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Vanguard Australian Shares Index ETF (VAS)

ASX Code: VAS
Index: S&P/ASX 300

The Vanguard Australian Shares Index ETF is one of the lowest cost funds that invests in an Australian Index. It invests in the top 300 Australian companies according to their size.
That is, it invests according to the S&P/ASX 300 Index.

Historically most Australian investors bought a whole portfolio of Australian companies to achieve the same result as this fund provides in one purchase. The Australian market has been among the world’s best historically and gives tax advantages to Australian taxpayers via Franking Credits. It has produced returns of around 9% plus Franking Credits for the last three decades. Only in the last decade or so have significant numbers of Australian investors looked to the US for higher returns.

Retaining some Australian shares in a portfolio is sensible. It avoids the currency effects of investing overseas or the costs of hedging to mitigate them. It gives you investment in local companies, many of which you will know. It is the lowest cost way to give yourself ownership of a very broad group of large businesses in one holding. This is a core holding that a portfolio can be built around. A $1,000 or $1m investment could be reasonable in this ETF.

Check out the Vanguard website Click here to better understand what you may own if you buy shares in this ETF. You do not need to buy your shares directly from the fund manager, or Issuer (in this case Vanguard). They market their own share trading platforms heavily. You can choose your preferred share trading platform. Click here to read about share trading platforms.

An alternative ETF is the Betashares Australia 200 ETF (A200) that invests in the top 200 companies in Australia weighted by size. It has slightly lower fees than VAS, but it may be prudent to use the Vanguard offering if you are considering investing in another Betashares issued ETF such as HNDQ. If all of your share investment funds are to be directed into ETFs, then owning multiple ETFs that are managed by different companies spreads whatever risk there may be from the Issuer around.

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