Search by ticker code:
Generic filters

Search by ticker code:
Generic filters

Search by ticker code:
Generic filters

Is Vanguard Australian Shares Index ETF (ASX:VAS) the best way to invest in ASX shares?

Vanguard Australian Shares Index ETF (ASX: VAS) is one of the most popular ways to invest into ASX shares. But is it one of the best ways?

What is the VAS ETF?

An exchange-traded fund (ETF) is a pretty awesome way to invest in shares. It enables investors to buy a whole group of shares in a single investment. It’s like being able to buy a whole basket of groceries rather than having to pick out the items individually yourself.

ETFs can be focused on different investment areas such as the global share market, the Australian share market, the US share market, the video gaming sector, the cybersecurity sector and so on.

The Vanguard Australian Shares Index ETF, or VAS ETF, is about giving investors exposure to theĀ ASX 300. That’s an index of 300 of the biggest businesses on the ASX.

Positives of the VAS ETF

It’s certainly one of the cheapest ways to access ASX shares. Lower management costs means that more of the investment returns are left in the hands of the investors, which is obviously good for long-term wealth growth. The VAS annual fee is just 0.10%.

The number of businesses (300) that it gives exposure to is attractive diversification. If there’s a problem with any individual business, it means that the impact will be less.

Also, the companies that make up the biggest allocations of this investment are predominately high dividend yield payers. That means investors who like income will receive an attractive amount of investment income from the portfolio.

Why it may not be the best

One of the main problems with the VAS ETF is that its biggest holdings are concentrated in the financial and resources space.

Companies likeĀ Commonwealth Bank of AustraliaĀ (ASX: CBA),Ā Westpac Banking CorpĀ (ASX: WBC),Ā Macquarie Group LtdĀ (ASX: MQG),Ā BHP Group LtdĀ (ASX: BHP) and Rio Tinto LimitedĀ (ASX: RIO) don’t have much growth potential because of their size and industry.

I think that VAS ETF is a decent option, don’t get me wrong. The passive investing means most people will do fine and track the performance of the broader share market.

But ASX blue chips are at a disadvantage for the long-term. The smallerĀ ASX shares have more growth potential in my opinion. That’s why I like investment options likeĀ WAM Microcap LimitedĀ (ASX: WMI) and Ophir High Conviction Fund (ASX: OPH) which could produce stronger total returns over the coming years.

WAM Leaders LtdĀ (ASX: WLE) is another investment that invests in ASX blue chips, but it has shown it can deliver outperformance by being a bit more active with its positions.

Summary thoughts on the VAS ETF

The ETF isn’t a bad option. But I think over the next five to ten years, there are other diversified investments that look at ASX shares that could be better.

$50,000 per year in passive income from shares? Yes, please!

With interest rates UP, now could be one of the best times to start earning passive income from a portfolio. Imagine earning 4%, 5% — or more — in dividend passive income from the best shares, LICs, or ETFs… it’s like magic.

So how do the best investors do it?

Chief Investment Officer Owen Rask has just released his brand new passive income report.Ā Owen has outlined 10 of his favourite ETFs and shares to watch, his rules for passive income investing, why he would buy ETFs before LICs and more.

You can INSTANTLY access Owen’s report — or get it emailed to you — for FREE by CLICKING HERE NOW or the button below.

Unsubscribe anytime. Read ourĀ Terms,Ā Financial Services Guide,Ā Privacy Policy. Weā€™ll never sell your email address. Our company is Australian owned.

Information warning: The information on this website is published by The Rask Group Pty Ltd (ABN: 36 622 810 995) isĀ limited to factual information or (at most) general financial advice only. That means, the information and advice does not take into account your objectives, financial situation or needs. It is not specific to you, your needs, goals or objectives. Because of that, you should consider if the advice is appropriate to you and your needs, before acting on the information. If you donā€™t know what your needs are, you should consult a trusted and licensed financial adviser who can provide you with personal financial product advice. In addition, you should obtain and read the product disclosure statement (PDS) before making a decision to acquire a financial product. Please read ourĀ Terms and ConditionsĀ andĀ Financial Services GuideĀ before using this website. The Rask Group Pty Ltd is a Corporate Authorised Representative (#1280930) of AFSL #383169.

At the time of publishing, Jaz owns shares of WAM Microcap.
Skip to content