IVV vs VGS vs VTS: Which International ETF Should You Buy?

But they are not interchangeable. IVV and VTS give you US exposure only. VGS gives you developed-world diversification across 23 countries. The real question is not IVV vs VGS. It is US-only vs globally diversified.

This guide breaks down exactly what you own in each, how they have performed, what they cost, and — critically — the alternatives most investors never consider.

No fund manager wrote this article. No issuer is paying for placement. Just data.

What Each ETF Actually Does

Before comparing performance, you need to understand what you are buying. These three ETFs track completely different benchmarks.

IVV — Pure S&P 500

IVV tracks the S&P 500 — the 500 largest US companies by market capitalisation. It is the cheapest option at 0.04% MER and gives you concentrated exposure to the biggest names in global markets: Apple, Microsoft, Nvidia, Amazon, Meta.

The trade-off: you get zero exposure to Japan, Europe, the UK, Canada, or any other developed market. You are making a 100% bet on the US.

VGS — Developed World ex-Australia

VGS tracks the MSCI World ex-Australia index, covering approximately 1,300 large and mid-cap stocks across 23 developed countries. The US still dominates at ~71%, but you also get meaningful exposure to Japan (~6%), the UK (~4%), Canada (~4%), France, Germany, Switzerland, and others.

VGS is the go-to for investors who want international diversification without picking individual country ETFs. At 0.18% MER, it costs more than IVV or VTS, but it is the only one of the three that genuinely diversifies beyond the US.

VTS — Total US Market

VTS tracks the entire US stock market — about 3,900 stocks including small and mid-caps that the S&P 500 misses. It is the cheapest of the three at 0.03% MER, but it is structured as a US-domiciled CDI (CHESS Depository Interest) rather than an Australian-domiciled fund.

This has practical implications. VTS distributions may be subject to US withholding tax, and you cannot participate in distribution reinvestment plans (DRPs) as easily. The tax treatment is different to IVV and VGS — something worth discussing with your tax adviser. For more on how ETF tax works, see our ETF tax guide.

The Key Differences at a Glance

Performance: The Numbers That Matter

Returns data to 31 March 2026, sourced from CBOE Australia. All figures are cumulative total returns in AUD.

What the data tells us

IVV has been the top performer of the three over 5 years — returning 87.35% vs VTS at 77.90% and VGS at 74.71%. The S&P 500's large-cap concentration (heavy in mega-cap tech) has driven this outperformance.

VTS slightly trails IVV despite lower fees. This is because VTS includes small and mid-cap stocks that have underperformed large-caps over this period. Broader diversification within the US has actually been a drag on returns.

VGS trails both because approximately 29% of its portfolio is in non-US developed markets (Japan, Europe, UK) that have underperformed the US over the past 5 years. This is the cost of geographic diversification — but also the insurance policy.

BGBL is the one to watch. At 0.08% MER, BGBL tracks a similar index to VGS at less than half the fee. Its 1-year return of 8.41% leads the pack. It only listed in 2021, so there is no 5-year track record yet — but the fundamentals are strong. We wrote a deep comparison of VGS vs BGBL if you want the full breakdown.

IOO has crushed everything — returning 106.84% over 5 years. It tracks the S&P Global 100 (the 100 largest companies on earth), which means even more mega-cap concentration than IVV. At 0.40% MER it is expensive, but the returns have more than justified the cost. The risk: extreme concentration in ~100 stocks.

What You Actually Own: Geographic Breakdown

This is the chart that changes the conversation. Most investors do not realise how different these three ETFs are under the hood.

The uncomfortable truth

If you hold IVV or VTS as your only international ETF alongside VAS or A200 for Australian exposure, your total portfolio has zero allocation to Japan (the world's 4th largest economy), zero allocation to the UK, and zero allocation to Europe.

VGS solves this in one fund. You get the US at ~71% (because that is what the market-cap weighting dictates) plus 23 countries of developed-world diversification.

For a full breakdown of how Australian shares compare to global, read our Australian vs Global Shares analysis.

Sector Exposure

The sector tilt matters as much as the geography.

