There are lots of questions to answer about Vanguard Australian Shares Index ETF (ASX: VAS) and I’m going to cover five of the most common here.
Is VAS an ETF?
Yes, VAS is an ETF that tracks the S&P/ASX 300 Index (ASX: XKO). Put simply, that means it provides an investor exposure to 300 of the largest companies on the Australian stock exchange (ASX).
What companies are in the VAS ETF?
It holds the 300 companies that make up the S&P/ASX 300. The holdings change gradually over time as the market and size of the companies change.
Taking a closer look at its current top holdings, Commonwealth Bank of Australia (ASX: CBA) makes up 8% of the ETF, CSL Limited (ASX: CSL) is 6.4%, BHP Group Ltd (ASX: BHP) 6.1%, Westpac Banking Corp (ASX: WBC) 4.3% and National Australia Bank Ltd (ASX: NAB) is 4.1% of the VAS.
When looking at VAS holdings broken down by sector, the top 5 sectors are 29.1% financials, 19.4% materials, 10.6% healthcare, 8.3% consumer discretionary and 7.2% real estate.
What is the VAS dividend?
Most Australian investors use the term “dividend” as an umbrella term for payments from ASX listed entities. ETFs actually refer to this as an “equity yield” or “distribution”, so if you’re looking for the dividend of an ETF those are the specific terms you should look out for.
For simplicity sake, I’ll stick with the word dividend (as I am also partial to using it as an umbrella term).
The VAS dividend yield is 2.8% and pays quarterly in January, April, July and October each year.
Over the last 3 years the dividend yield has been an average of 3.87%. The lower current rate of 2.8% is probably down to the fact that interest rates have fallen to near zero and high yields are harder to come by lately.
What is the return on VAS?
Although we can look back at past returns, we can never truly know what the future returns will be on an investment. The old saying of “past performance is not an indicator of future performance” is a saying for a reason.
The average annual return, after fees, over the last 5 years for VAS has been 11.05%. This figure is made up of price growth (capital growth) and dividend payments.
Bonus question – what are the VAS fees?
Fees should be a huge consideration for any investor. Compounding is one of the reasons shares are so appealing. High fees can also compound and that can be painful over an investing lifetime.
The management fee for VAS is 0.10% each year. That means that if $5,000 was invested for one year the fees would total $5 for that one year.
It is hard to say exactly what would be an expensive management fee, each investor would have their own tolerance for fees. The returns after fees are more important to take note of. However I think that 0.10% is reasonable and is on the low end.
The diversification and hands-off investing balances out the fact that ETFs providers charge management fees and is certainly cheaper than other asset classes.
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