The Vanguard Australian Shares Index ETF (ASX: VAS) went up by around 7% over March 2022.
This was an outperformance of other exchange-traded funds (ETFs) such as iShares S&P 500 ETF (ASX: IVV) which only rose by 3.3%.
The VAS ETF is one of the largest ETFs on the ASX. The fund size is currently around $10 billion, according to Vanguard. It has an annual management fee of 0.1% per annum.
Each ETF's performance is decided by the underlying holdings, less the management fee. Vanguard Australian Shares Index ETF tracks the S&P/ASX 300 Index (ASX: XKO).
Therefore, it's the biggest positions in the portfolio that can have the most significant influence on the direction of the ASX 300.
VAS ETF holdings
At the end of February 2022, these were the fund's biggest positions:
BHP Group Ltd (ASX: BHP) was 11% of the portfolio.
Commonwealth Bank of Australia (ASX: CBA) was 7.4% of the portfolio.
CSL Limited (ASX: CSL) was 5.8% of the portfolio.
National Australia Bank Ltd (ASX: NAB) was 4.4% of the portfolio.
Westpac Banking Corp (ASX: WBC) was 3.7% of the portfolio.
Australia and New Zealand Banking Group Ltd (ASX: ANZ) was 3.4% of the portfolio.
Macquarie Group Ltd (ASX: MQG) was 3% of the portfolio.
How did the top 3 perform?
The Vanguard Australian Shares Index ETF's portfolio only has three positions with a weighting of more than 5% of the portfolio. All the 300 positions were part of the VAS ETF return of approximately 7% in March 2022, but the biggest three could have the most influence.
Over March, the BHP share price increased by almost 11% amid the Russian invasion of Ukraine, which saw both the iron ore price and the oil price increase. BHP produces both of those commodities.
The CBA share price rose by 13% over the month amid further talk and market commentary on inflation and the potential of interest rate rises. Some analysts believe that a rising interest rate environment will positively affect bank net interest margins (NIMs).
The CSL share price rose by 3% last month. That wasn't as much as BHP and CBA but it was still a gain.
How has April started for the VAS ETF?
The Vanguard Australian Shares Index ETF is down 1.6% in the first few days of April 2022, but there is plenty more of the month left.
Interestingly, senior portfolio manager and principal of Auscap Asset Management Tim Carleton said to Livewire:
There is a massive push to diversify out of Australia, but I think you want to be as overweight Australia as you can possibly stomach for the rest of our lifetimes.
That's certainly been the right way over the last 100 years, with the Australian market delivering the best returns of any developed market, at around 12% a year, and I see no reason for that to change and if anything, we're in a better position now than we have been.
Mr Carleton referred to three advantages that Australia supposedly has: its natural resources, its "relatively strong population growth over the medium term", and its proximity to the high growth and rapidly-developing Asian economies.