IVV and VTS are heavily tilted toward US tech — approximately 30–32% in the technology sector. VGS still has significant tech exposure (~25%) because the US dominates its weighting, but the inclusion of Japanese industrials, European financials, and UK healthcare provides slightly more balance.

If your Australian portfolio (VAS/A200) is already heavily weighted toward financials and materials, adding VGS gives you the most different sector exposure. Adding IVV gives you even more concentration in tech.

Fee Impact Over 20 Years

Fees seem trivial at these levels — 0.03% vs 0.18% — but they compound significantly over decades.

Assumes 8% gross return p.a. before fees.

The difference between VTS (0.03%) and VGS (0.18%) is approximately $13K on a $100K investment over 20 years. That is not nothing — but VGS gives you geographic diversification that the others do not.

The real outlier is QUAL at 0.40% MER. Over 20 years, its fee drag costs $31K more than VTS. Factor ETFs need to consistently beat the market to justify that cost — and the data shows they often do, but not always. For more on whether fees predict returns, see our fee analysis.

The Domicile Issue: Why VTS Is Different

VTS is US-domiciled, which matters for Australian investors.

The US estate tax issue is the one most people miss. US-domiciled assets held by non-US persons may be subject to US estate tax on holdings above US$60,000. For large portfolios, this is worth professional advice.

For most investors, the simplicity of an Australian-domiciled fund (IVV or VGS) is worth the marginally higher MER. If you want total US market exposure in an Australian-domiciled wrapper, consider BGBL or IWLD instead.

The Hedging Question

All three of IVV, VGS, and VTS are unhedged — meaning your returns are affected by movements in the AUD/USD exchange rate.

When the Australian dollar falls (as it has over much of the past decade), unhedged international ETFs get a tailwind. When the AUD rises, they face a headwind.

If you want to neutralise currency risk, hedged versions exist:

Over the past 5 years, hedged versions have significantly underperformed unhedged — VGAD returned 53.8% vs VGS at 74.7%, and IHVV returned 47.6% vs IVV at 87.3%. But this is entirely a function of the AUD weakening. If the AUD strengthens from here, hedged will outperform.

A common approach is to hold a mix — for example, 70% unhedged and 30% hedged. We covered this in detail in our Hedged vs Unhedged ETFs guide.

The Alternatives You Should Consider

IVV, VGS, and VTS get most of the attention, but they are not the only options. Here is the full landscape of international ETFs ranked by 5-year return.

Global Diversified (VGS alternatives)

US-Focused (IVV/VTS alternatives)

Non-US / Small Cap (for geographic diversification)

Hedged Versions

For a full analysis of every hedged ETF on the ASX, see our complete hedged ETF guide.

How These Fit Into a Portfolio

The right choice depends on what else you hold. Here are three common portfolio approaches:

Approach 1: Simple Two-ETF Portfolio

VGS or BGBL is the natural choice here because it provides built-in geographic diversification. You do not need to separately manage US, European, and Japanese allocations. For more on this approach vs core-satellite, see our 2-ETF vs Core-Satellite analysis.

Approach 2: US Conviction + Satellite

This is for investors who deliberately want to overweight the US. Adding VEU as a satellite ensures you still have some non-US exposure.

Approach 3: Core-Satellite with Diversified Core

This gives you a diversified core (VGS + VGAD), currency hedging on a portion, and satellite positions in quality and small-cap for factor diversification. For the full satellite playbook, see our Satellite Portfolio guide.

The Bottom Line

The real decision is not IVV vs VGS vs VTS. It is whether you want to bet entirely on the US, or whether you want genuine geographic diversification. Both are valid — but you should make that choice deliberately, not by default.

If you are building a portfolio from scratch, start with our complete portfolio design guide. If you already hold one of these ETFs and want to check for overlap, see How Many ETFs Should You Hold.

Data sourced from CBOE Australia (performance to 31 March 2026), issuer websites (Vanguard, iShares), and ReviewETF.

Find the right international ETF at ReviewETF.com.au — every ASX-listed ETF, compared and ranked with independent data.

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