Vanguard Australian Shares Index ETF (ASX: VAS) has fully recovered from the COVID-19 share market crunch. Is it time to buy?
What’s the VAS ETF?
This exchange-traded fund (ETF) aims to provide a low cost exposure to ASX 300 (ASX: XKO) shares.
The ASX 300 essentially covers most of the market capitalisation of the Australian share market. It covers 300 of the largest businesses on the ASX.
You’ve probably heard of most, if not all, of the top 10 holdings: Commonwealth Bank of Australia (ASX: CBA), BHP Group Ltd (ASX: BHP), CSL Limited (ASX: CSL), Westpac Banking Corp (ASX: WBC), National Australia Bank Ltd (ASX: NAB), Australia and New Zealand Banking Group Ltd (ASX: ANZ), Wesfarmers Ltd (ASX: WES), Macquarie Group Ltd (ASX: MQG), Woolworths Group Ltd (ASX: WOW) and Rio Tinto Limited (ASX: RIO).
There are also businesses like Breville Group Ltd (ASX: BRG), Afterpay Ltd (ASX: APT) and Xero Limited (ASX: XRO) in there.
Cheap fees
The very low cost of this investment is one of the most attractive things about the ETF. Fees don’t benefit the investor, particularly when it comes to an index-tracking option like this one.
VAS ETF has an annual management fee of just 0.10%. That’s one of the cheapest options on the market.
Returns
Obviously the investment returns are probably the most important thing about choosing shares.
Over the last 10 years, the VAS ETF has returned an average of 8.2%. More than half of the return has been generated by dividends, so there hasn’t been much capital growth. But the last five years have shown a total net return of 10.3% per year. Not too bad.
Is it time to buy the VAS ETF?
The ASX is weighted towards cycling businesses like miners and banks. It’s normally not a smart thing to buy an investment at the top of the cycle of strength, so I think it might be wise to consider different options that aren’t so weighted towards resources and financials. It’s not a terrible option for dividend income though.
Those large ASX blue chips are not in the tech space. Most of them don’t offer the type of long term growth that international names like Microsoft, Alphabet or ASML do.
