Vanguard VGTSX Review: 20 Key Things You Should Know About This Mutual Fund

Proj Omni: Dec 17, '17

In this Vanguard Total International Stock Index Fund Investor Shares (MUTF: VGTSX) review, we’ll address key questions our readers have been asking us about this Fund, beyond what you can normally find on the VGTSX Morningstar page.  We'll also address some of the popular questions asked on the VGTSX Bogleheads forum.  

VGTSX is a top 3 international (ex-US) fund by assets and is hugely popular among retail (individual) investors.  It's an Investor Shares fund, requiring a minimum $3K investment.  VGTSX Admiral equivalent, VTIAX, requires a minimum $10K investment.  

In this review, we’ll cover the following topics:

  1. VGTSX mutual fund profile (i.e., what does it track?)
  2. VGTSX underlying index
  3. VGTSX holdings
  4. VGTSX returns / VGTSX performance
  5. VGTSX minimum initial investment amount
  6. VGTSX dividend yield
  7. VGTSX sales load and distribution (12b-1) expenses
  8. VGTSX historical view: number of up/down years
  9. VGTSX expense ratio
  10. VGTSX tax-cost ratio
  11. VGTSX Beta / VGTSX risk
  12. VGTSX Sharpe ratio                                                                                              
  13. VGTSX vs VFIAX
  14. VGTSX vs VOO
  15. VGTSX vs VFINX
  16. VGTSX vs VTSMX
  17. VGTSX vs VTI
  18. VGTSX vs VTSAX
  19. VGTSX vs VTIAX
  20. VGTSX vs VXUS

So let’s start.  Scroll down to questions that are most interesting to you. 

1. What is VGTSX?

The Fund seeks to track the performance of the FTSE Global All Cap ex US Index, a market capitalization weighted index designed to measure equity market performance of companies located in developed and emerging markets, excluding the United States.

VGTSX is the top international equity fund by assets invested in it, and it's also one of the top 10 Vanguard funds by assets.  

2. What is underlying index for VGTSX?

FTSE Global All Cap ex US Index.  Vanguard is known to use low-cost index providers, and that may be one of the reasons why they use FTSE as opposed to MSCI (that some other fund issuers prefer).  

3. How many stocks does VGTSX have as its holdings?

VGTSX has over 5,900 stocks as its holdings.

The top 10 holdings represent 7.74% of total VTSAX assets.

Here are the top holdings:

Name
Symbol
% Assets
Nestle SA
NSRGF
1.07
Tencent Holdings Ltd
TCTZF
0.96
Samsung Electronics Co Ltd
SSNLF.KS
0.88
Novartis AG
NVSEF
0.83
HSBC Holdings PLC
HBCYF.L
0.81
Roche Holding AG Dividend Right Cert.
RHHVF
0.73
Taiwan Semiconductor Manufacturing Co Ltd
2330.TW
0.68
Toyota Motor Corp
TOYOF
0.64
Royal Dutch Shell PLC Class A
RYDAF.L
0.57
British American Tobacco PLC
BTAFF.L
0.57

4. How did VGTSX perform historically?

VGTSX generated the following returns:

  • 1-months return is 1.94%;
  • 3-months return is 4.44%;
  • 1-years return is 23.7%;
  • 3-years return is 6.02%;
  • 5-years return is 7.7%.

5. What is the minimum initial investment amount for VGTSX?

The minimum investment requirement for VGTSX is $3,000.  VGTSX also has an Admiral share equivalent VTIAX that has a $10,000 minimum investment requirement.  

6. What is VGTSX dividend yield?

VGTSX yield is 2.52%.  That means for every $10,000 invested, you should expect to see $252 in dividends (from the underlying stocks).  

7. Does VGTSX have any sales loads or 12b-1 distribution expenses?

VTSAX does not have a 12b1 fee, a front-end sales load or a back-end sales load.  Whenever possible, look for mutual funds that cary no sales loads or marketing expenses.  

8. How many up and down years did VGTSX have historically?

In the last 20 years, VGTSX had 12 up years and 8 down years.

9. What is VGTSX expense ratio?

VGTSX expense ratio is 0.18%. The expense ratio of a fund is the total percentage of fund assets used for administrative, management, and all other expenses.

