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Is Vanguard Australian Share ETF the best long-term investment?

Vanguard Australian Share ETF (ASX: VAS) is one of the most popular investments for Australian investors.

What is Vanguard Australian Share ETF?

It’s an exchange-traded fund (ETF), which is a diversified investment which owns lots of different assets or shares. The advantage of ETFs is that they can provide attractive diversification for very low management fee costs.

This particular ETF is focused on ASX shares within the ASX300. It’s invested in all of the ASX’s large blue chips including Commonwealth Bank of Australia (ASX: CBA), CSL Limited (ASX: CSL), BHP Group Ltd (ASX: BHP) and Westpac Banking Corp (ASX: WBC).

Why is it so popular?

Vanguard is a world leader in providing cheap investment options for investors. It can be hard to know which share to buy. It can be hard to beat the market. So why not just invest in the whole market?

The ETF has annual management fees of just 0.10% per annum, which is cheap even compared to industry super funds. The lower the fees the more of the net returns that are left with the investor, which makes a big difference with compounding.

Another attraction of the ASX share market is the relatively high dividend yield, partly because of franking credits and partly because Australian companies have a higher dividend payout ratio. It currently has a partially franked dividend yield of 3.8%.

Is it a good investment today?

Growth shares now make up a bit of more of the index than a few years ago with CSL and Macquarie Group Ltd (ASX: MQG) continuing to grow. This is better than owning banks, that’s for sure. 

The ASX is close to its all time high, so if you won the lottery or inherited a large sum I wouldn’t invest it all in one go right now.

It would be a decent option as part of a regular investment plan to ride the highs and lows of the ASX.

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Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns shares of CSL Ltd. The Motley Fool Australia owns shares of and has recommended Macquarie Group Limited. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.