Vanguard MSCI Index International Shares (Hedged) ETF (VGAD) — Review & Analysis

VGAD is Australia's ninth-largest ETF, with $7.2 billion in assets as at May 2026 — about 2.0% of the entire $358 billion Australian ETF market. It's the largest currency-hedged global equity ETF on the ASX, more than 1.8x the size of the next-largest hedged international ETF IHVV ($4.0B) as at May 2026. VGAD is the AUD-hedged twin of VGS — same underlying portfolio of ~1,500 developed-world stocks across 23 countries, but with the AUD/USD currency exposure systematically hedged out. Vanguard launched both VGS and VGAD on the same day in November 2014. The management fee is 0.21% per annum — three basis points more than VGS to cover the hedging cost.

To compare VGAD side-by-side with every other ETF on the ASX, see the full ETF directory.

The underlying equity portfolio is identical to VGS — approximately 1,500 of the largest developed-market companies, ~72% US, ~6% Japan, ~4% UK as at May 2026. Top holdings: Microsoft, Apple, Nvidia, Amazon, Meta, Alphabet, Berkshire, Eli Lilly, Broadcom and Tesla. The only difference is the AUD currency hedge overlaid on top — Vanguard sells USD forwards monthly to neutralise the currency exposure. Over the 12 months to May 2026, the AUD strengthened against the USD, and VGAD outperformed VGS by 12 percentage points (+26.4% vs +14.4%). Over the 5 years to May 2026, VGAD returned +65.6% — well behind VGS's +84.2% because the AUD weakened over the full window. The performance gap between hedged and unhedged international ETFs is one of the largest sources of return variation in Australian portfolios.

VGAD pays distributions quarterly (late March, June, September and December) at a similar yield to VGS — around 1.5-2.0% gross as at May 2026, with no franking credits. The systematic currency hedging creates an additional source of return variation: when AUD interest rates exceed US rates (as at May 2026), the hedge generates a small positive carry. When US rates exceed AUD rates (the 2022-2024 environment), the hedge cost reduces the AUD return relative to the underlying USD return. Over the past decade, VGAD has systematically underperformed VGS because the AUD weakened — but the 12 months to May 2026 was a sharp reversal of that pattern.

VGAD is the right choice when you want global equity returns without the currency variable. Retirees and near-retirees with defined withdrawal timelines often prefer it over unhedged VGS. Long-term accumulators with 20+ year horizons typically pick VGS — the currency variable washes out over very long periods and the lower fee compounds. A $10,000 investment in VGAD at its November 2014 launch (with all distributions reinvested) would be worth roughly $24,000 as at May 2026 — an annualised return of about 7.9% per year over the 11.5-year period. For more on the hedging decision, see Hedged vs unhedged ETFs — the best option in every category.