10. What is VGTSX tax efficiency (tax-cost ratio)?

VGTSX tax-cost ratio is 0.79%. The tax-cost ratio measures how much a fund’s annualized return is diminished by the taxes investors pay on distributions. Funds like VGTSX regularly distribute dividends and capital gains.

11. What is VGTSX beta? How would you assess VGTSX risk?

VGTSX 3-year beta is 0.93. Beta is a measure of the volatility, or systematic risk, of a fund in comparison to the market as a whole. S&P 500 Beta is equal to 1. A Beta higher than 1 means riskier than the market overall; conversely, lower than 1 means less risky than the market.

12. What is VGTSX Sharpe ratio?

The 3-year Sharpe ratio for VGTSX is 0.53. The Sharpe ratio is the average return earned in excess of the risk-free rate per unit of volatility or total risk. Generally, the greater the value of the Sharpe ratio, the more attractive the risk-adjusted return.

13. Compare and contrast: VGTSX vs VFIAX.

Below is a comparison table for VGTSX and VFIAX.


VFIAX
VGTSX
Segment
U.S. Equity: Large Blend
International Equity: Foreign Large Blend
Net Assets
$205.30B
$106.30B
Expense Ratio
0.04%
0.18%
Management Style
passive (index-based)
passive (index-based)
Minimum Investment
$10,000
$3,000
YTD Return
16.87%
23.91%
1-Year Return
23.59%
23.70%
3-Year Return
10.74%
6.02%
5-Year Return
15.14%
7.70%
1-Year Tax Cost
0.77%
0.79%

Vanguard 500 Index Fund Admiral Shares (MUTF: VFIAXseeks to track the performance of its benchmark index, the S&P 500. The Fund employs an indexing investment approach. VFIAX attempts to replicate the target index by investing all of its assets in the stocks that make up the Index with the same approximate weightings as the Index.

Bottom line, VFIAX is focused on the top 500 stocks of the US market, while VGTSX is focused on international stocks (and has much broader coverage as far as the number of stocks).

VGTSX is more expensive than VFIAX by 0.14 percentage points, but it also requires a smaller minimum investment ($3K vs. $10K).  

Our advice: these two funds are really different.  Figure out what your investment focus is (US vs. international), and then invest accordingly.  

 Finbot: compare two mutual funds

14. Compare and contrast: VGTSX vs VOO.

Below is a comparison table for VGTSX and VOO.


VOO
VGTSX
Security Type
ETF
Mutual fund
Segment
Equity: U.S. - Large Cap
International Equity: Foreign Large Blend
Net Assets
$367.47B
$106.30B
Expense Ratio
0.04%
0.18%
Management Style
passive (index-based)passive (index-based)
Minimum Investment
N/A
$3,000
YTD Return
16.66%
23.91%
1-Year Return
23.52%
23.70%
3-Year Return
10.74%
6.02%
5-Year Return
15.15%
7.70%
1-Year Tax Cost
0.49%
0.79%

Vanguard 500 Index Fund (NYSEARCA: VOO) is an ETF that tracks the performance of its benchmark index, the S&P 500.  The Fund attempts to replicate the target index by investing all of its assets in the stocks that make up the Index with the same approximate weightings as the Index.

Now, let’s compare and contrast mutual funds and ETFs.  ETFs trade like stocks, while mutual funds’ price is determined at the end of a business day when Net Asset Value (NAV) is set. 

VOO is an ETF, so you may have to pay a trading fee when you buy/sell it unless you invest through a zero-commission brokerage or Vanguard.

With mutual funds, it may be easier to enroll in automatic investments, so you can acquire shares in desirable proportions.  As a matter of fact, you can even choose an option to automatically deduct from your bank account every month.

If you have a Vanguard account, you will have access to no-fee, no-commission reinvesting for both ETFs and mutual funds. That means you won’t be paying a trading commission for either VGTSX or VOO.  And you’ll be able to reinvest dividend and/or capital gains distributions.

Our recommendation—these two funds are really different.  Figure out what your investment focus is (US vs. international), and whether ETFs or mutual funds are right for you, and then invest accordingly.  

