposure:

• VGS alone (simple, one-fund solution)

• VGS + VAS (international + Australian)

For US-focused + international:

• VTS + separate European/Asian ETFs

• IVV + separate regional exposures

For complete diversification:

• VTS (or IVV) + VEU (ex-US international)

• VGS + VAS (international + Australian, no US duplication)

Tax Implications for Australian Investors

Australian Tax Treatment

All three ETFs generate taxable income for Australian residents:

1. Distribution Income Quarterly distributions are taxable income in the year received. These distributions include:

• Dividends from underlying stocks

• Capital gains from portfolio rebalancing

• Foreign income

2. Capital Gains Tax Selling ETF units triggers capital gains tax (CGT) on any profit. The CGT discount (50%) applies after holding for 12+ months.

US Dividend Withholding Tax

All three ETFs hold US stocks, which are subject to US dividend withholding tax:

• Standard rate: 15% withheld on US dividends (under Australia-US tax treaty)

• What this means: Australian investors receive 85% of US dividends; 15% is withheld by the IRS

• Tax offset: Foreign income tax offsets may be available, depending on individual tax circumstances

VGS-Specific Consideration

VGS holds stocks from 22 countries, each with different withholding tax rates:

• US dividends: 15% withheld

• Japanese dividends: 15% withheld

• UK dividends: 0% withheld (no withholding for Australian residents)

• European dividends: Varies by country (0-35%)

Tax Advice Disclaimer

Tax treatment varies based on individual circumstances. Investors should consult a qualified tax adviser for advice specific to their situation. This information is general only and is not tax advice.

What Are the Best ASX ETFs for Long-Term Investment?

VGS, VTS, and IVV in Context

All three are among the most popular ASX ETFs for long-term investing, but "best" depends on investment strategy:

For global diversification:

• VGS (international developed markets)

• VTS or IVV (US markets)

• VAS or A200 (Australian market)

• VAF or VGB (bonds for diversification)

For US-focused portfolios:

• VTS (complete US market, lowest fee)

• IVV (S&P 500 specifically)

• NDQ (NASDAQ 100 for tech concentration)

For international without US dominance:

• VEU (ex-US developed and emerging markets)

• VAE (Asian markets)

• VEQ (European markets)

Key Principles for Long-Term Investing

Regardless of which ETFs are chosen:

• Diversification: Don't concentrate in single regions/sectors

• Fees matter: Lower fees compound positively over decades

• Consistency: Regular investing beats timing the market

• Time horizon: Longer horizons smooth short-term volatility

All three ETFs (VGS, VTS, IVV) are high-quality, low-cost options suitable for long-term portfolios. The choice depends on desired geographic allocation and portfolio construction approach.

Should I Buy VGS or VTS for Australian Investors?

The Decision Framework

Choose VGS when:

• Wanting global developed market exposure in one ETF

• Comfortable with 73.6% US + 26.4% international allocation

• Preferring market-cap weighted global approach

• Willing to pay 0.18% fee for geographic diversification

• Seeking "set and forget" simplicity

Choose VTS when:

• Comfortable with 100% US market exposure

• Planning to add separate international ETFs later

• Prioritising lowest possible fees (0.03%)

• Wanting complete US market coverage (including mid/small-cap)

• Building custom portfolio with specific regional allocations

Consider both when:

• VTS for core US exposure (low cost, broad coverage)

• VGS for international diversification (adds non-US developed markets)

• Combined allocation provides custom global exposure

Common Portfolio Approaches

Approach 1: Simple (2 ETFs)

• 50% VGS (global developed)

• 50% VAS (Australian)

• Result: Global diversification, home bias, simple maintenance

Approach 2: US-Focused (3 ETFs)

• 40% VTS (US total market)

• 30% VEU (ex-US international)

• 30% VAS (Australian)

• Result: More control over regional allocations, low fees

Approach 3: Minimal (1 ETF)

• 100% VGS (if no Australian exposure desired)

• Result: Maximum simplicity, global coverage, slightly higher fee

VGS or IVV or Both?

The Overlap Problem

Holding both VGS and IVV creates substantial overlap:

• VGS is 73.6% US stocks

• IVV is 100% US large-cap stocks

• Many of IVV's holdings appear in VGS's US allocation

When Holding Both Makes Sense

Scenario 1: Transitioning portfolios Gradually shifting from IVV (pure US) to VGS (global) by holding both temporarily during reallocation.

Scenario 2: Overweighting US intentionally

• VGS provides 73.6% US + 26.4% international

• IVV adds extra US large-cap concentration

• Result: Higher US exposure than VGS alone (suitable if preferring US overweight)

When Holding Both Doesn't Make Sense

Scenario 1: Seeking diversification If the goal is geographic diversification, holding both VGS and IVV dilutes VGS's international component by doubling up on US stocks.

