VGS vs IVV: Global Shares or the S&P 500?

Once you have your Australian shares sorted, the next question is usually the bigger one: what do you hold for the rest of the world? Two ETFs dominate that conversation in Australia. VGS from Vanguard owns companies across the developed world, and IVV from iShares owns the 500 largest companies in the United States.

They overlap more than most people expect, but they are not the same thing. One is built for breadth, the other for low cost and a single market. Here is how to think about the choice.

What each ETF holds

VGS: the developed world, minus Australia

VGS tracks the MSCI World ex-Australia Index. At 30 September 2026 it held 1,219 companies across more than 20 developed countries, including the US, Japan, the UK, Canada and much of Europe. It leaves out Australia on purpose, so it pairs neatly with an Australian shares ETF like the ones in VAS vs A200.

IVV: the S&P 500

IVV tracks the S&P 500, the 500 largest listed companies in the US. Today it is an Australian-domiciled fund that holds the US-listed iShares Core S&P 500 ETF underneath, so you buy it on the ASX in Australian dollars like any other ETF. The fund dates back to May 2000, making it one of the longest-running ETFs available to Australians.

The overlap

Here is the part that surprises people. Because VGS is weighted by company size, and US companies are so large, about 74% of VGS was in the US at the end of September 2026. Its biggest holdings are the same names that lead IVV: NVIDIA, Apple, Microsoft, Amazon and Alphabet.

So choosing between them is less "world vs America" and more "America plus about a quarter in other countries" vs "America only".

VGS vs IVV side by side

Returns are to 30 September 2026, after fees, with distributions reinvested, from each provider's fact sheet. Past performance is not a reliable guide to future returns. Both ETFs are unhedged, which means their value in Australian dollars also moves with exchange rates. Our guide to hedged vs unhedged ETFs explains what that means for you.

Fees: a real but modest gap

IVV is one of the cheapest ETFs on the ASX. VGS costs more than four times as much in percentage terms. In dollars, the gap looks like this on a $100,000 holding:

That gap grows as your portfolio grows, and over a few decades it adds up to real money. It is the strongest argument for IVV. It is also worth knowing that cheaper global funds now exist, such as Betashares' BGBL, which we will compare with VGS in a later article.

Diversification: what the extra fee buys

More countries, more companies

VGS adds Japan, the UK, Canada, Switzerland, France, Germany and others, plus hundreds of mid-sized US companies that sit outside the S&P 500. If the US market has a long stretch of weak returns while other markets do better, that quarter of the fund outside the US gives you some protection.

That has happened before. There have been long periods, such as the 2000s, when US shares lagged the rest of the world. Nobody knows which market will lead over the next twenty years, and diversification is how you avoid having to guess.

Concentration in big tech

Both funds lean heavily on a handful of giant technology companies. Information technology made up about 32% of VGS at the end of September 2026, and IVV's ten largest holdings alone came to almost 39% of the fund. IVV is a little more concentrated because it has no non-US companies to dilute those names.

If those companies keep leading, IVV is likely to stay ahead. If they stumble, IVV will feel it more.

Why IVV has been ahead

Over the last five years IVV returned about 1.5 percentage points a year more than VGS. Most of that is simply the US market, and especially its largest technology companies, beating everyone else. A little of it is IVV's lower fee.

It is tempting to look at that table and pick the winner. But the reason IVV did better is the same reason VGS exists: concentration works brilliantly until it doesn't. Past returns tell you which market did well, not which one will.

Who each one might suit

VGS might suit you if

• You want one fund that covers most of the developed world outside Australia.
• You would rather not bet everything on a single country, even a very strong one.
• You value broad diversification more than the lowest possible fee.

IVV might suit you if

• You want the lowest-cost way to own large US companies.
• You are comfortable with having your international shares in one market.
• You plan to add other countries separately, or you already hold an all-in-one fund and want a US tilt.

Holding both

Some investors hold both, but because VGS is already about three-quarters US, adding IVV mostly increases your US weighting rather than adding new companies. If you want a mix, it is worth checking that the combined result is what you intended.

How they fit into a portfolio

Either ETF usually sits next to an Australian shares fund. Here are two simple examples, shown to illustrate the idea rather than as a recommendation:

The second mix is cheaper but leaves out every developed market except the US and Australia. For more ready-made splits, see DIY Wealth: 3 Simple ASX Model Portfolios. If you would rather have all of this handled for you in one fund, VDHG vs DHHF covers the all-in-one options.

Conclusion

VGS and IVV are both solid, low-cost ways to own the world's largest companies. IVV wins on fees and has won on recent returns, but it puts all your international money in one country. VGS costs more, yet spreads that money across about 1,200 companies and more than 20 countries, so you are not relying on the US to keep leading.

Decide how much you want to rely on a single market, pick the fund that matches, and set up regular investments. If you already hold one with a gain, think carefully before switching, because selling can trigger capital gains tax that wipes out years of fee savings.