Finbot: compare mutual funds to ETFs

15. Compare and contrast: VGTSX vs VFINX.

Below is a comparison table for VGTSX and VFINX.


VFINX
VGTSX
Segment
U.S. Equity: Large Blend
International Equity: Foreign Large Blend
Net Assets
$28.20B
$106.30B
Expense Ratio
0.14%
0.18%
Management Style
passive (index-based)
passive (index-based)
Minimum Investment
$3,000
$3,000
YTD Return
16.77%
23.91%
1-Year Return
23.46%
23.70%
3-Year Return
10.63%
6.02%
5-Year Return
15.01%
7.70%
1-Year Tax Cost
0.73%
0.79%

Vanguard 500 Index Fund Investor Shares (MUTF: VFINXtracks the performance of its benchmark index, the S&P 500.  The Fund attempts to replicate the target index by investing all of its assets in the stocks that make up the Index with the same approximate weightings as the Index.

The key difference between VFINX and VGTSX is, VFINX is focused on the US market, whereas VGTSX is focused on a broad selection of international stocks.  

Both funds require a minimum investment of $3,000 (which is common for Vanguard's Investor Shares funds).  

Our advice: these two funds are really different.  Figure out what your investment focus is (US vs. international), and then invest accordingly.

16. Compare and contrast: VGTSX vs VTSMX.

Below is a comparison table for VGTSX and VTSMX.


VGTSX
VTSMX
Segment
International Equity: Foreign Large Blend
U.S. Equity: Large Blend
Net Assets
$106.30B
$116.10B
Expense Ratio
0.18%
0.15%
Management Style
passive (index-based)
passive (index-based)
Minimum Investment
$3,000
$3,000
YTD Return
23.91%
16.32%
1-Year Return
23.70%
23.81%
3-Year Return
6.02%
10.37%
5-Year Return
7.70%
14.94%
1-Year Tax Cost
0.79%
0.74%

Vanguard Total Stock Market Index Fund Investor Shares (MUTF: VTSMXtracks the performance of a benchmark index that measures the investment return of the overall stock market. The Fund employs a "passive management" approach designed to track the performance of the CRSP US Total Market Index.

The key difference between VTSMX and VGTSX is, VTSMX is focused on the US market, whereas VGTSX is focused on a broad selection of international stocks.  

Both funds require a minimum investment of $3,000 (which is common for Vanguard's Investor Shares funds).  

VTSMX covers a much broader selection of stocks (virtually the entire investable US market) than VFINX (which is S&P based).  For the exact number of stocks, please visit Finbot and type "VTSMX number of stocks".

Our advice: these two funds are really different.  Figure out what your investment focus is (US vs. international), and then invest accordingly.

17. Compare and contrast: VGTSX vs VTI.

Below is a comparison table for VGTSX and VTI.


VTI
VGTSX
Security Type
ETF
Mutual fund
Segment
Equity: U.S. - Total Market
International Equity: Foreign Large Blend
Net Assets
$635.02B
$106.30B
Expense Ratio
0.04%
0.18%
Management Style
passive (index-based)
passive (index-based)
Minimum Investment
N/A
$3,000
YTD Return
16.30%
23.91%
1-Year Return
23.93%
23.70%
3-Year Return
10.49%
6.02%
5-Year Return
15.09%
7.70%
1-Year Tax Cost
0.47%
0.79%

Vanguard Total Stock Market ETF (NYSEARCA: VTI) tracks the performance of a benchmark index that measures the investment return of the overall stock market. The Fund employs a "passive management" approach designed to track the performance of the CRSP US Total Market Index (over 3,500 stocks trading on different US stock exchanges).  

VTI is an ETF, whereas VGTSX is a mutual fund. As such, VTI trades like a stock and does not have a minimum investment requirement. ETFs are more tax-efficient than mutual funds ( as demonstrated by a lower Tax Cost ratio in the table above).   

Our recommendation—these two funds are really different.  Figure out what your investment focus is (US vs. international), and whether ETFs or mutual funds are right for you, and then invest accordingly.  

18. Compare and contrast: VGTSX vs VTSAX.

Below is a comparison table for VGTSX and VTSAX.


