How diversified is the Vanguard Australian Shares Index ETF?

We check the holdings of this popular exchange traded fund.

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Key points

  • Vanguard Australian Shares Index ETF has a portfolio that aims to match the ASX 300
  • The portfolio is weighted to the sectors of financials and materials
  • Some of VAS's biggest positions are in BHP, CBA, and CSL

Vanguard Australian Shares Index ETF (ASX: VAS) is an exchange-traded fund (ETF) that invests in ASX shares.

It’s one of the biggest ETFs on the ASX. At the end of February 2022, the ETF was around $10 billion in size.

How much diversification does the VAS ETF have?

The business tracks the S&P/ASX 300 Index (ASX: XKO).

That means it should have 300 holdings. This is more than an ETF focused on the S&P/ASX 200 Index (ASX: XJO), such as BetaShares Australia 200 ETF (ASX: A200). However, there are fewer holdings than an investment like iShares S&P 500 ETF (ASX: IVV).

Yet, there are two sectors that get most of VAS’s portfolio allocation. At the end of February 2022, 27.7% of the portfolio was invested in financial shares and 25% was invested in materials.

Looking at the other allocations, 9.4% was in healthcare, 7.3% was in real estate, 7.2% was in consumer discretionary, 5.8% was in industrials, 4.9% was in consumer staples, 4% was in communication services, 3.8% was in energy, 3.6% was in IT, and 1.3% was in utilities.

VAS ETF’s biggest holdings

While there are 300 holdings in the Vanguard Australian Shares Index ETF portfolio, some positions are much larger than others.

There are only approximately 20 positions that had a weighting of more than 1%.

On 28 February 2022, these were the ten biggest positions in the portfolio:

BHP Group Ltd (ASX: BHP) with a 11% allocation.

Commonwealth Bank of Australia (ASX: CBA) with a 7.4% allocation.

CSL Limited (ASX: CSL) with a 5.8% allocation.

National Australia Bank Ltd (ASX: NAB) with a 4.4% allocation.

Westpac Banking Corp (ASX: WBC) with a 3.7% allocation.

Australia and New Zealand Banking Group Ltd (ASX: ANZ) with a 3.4% allocation.

Macquarie Group Ltd (ASX: MQG) with a 3% allocation.

Wesfarmers Ltd (ASX: WES) with a 2.5% allocation.

Telstra Corporation Ltd (ASX: TLS) with a 2.2% allocation.

Rio Tinto Limited (ASX: RIO) with a 2% weighting.

There are five large financial institutions in the top ten holdings of the Vanguard Australian Shares Index ETF. Resources also feature with a large weighting, particularly with BHP’s significant position.

But at the other end of the portfolio are names like Ardent Leisure Group Ltd (ASX: ALG), Siteminder Ltd (ASX: SDR), Calix Ltd (ASX: CXL), and Aussie Broadband Ltd (ASX: ABB).

Dividend yield and management fee

Vanguard aims to make its management as low as possible for investors. It has an annual management fee of 0.10%.

According to Vanguard, the VAS ETF has a dividend yield of 4.2%.

Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns and has recommended CSL Ltd. The Motley Fool Australia owns and has recommended Telstra Corporation Limited and Wesfarmers Limited. The Motley Fool Australia has recommended Macquarie Group Limited, Westpac Banking Corporation, and iShares Trust - iShares Core S&P 500 ETF. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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