Vanguard's Ethically Conscious Australian Shares ETF (ASX: VETH) is a diversified exchange-traded fund (ETF) that uses an ethical screen on the top 300 ASX-listed shares.
While the ETF underperformed the S&P/ASX 300 Index (ASX: XKO) in the past year, it still managed to deliver 15.3% before dividends.
So, let's grasp an understanding of what this ETF is exactly.
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Investing in ASX shares without the baggage
ETFs are a popular way for investors to gain exposure to a specific sector, index, or thematic in a single transaction. One increasingly popular thematic is ethical investing.
There are many options available when it comes to providers of ethical investing ETFs, however, today we're taking a look at Vanguard's Ethically Conscious Australian Shares ETF.
This one considers the top 300 companies listed on the ASX with an added filter. Specifically, the fund excludes companies with significant business activities involving fossil fuels, nuclear power, alcohol, tobacco, gambling, weapons, adult entertainment, and a conduct-related screen based on severe controversies.
As a result, the fund holds 238 ASX-listed companies with a median market capitalisation of $35.9 billion. According to the fund, the price-to-earnings (P/E) ratio of the ETF came to 20.5 times as at 31 May 2021.
Passive income investors would also be pleased to know that VETH ASX currently has a dividend yield of 2.6%.
What companies are in VETH ASX?
For most investors, you want to know exactly what is in the financial product your hard-earned dollars are going towards. For that reason, here are the top 10 holdings of the Vanguard Ethically Conscious Australian Shares ETF:
- Commonwealth Bank of Australia (ASX: CBA)
- CSL Limited (ASX: CSL)
- Westpac Banking Corp (ASX: WBC)
- National Australia Bank Ltd (ASX: NAB)
- Australia & New Zealand Banking Grp Ltd (ASX: ANZ)
- Wesfarmers Ltd (ASX: WES)
- Fortescue Metals Group Ltd (ASX: FMG)
- Macquarie Group Ltd (ASX: MQG)
- Telstra Corp Ltd (ASX: TLS)
- Transurban Group (ASX: TCL)
These top 10 holdings make up 48.9% of the total ETF. But how does VETH's top 10 differ from the unfiltered ASX 300? Well, the notable exclusions include BHP Group Ltd (ASX: BHP) and Woolworths Group Ltd (ASX: WOW).
However, the latter might be considered now that Woolies has demerged from its alcohol business, Endeavour Group Ltd (ASX: EDV)
Finally, one of the most important considerations for an ETF… the costs. Investors can expect a 0.16% per annum management fee in addition to 0.01% of indirect costs.
At the time of writing, the ASX-listed VETH is trading for $58.93 per unit.