Scenario 2: Fee efficiency Paying fees twice for overlapping holdings (VGS's US allocation + IVV) is inefficient.

Better Alternatives

Instead of VGS + IVV:

• VGS alone (if wanting global diversification)

• IVV + VEU (if wanting to control US vs ex-US allocation)

• VTS alone (if wanting low-cost complete US coverage, then add international later)

Which ETF Gives the Highest Return?

Why This Question Has No Answer

Past performance does not indicate future results. Any historical comparison would be misleading because:

• Markets change constantly

• Currency movements vary

• Time periods affect comparisons

• Future returns are unpredictable

What Influences Returns?

For all three ETFs:

• Underlying market performance (US, global developed markets)

• Currency movements (AUD/USD exchange rate)

• Market cycles (bull vs bear markets)

• Economic conditions (interest rates, inflation, growth)

• Time horizon (short-term volatility vs long-term trends)

The Right Focus

Instead of "highest return," investors should focus on:

• Appropriate allocation: Does this match investment strategy?

• Diversification: Does this provide desired geographic exposure?

• Fees: Lower fees compound positively over time

• Risk tolerance: Can volatility be handled without panic selling?

All three ETFs provide exposure to developed equity markets that have historically grown over long periods. Future returns will depend on factors beyond the ETFs themselves.

Important Considerations Before Investing

1. Portfolio Context Matters

These ETFs should fit within an overall portfolio strategy:

• Existing Australian equity exposure (VAS, A200, etc.)

• Target allocation between international and domestic stocks

• Need for bonds, property, or other asset classes

• Overall diversification across regions and sectors

2. Risk Factors Apply to All Three

Investing in equities involves risk:

• Market risk: Stock prices can decline

• Currency risk: AUD/USD fluctuations affect returns

• Concentration risk: Top holdings dominate all three ETFs

• Economic risk: US economic downturns impact all three

• Volatility: Short-term price swings are normal

3. Time Horizon Matters

These ETFs suit long-term investors (5+ years minimum):

• Short-term volatility is normal

• Longer horizons smooth out market fluctuations

• Equity markets have historically grown over long periods

• Past trends do not guarantee future results

4. Fee Considerations

While all three have low fees compared to active funds, the differences matter over decades:

• VTS: 0.03% (lowest)

• IVV: 0.04% (very low)

• VGS: 0.18% (low, but 0.15% higher than VTS)

Lower fees mean more capital compounds for investors over time.

Where to Find More Information

Official ETF Resources

VGS (Vanguard):

• Website: vanguard.com.au

• Product Code: 8212

• Download PDS and fact sheets

VTS (Vanguard):

• Website: vanguard.com.au

• Product Code: 0970

• Download PDS and fact sheets

IVV (BlackRock):

• Website: blackrock.com/au

• Product Code: 275304

• Download PDS and fact sheets

Before Investing

Investors should:

1. Read the Product Disclosure Statement (PDS) for each ETF

2. Review the Target Market Determination (TMD)

3. Consider investment objectives, financial situation, and needs

4. Assess whether this information is appropriate for their circumstances

5. Seek professional financial advice if needed

Summary: VGS vs VTS vs IVV

Key Differences

VGS (Vanguard International Shares):

• 1,284 holdings across 22 developed countries

• 73.6% US + 26.4% international

• 0.18% management fee

• Broadest geographic diversification

VTS (Vanguard US Total Market):

• 3,529 holdings covering entire US market

• 100% US (large, mid, small, micro-cap)

• 0.03% management fee (lowest)

• Most comprehensive US coverage

IVV (iShares S&P 500):

• 500 holdings (S&P 500 large-caps)

• 100% US (established leaders only)

• 0.04% management fee

• Specific S&P 500 benchmark

The Bottom Line

There is no universally "best" ETF. The appropriate choice depends on:

• Desired geographic exposure (global vs US-only)

• Fee sensitivity (VTS lowest, VGS highest)

• Diversification preferences (broad vs concentrated)

• Portfolio construction approach (single fund vs building blocks)

• Individual investment strategy and goals

All three are high-quality, low-cost options for long-term investing. Investors should choose based on their specific strategy and circumstances, not on promises of future returns.

Disclaimer

 Finer Market Points Pty Ltd, CAR 1304002, AFSL 526688, ABN 87 645 284 680. This general information is educational only and not financial advice, recommendation, forecast or solicitation. Consider your objectives, financial situation and needs before acting. Seek appropriate professional advice. We accept no liability for any loss or damages arising from use. Data Sources: Vanguard Australia and BlackRock Australia official fund fact sheets (November/December 2025)

Article Last Updated: January 2026 | Word Count: ~5,850 | Purpose: Educational comparison for Australian investors