Globally diversified ESG equity ETF with strong income tilt and below market historical returns
Report created on Apr 29, 2024Risk profile
4/7
Diversification profile
4/5
Positions
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VS Vanguard ESG International Stock
VSGX - US9219107250 100.00%
The portfolio is as simple as it gets: one ESG-screened international stock ETF at 100%. That means all exposure is in foreign equities outside the US, filtered to exclude certain controversial activities based on ESG criteria. A single-fund approach is easy to manage and keeps behavior mistakes lower because there are no moving parts to juggle. The trade-off is that every bit of risk and return comes from one building block, so there is no cushion from other asset classes. The big takeaway: this structure works well as a component of a bigger plan, but on its own it behaves like a pure international stock sleeve.
Growth
Historically, $1,000 grew to about $1,646, a compound annual growth rate (CAGR) of 6.87%. CAGR is like the average speed of a road trip, smoothing out bumps along the way. Over the same period, the US market and global market delivered 12.59% and 10.19% annually, so this fund lagged both, mainly because international stocks trailed US stocks broadly. Max drawdown, the worst peak‑to‑trough fall, was about -33%, similar to the benchmarks, showing equity‑like downside. The key point: risk has been stock‑level, but returns were lower than broad global and US markets. As always, past performance shows what happened, not what must happen next.
Asset classes
- Stocks 100%
Asset allocation is straightforward: 100% in stocks, zero in bonds, cash, or alternatives. Stocks historically offer higher long‑term growth but also steeper ups and downs, especially during recessions or market panics. Without bonds or cash, there’s no built‑in stabilizer to soften big drawdowns or provide “dry powder” for buying dips. This makes the holding best suited as the growth engine in a broader mix, rather than a stand‑alone all‑weather portfolio. The upside is simplicity and clear exposure; the downside is full participation in equity volatility. Anyone using this as a core piece would generally pair it with safer assets elsewhere.
Sectors
- Financials 28%
- Technology 21%
- Consumer Discretionary 10%
- Health Care 10%
- Industrials 10%
- Basic Materials 7%
- Consumer Staples 5%
- Telecommunications 5%
- Real Estate 3%
- Utilities 1%
Sector exposure is nicely spread, with financials the largest slice, followed by technology and a mix of consumer, healthcare, industrials, and smaller allocations elsewhere. This looks broadly in line with typical international equity indexes, which is a strong indicator of diversification across different parts of the economy. A meaningful but not dominant tech allocation means participation in growth themes without the extreme tech concentration some portfolios carry. Financials and cyclicals can be more sensitive to economic cycles and interest rates, so returns may ebb and flow with global growth. Overall, the sector mix is well-balanced and benchmark‑like, which supports smoother diversification.
Regions
- Europe Developed 34%
- Asia Developed 18%
- Japan 16%
- Asia Emerging 13%
- North America 7%
- Australasia 4%
- Africa/Middle East 4%
- Latin America 2%
- Europe Emerging 1%
Geographically, exposure is truly international: large stakes in developed Europe, developed Asia, and Japan, plus meaningful allocations to emerging Asia and smaller slices across other regions. North America is only a minor portion, so this fund is intentionally non‑US centric. Compared with a global benchmark that’s heavily tilted to the US, this is a clear overweight to the rest of the world. That can be attractive for someone already heavy in US stocks elsewhere, or for those who believe non‑US markets may catch up. The flip side is that underperformance versus US indices is likely when American equities lead, as seen in recent years.
Market capitalization
- Mega-cap 45%
- Large-cap 31%
- Mid-cap 18%
- Small-cap 4%
Market‑cap exposure is dominated by mega‑ and large‑cap companies, with smaller but meaningful slices in mid‑caps and a modest allocation to small‑caps. Large and mega companies tend to be more stable, diversified businesses with deeper liquidity, which generally dampens volatility relative to pure small‑cap portfolios. The mid‑ and small‑cap pieces add some growth and diversification potential, since smaller companies often move differently than giants. This blend mirrors many mainstream international indexes and is a healthy sign of broad market coverage. The takeaway: the portfolio taps into the global corporate heavyweights while still leaving room for some smaller‑company upside.
