Vanguard FTSE Developed Asia Pacific ex Japan ETF: July 2026 update

• Vanguard is a pioneer in index investing and launched its first ETF in 2001

• This ETF invests a significant amount in countries like Australia and South Korea

• It has tracked the FTSE Developed Asia Pacific ex Japan Index closely since launch

How it fits in a portfolio

An ETF is a basket of investments that often includes company shares or bonds. They tend to track the performance of an index such as the FTSE Developed Asia Pacific ex Japan Index and trade on stock exchanges, like shares. This means that their price fluctuates throughout the day.

Find out more about ETFs

The Vanguard FTSE Developed Asia Pacific ex Japan ETF invests in large and medium-sized companies in developed markets across the Asia Pacific region, excluding Japan.

An ETF is one of the simplest ways to invest and can be a low-cost starting point for an investment portfolio aiming to deliver long-term growth. Given the regional exposure, this ETF could add diversification to the Asian portion of a global portfolio and sit alongside other funds focused on areas like the US or Europe.

Manager

Vanguard is a pioneer when it comes to index investing, having created the first retail index fund in 1976. It now runs some of the largest index funds and ETFs in the world. Given its size, it has a big investment team with the expertise and resources to help its ETFs track indices and markets as closely as possible, while having the scale to keep costs down.

Vanguard ETFs are run by a large, global team. They’re spread across three investment hubs around the world – the US, UK and Australia. This team-based approach means that there’s no named manager on the ETF. Vanguard has run this ETF since 2013.

Vanguard also has a trading analytics team, which is responsible for ensuring that the ETFs buy and sell investments efficiently and at a competitive cost. This involves analysing data from different brokers and banks. Lower costs should help the ETFs track their benchmarks as tightly as possible.

Process

This ETF aims to track the performance of the FTSE Developed Asia Pacific ex Japan Index. It does this by investing in every company in the index and in the same proportion. This is known as full replication and can help the ETF closely match the performance of the benchmark.

The ETF currently invests in 376 companies. South Korea and Australia are the ETF’s largest country exposures, accounting for 54.8% and 29.5% respectively at the end of June 2026. The remainder is invested in Hong Kong, Singapore and New Zealand. Key sectors include financials, technology and telecommunications.

Over the past year, the amount invested in South Korea has increased significantly, resulting in a greater share of the ETF being invested in the technology sector. The ETF’s biggest holdings are Samsung Electronics and SK Hynix, which made up 17.6% and 16.7% of the ETF respectively as of 30 June. As these two companies account for around a third of the ETF, their performance can have a meaningful impact on its overall returns.

Reducing costs is a key part of keeping the difference in performance between the ETF and the benchmark to a minimum. In any ETF, factors like taxes, dealing commissions and spreads, and the cost of running the ETF all drag on performance. To help keep these costs down, the team aims to make large investments in companies instead of lots of small transactions.

Vanguard will also lend some of the investments in the ETF to other providers in exchange for a fee, which can offset some of the costs. It will lend securities to only a limited number of high-quality approved dealers. Vanguard indemnifies the fund against any loss from this process, meaning that there should be no negative impact on investors. However, stock lending adds risk.

As this ETF is listed offshore, investors are not usually entitled to compensation from the UK Financial Services Compensation Scheme.

Culture

Vanguard is one of the largest asset managers in the world and manages around $12trn of assets globally. The group aims to put the client at the forefront of everything it does, which drives its focus on quality, low-cost index products.

John Bogle founded Vanguard in 1975, and it’s owned by investors. This allows Vanguard to redirect its profits to investors in the form of lower fees, instead of paying dividends to external shareholders. Bogle believed in creating products that simply track the performance of a market rather than taking a shot at picking individual companies that may beat them.

The team running this ETF works closely with other equity research and risk departments across the business. They have daily and weekly meetings to discuss ongoing strategy which could add good support and challenge on how to run the ETF effectively.

ESG Integration

Vanguard is predominantly an index fund house. Although it has offered exclusions-based index funds for many years, it has lagged peers in offering index funds that explicitly integrate Environmental, Social and Governance (ESG) criteria by tracking indices that tilt towards companies with positive ESG characteristics and away from those that don’t.

Vanguard’s Investment Stewardship team carries out most of the firm’s voting and engagement activity. Its stewardship activity is grounded in the firm’s four principles of good governance: board composition and effectiveness, board oversight of strategy and risk, executive pay, and shareholder rights.

The Investment Stewardship team produces frequent insights on their engagement activity at both a corporate and governmental level. Investors can also access fund-by-fund proxy voting records, although voting rationales are not provided. That said, voting and engagement case studies can be found in the firm’s annual Investment Stewardship report and quarterly Engagement and Voting reports.

Vanguard courted controversy in 2022 when it left the Net Zero Asset Managers’ Initiative, a group of asset managers that have committed to achieving net zero carbon emissions by 2050. Vanguard claimed that its decision would improve clarity for investors and allow it to speak independently. We view this as a disappointing backward step. Furthermore, in 2024 and 2025, it was reported that Vanguard failed to support a single shareholder proposal requiring more action from investee companies on environmental and social matters.

The Vanguard FTSE Developed Asia Pacific ex Japan ETF tracks an index that doesn’t specifically integrate ESG considerations into its process. The ETF will therefore invest in shares issued by companies in any sector in line with the benchmark.

Cost

The ETF currently has an ongoing annual fund charge of 0.15%. Ensuring that an ETF has a low charge is an important part of tracking the underlying index closely.

The annual charge to hold ETFs in the HL Stocks & Shares ISA, SIPP or Fund & Share Account is 0.35% (capped at £150 p.a. in each account) and 0.25% in the HL Lifetime ISA (capped at £45 p.a.). There are no charges from HL to hold ETFs within the HL Junior ISA. As ETFs trade like shares, both a buy and sell instruction will be subject to the HL share dealing charges.

Learn more about the difference between ETFs and index tracker funds

Performance

Since launch in May 2013, the ETF has tracked the index well, rising 231.4%* during this time. As expected, it has lagged the benchmark over the long term because of the costs involved in running the ETF. However, the tools used by the managers have helped to keep performance close to the index.

Over the past 12 months, the ETF has gained 78.4%. Remember, past performance isn’t a guide to future returns.

South Korea was the best-performing market and a significant contributor to the ETF’s returns. This was driven by the technology sector, as leading semiconductor companies, like Samsung Electronics and SK Hynix, benefited from strong demand for the memory chips used in artificial intelligence (AI) systems. This has boosted their profits and share prices.

Not all Pacific ex Japan ETFs track benchmarks that include South Korea. As South Korea has performed so strongly over the past year, ETFs that include it, like this one, have performed better than ones that don’t. This difference has been larger than we’d usually expect.

It's important to remember, however, that South Korea is unlikely to be the best-performing market every year and that different markets move in and out of favour over time.

Given Vanguard’s size, experience and expertise running ETFs, this ETF should continue to track the index well in future, though there are no guarantees.