Vanguard Australian Shares Index ETF (ASX:VAS)
The Vanguard VAS ETF provides exposure to the largest 300 Australian shares, based on market capitalisation. This is a low-cost way to access top Australian companies through a single fund.
VAS ETF review
VAS share price and fees
The Vanguard Australian Shares Index ETF (ASX: VAS) is Australia’s largest ETF — and by a very long way. With $11 billion of investments in the VAS ETF as of July 2022, the next closest index fund ETF is iShares S&P 500 ETF (ASX: IVV) with $5 billion. That’s a huge difference considering there are over 200 ETFs in Australia.
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VAS is unique
The Vanguard Australian Shares ETF is simple but unique — it buys and holds the top 300 shares on the Australian stock exchange, ranked by size/market capitalisation. VAS tracks the S&P/ASX 300 index, making it relatively unique amongst its peers.
Vanguard is the issuer of the VAS ETF and has decades of experience providing similar types of ETFs and index funds. Other big ETFs provided by Vanguard include Vanguard MSCI International Shares ETF (ASX: VGS) and Vanguard Total US Market Shares ETF (ASX: VTS).
The key alternative Australian shares ETFs to VAS are as follows:
- BetaShares Australia 200 ETF (ASX: A200) – follows a Solative index that tracks the largest 200 shares. Given its market-capitalisation weighted, it’s nearly an identical portfolio to VAS. A200’s fees are slightly lower, at 0.07% per year, but VAS’ are falling over time and are broadly comparable (0.1%).
- iShares S&P/ASX 200 ETF (ASX: IOZ) – follows the S&P/ASX 200 index, so Australia’s top 200 shares. Like Betashares it’s a portfolio that’s very similar to VAS, though VAS includes an extra 100 securities in the mid-cap space, giving it a little more volatility than IOZ but, potentially, slightly more performance over time. With a fee load of 0.09%, it has nearly identical fees to VAS.
- SPDR S&P/ASX 200 ETF (ASX: STW) – virtually the same portfolio as IOZ and A200, and one of Australia’s longest-running ETFs. With a fee of 0.13% per year, it’s slightly more expensive than VAS.
- VanEck Australian Equal Weight ETF (ASX: MVW) – this ETF from VanEck invests in around 100 shares and rebalances so they are ‘equally weighted’ (around 1% holdings). This means it ‘trades’ the portfolio more than VAS (which uses a market cap weighted weighting methodology) to rebalance. It also means MVW portfolio is less diversified by securities. It also turns out to be broadly the same as VAS in terms of sector weightings.
- Vanguard High Yield Australian Shares ETF (ASX: VHY) – this Vanguard ETF targets Australian shares that pay dividends and ends up with a portfolio between 65 and 80 securities (typically). The VHY portfolio is more concentrated and focused on dividend income than VAS, which means it may suit investors in retirement or those looking to produce a higher level of passive income in their portfolio.
How VAS can be used
The VAS ETF can be used by investors to get exposure to Australian shares/equities, with a tiny cost per year (0.1%). Basically, buying VAS is like ‘owning the market’ for next to nothing. This is one reason why VAS has proven to be so popular.
Given VAS’ unique focus on the top 300 Australian shares, as opposed to the top 200 followed by most competing ETFs, VAS captures some exposure to the small and medium-sized companies on the ASX. That is, the companies ranked between 200 and 300 in size.
With low costs, diversification, dividend income and franking credits, it’s easy to see why VAS is the most popular ‘Core’ ETF in Australia.
It should be noted that if you own similar ETFs, such as A200, STW, IOZ or MVW, you’re going to have a lot of ‘overlap’ in your portfolio if you own more than one of these ETFs.
VAS ETF holdings
- BHP Group Ltd
- Commonwealth Bank of Australia
- CSL Ltd
- National Australia Bank Ltd
- Westpac Banking Corp
- Australia & New Zealand Banking Group Ltd
- Woodside Energy Group Ltd
- Macquarie Group Ltd
- Wesfarmers Ltd
- Telstra Corp. Ltd
If you’re comparing VAS to other index fund shares ETFs, its risk level should be relatively the same.
However, compared to bond ETFs, VAS will be riskier (volatile).
Given it is an Australian shares ETF, investors should consider VAS as part of the ‘risk on’ side of a portfolio and seek to hold the ETF for a minimum of 7 years to ensure the portfolio is given time to produce results in most market environments.
Does VAS pay franking credits?
Yes. VAS will pay or ‘pass through’ the franking credits it receives from its holdings. If you’re especially focused on fully franked dividend income you might try something like the VHY ETF (also from Vanguard) as either a complement or replacement to VAS.
Founder of Best ETFs Australia, lead analyst of Rask Core
This chart shows the yearly performance of the chosen ETF to key asset classes of Aussie shares (ASX: VAS) and US shares (ASX: IVV). You can use this chart to visualise how the ETF responds to different market environments. We recommend using a 5+ year time horizon for comparisons. The chart compares price return only.
What does the VAS ASX ETF invest in?
The VAS ETF invests in Australian shares, which offer growth and income potential. You could buy all of these companies yourself using a share brokerage account, but that would be a very expensive and time-consuming process. ETFs are an effective way to invest in an entire sector or index through a single trade.
What do investors use the VAS ETF for?
The VAS ETF could be used by investors to get exposure to a broad basket of Australia’s largest public companies, which are likely to grow their profit over time and pay regular tax-effective dividends to their shareholders.
How to buy the VAS ETF
Did you know: You can invest in any ASX-listed ETF for $6.50 (or less)?
Latest ETF News
ASX: VAS technical analysis
The Best ETFs technical analysis chart pack shows the 12-month share price movements, Stochastic bands and traded volume (for both up and down days). This chart uses end-of-day data, so it’s for illustrative purposes only.
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*The warnings on this page are applied by our ETF research team. Please know that these warnings are based on quantitative metrics and our internal methodology. These risks are not exhaustive and therefore they should not be relied upon. Always read the PDS of the function and speak to your financial adviser before acting on this information.
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