The Vanguard Australian Shares Index ETF (ASX: VAS) is an exchange-traded fund (ETF) well known by ASX investors. So much so that it is, and by quite a distance, the most popular index fund on the ASX.
The VAS ETF has had a pretty average year in 2023 to date. At present, Vanguard Australian Share ETF units are up by just over 3% this year so far.
But this July, it might just be a great chance to pick up some more. Here are three reasons why.
3 reasons to buy the Vanguard Australian Shares Index ETF (VAS) on the ASX in July
ASX diversification with VAS
One of the reasons ASX investors seek out the VAS ETF is the instant and inherent diversification this fund offers, all in one ticker code. The Vanguard Australian Shares ETF may be a single fund. But it offers investors exposure to a portfolio of 300 of ASX’s largest shares by market capitalisation.
That includes everything from Commonwealth Bank of Australia (ASX: CBA), Woolworths Group Ltd (ASX: WOW) and Fortescue Metals Group Limited (ASX: FMG) to Telstra Group Ltd (ASX: TLS) and Harvey Norman Holdings Limited (ASX: HVN).
That makes this investment theoretically a lot safer than an individual share since it is really an investment in 300 different companies, which spans every sector of the market.
So if you don’t know which shares are worth buying this July, why not buy them all with this ETF?
Dividends
ASX shares are well known for their dividend prowess. Many investors and retirees that seek passive income do so by investing in generous dividend payers like CBA, Westpac Banking Corp (ASX: WBC), Telstra and BHP Group Ltd (ASX: BHP).
Because the Vanguard Australian Shares ETF holds all of these shares, and more, it too receives dividend income. The fund then passes on this income to its own investors in the form of quarterly dividend distributions. Over the past 12 months, VAS units have paid out a total of $3.67 per unit (including the upcoming distribution this month).
That gives this ETF a solid trailing dividend yield of 4.15%.
Given the income this fund pays out is an aggregate of all 300 shares in the portfolio, it tends to fluctuate. But as long as the ASX is stocked full of generous dividend-paying shares, you will get a slice of the income action with this ETF.
Solid long-term performance
Of course, none of the above matters much if investors don’t get a solid return from their capital with the Vanguard Australian Shares ETF. Fortunately, this fund has been around for a long time (since 2009) and has established a solid track record since its inception.
Vanguard investors have enjoyed an average return of 7.11% per annum over the past five years (to 30 June), and 8.47% per annum over the past ten. Since its inception, it has averaged 8.79% per annum. Those figures assume the reinvestment of dividends.
That’s a far better long-term performance than many other investments can offer, particularly cash assets like term deposits.