True holdings
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23 Taiwan Semiconductor Manufacturing Co. Ltd. 4.08%
Part of fund(s):- Vanguard ESG International Stock
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AS ASML Holding N.V. 1.45%
Part of fund(s):- Vanguard ESG International Stock
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SS Samsung Electronics Co Ltd 1.34%
Part of fund(s):- Vanguard ESG International Stock
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99 Alibaba Group Holding Ltd 1.12%
Part of fund(s):- Vanguard ESG International Stock
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RO Roche Holding AG 0.99%
Part of fund(s):- Vanguard ESG International Stock
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AZ AstraZeneca PLC 0.95%
Part of fund(s):- Vanguard ESG International Stock
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NO Novartis AG 0.90%
Part of fund(s):- Vanguard ESG International Stock
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NE Nestlé S.A. 0.86%
Part of fund(s):- Vanguard ESG International Stock
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SA SAP SE 0.85%
Part of fund(s):- Vanguard ESG International Stock
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00 SK Hynix Inc 0.84%
Part of fund(s):- Vanguard ESG International Stock
- Top 10 total 13.38%
Looking through the ETF’s top holdings, exposure is spread across several large global names like Taiwan Semiconductor, ASML, Samsung, and major healthcare and consumer companies. The top ten represent only about 13% of the fund, so even the biggest positions are relatively small slices. There is no hidden overlap from multiple ETFs because everything is inside this one fund, which simplifies concentration risk. Still, the uncovered 86% means many other mid‑ and smaller‑cap stocks sit underneath. The main takeaway: concentration risk at the single‑company level looks modest, but investors still ride the fortunes of international large caps broadly.
Factors
Factor exposure looks mostly balanced, with neutral tilts to value, size, momentum, and quality, meaning the portfolio behaves broadly like the market on those dimensions. Two areas stand out: high exposure to yield and high exposure to low volatility. Yield exposure means the holdings tend to pay above‑average dividends, which can be attractive for income seekers and may cushion returns in sideways markets. Low volatility exposure suggests a bias toward historically steadier stocks, which often fall less in sharp downturns but may lag in roaring bull markets. Overall, this combination points to a slightly more defensive, income‑oriented equity profile without extreme style bets.
Risk contribution
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Vanguard ESG International Stock
Weight: 100.00% 100.0%
Risk contribution is simple here: one ETF accounts for 100% of portfolio risk, matching its 100% weight. Risk contribution measures how much each position drives the ups and downs of the overall account, and in this case there’s no diversification across different funds or asset types. That’s not inherently bad, but it means all volatility comes from one source, and any trading or suspension affecting this ETF would matter a lot. A common way to spread risk more evenly is to hold multiple uncorrelated assets so no single holding dominates the experience. As a sleeve, though, this single‑source risk is very manageable.
Dividends
- Vanguard ESG International Stock 3.40%
- Weighted yield (per year) 3.40%
The indicated dividend yield of about 3.4% is relatively generous for an equity holding and aligns with the higher yield factor exposure. Dividends are cash payments from companies and can make up a significant chunk of total return over decades, especially when reinvested. An income tilt like this can be especially appealing for investors who like a steady cash flow or who reinvest to compound faster. However, yields can fluctuate with market conditions and company policies, so they are not guaranteed. As part of a bigger picture, this fund can play a strong role for someone blending growth with a meaningful income stream.
Ongoing product costs
- Vanguard ESG International Stock 0.12%
- Weighted costs total (per year) 0.12%
Costs are impressively low, with a total expense ratio (TER) of 0.12%. TER is the ongoing annual fee charged by the fund, quietly deducted from returns, much like a small service charge. Keeping fees low is one of the most reliable ways to improve long‑term outcomes because the savings compound year after year. This level of cost is very competitive versus many active funds and even a lot of other ESG offerings. The key takeaway: fee drag here is minimal, which is a real strength and lines up well with best practices for long‑term investing.
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