I think that the Vanguard Australian Shares Index ETF (ASX: VAS) share price is a buy.
At the moment the Vanguard Australian Shares Index ETF share price is down around 17.5% from the pre-coronavirus selloff high. That’s still a pretty large decline if you ignore where it was in March 2020. We don’t have a time machine to go back to that price.
All we can decide is whether today is a good time to buy or not to buy the exchange-traded fund (ETF).
Things are certainly looking up compared to a couple of months ago. The infection numbers are very low across the country and not as many people are on jobkeeper as feared.
Perhaps that means that the Australian economy won’t be as bad as expected? Let’s hope so.
In that context, I think it’s good to consider if the Australian share market is worth buying.
Is it time to buy Vanguard Australian Shares Index ETF?
At the moment the ASX banks like Commonwealth Bank of Australia (ASX: CBA), Westpac Banking Corp (ASX: WBC), National Australia Bank Ltd (ASX: NAB) and Australia and New Zealand Banking Group (ASX: ANZ) are at low share prices. It’s a large reason why the Vanguard Australian Shares Index ETF share price is down as much as it is.
I’ve always said that I’m not a big fan of investing in banks. So being able to buy the ETF when the banks are a smaller allocation than before is attractive to me. I’d rather get more exposure to shares like CSL Limited (ASX: CSL), Macquarie Group Ltd (ASX: MQG) and Wesfarmers Ltd (ASX: WES).
As time goes on it’s growing shares like A2 Milk Company Ltd (ASX: A2M), Altium Limited (ASX: ALU), Aristocrat Leisure Limited (ASX: ALL), Fisher & Paykel Healthcare Corp Ltd (ASX: FPH) and Amcor Plc (ASX: AMC) that become a bigger part of the ETF.
We can’t decide how much each share makes up of the Vanguard Australian Shares Index ETF, we can just buy the whole ETF at today’s price. In the future the ETF may have shares like CSL, Wesfarmers and Xero Limited (ASX: XRO) at the very top of the holdings.
So, I think it could be a good idea to buy the ETF at a lower price, particularly as the Australian dollar is so strong right now. It means we can buy the earnings of shares that make earnings in US dollars, such as CSL, at a lower price in Australian dollars. I’d happily buy the Vanguard Australian Shares Index ETF today for the long-term.
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Tristan Harrison owns shares of Altium. 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 Amcor Limited and Macquarie Group Limited. The Motley Fool Australia owns shares of A2 Milk, Altium, Wesfarmers Limited, and Xero. 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.
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