VGTSX
VTSAX
Segment
International Equity: Foreign Large Blend
U.S. Equity: Large Blend
Net Assets
$106.30B
$170.10B
Expense Ratio
0.18%
0.04%
Management Style
passive (index-based)
passive (index-based)
Minimum Investment
$3,000
$10,000
YTD Return
23.91%
16.42%
1-Year Return
23.70%
23.96%
3-Year Return
6.02%
10.49%
5-Year Return
7.70%
15.07%
1-Year Tax Cost
0.79%
0.78%

Vanguard Total Stock Market Index Fund Admiral Shares (MUTF: VTSAX) tracks the performance of a benchmark index that measures the investment return of the overall stock market. The Fund employs a "passive management" approach designed to track the performance of the CRSP US Total Market Index.  VTSAX covers over 3,500 US stocks.  

VTSAX is an Admiral shares fund (with a minimum investment requirement of $10,000), whereas VGTSX is an Investor shares fund (requiring $3,000 as a minimum initial investment).  

Our advice: these two funds are really different.  Figure out what your investment focus is (US vs. international), and then invest accordingly.

19. Compare and contrast: VGTSX vs VTIAX.

Below is a comparison table for VGTSX and VTIAX.


VGTSX
VTIAX
Segment
International Equity: Foreign Large Blend
International Equity: Foreign Large Blend
Net Assets
$106.30B
$58.10B
Expense Ratio
0.18%
0.11%
Management Style
passive (index-based)
passive (index-based)
Minimum Investment
$3,000
$10,000
YTD Return
23.91%
23.98%
1-Year Return
23.70%
23.73%
3-Year Return
6.02%
6.07%
5-Year Return
7.70%
7.77%
1-Year Tax Cost
0.79%
0.81%

Vanguard Total International Stock Index Fund Admiral Shares (MUTF: VTIAXtracks the performance of the FTSE Global All Cap ex US Index, a free-float-adjusted market capitalization weighted index designed to measure equity market performance of companies located in developed and emerging markets, excluding the United States.

The key differences between VTIAX and VGTSX are 1. the minimum investment requirement; 2. expense ratio.  

If you have $10,000 to invest in an international broad-based mutual fund, we recommend you go with VTIAX vs. VGTSX.  

20. Compare and contrast: VGTSX vs VXUS.

Below is a comparison table for VGTSX and VXUS.


VXUS
VGTSX
Security Type
ETF
Mutual fund
Segment
Equity: Global Ex-U.S. - Total Market
International Equity: Foreign Large Blend
Net Assets
$315.64B
$106.30B
Expense Ratio
0.11%
0.18%
Management Style
passive (index-based)
passive (index-based)
Minimum Investment
N/A
$3,000
YTD Return
24.09%
23.91%
1-Year Return
23.98%
23.70%
3-Year Return
6.02%
6.02%
5-Year Return
7.81%
7.70%
1-Year Tax Cost
0.86%
0.79%

Vanguard Total International Stock ETF (NASDAQ: VXUStracks the performance of the FTSE Global All Cap ex US Index, a free-float-adjusted market capitalization weighted index designed to measure equity market performance of companies located in developed and emerging markets, excluding the United States.

In other words, VXUS has the same portfolio allocations as VGTSX.  VXUS is cheaper than VGTSX.  

VXUS is an ETF, whereas VGTSX is a mutual fund. As such, VXUS trades like a stock and does not have a minimum investment requirement. 

ETFs are typically more tax-efficient than mutual funds, but VGTSX is slightly more tax-efficient than VXUS (as demonstrated by a lower Tax Cost in the table above).    

Our recommendation—go with VXUS if you don't have $10,000 to invest and choose a brokerage where you won't be paying a trading fee (such as Vanguard) that will allow you to automatically re-invest your capital gains and dividends.  

We hope this review has given you a perspective on VGTSX performance (returns, expenses, dividend yield) and alternative choices (VGTSX vs VFIAX, VGTSX vs VOO, VGTSX vs VFINX, VGTSX vs VTSMX, VGTSX vs VTI, VGTSX vs VTSAX, VGTSX vs VTIAX and VGTSX vs VXUS).

If you have any questions or comments, send us an email at: hi [at] finstead [dot] com.

Comments (1)expand_more
Liz Piazza | Feb 21, '18

Thanks so much

reply0