Is the Vanguard Australian Shares ETF a good buy at current prices?

Could the VAS ETF be an opportunity for investors?

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Key points

  • Experts have had their say on the VAS ETF 
  • One expert said it was a buy, while the other rated it as a hold 
  • The VAS ETF tracks the ASX 300, which includes names like BHP, CBA and CSL 

The Vanguard Australian Shares Index ETF (ASX: VAS) is an exchange-traded fund (ETF) that’s invested in ASX shares. Could it be a good time to invest in the VAS ETF at the current price?

It tracks the S&P/ASX 300 Index (ASX: XKO), which represents a list of 300 of the biggest businesses on the ASX.

Some of the biggest names in the portfolio are ones like BHP Group Ltd (ASX: BHP), Commonwealth Bank of Australia (ASX: CBA) and CSL Limited (ASX: CSL).

But could it be time to buy the ETF?

Expert thoughts on the VAS ETF

In a recent episode of ‘buy hold sell’ on Livewire, Felicity Thomas from Shaw and Partners and Ben Nash from Pivot Wealth gave their opinion on the VAS ETF.

For Ben Nash, he thought that the Vanguard Australian Shares ETF is a buy because it is “rock solid” and “nice and cheap”.

According to Mr Nash, the VAS ETF offers a good yield and it can provide inflation protection with the “growth element” of the ETF. He concluded that it’s “definitely a buy”.

While the Vanguard Australian Shares ETF may not be far off its all-time high, the “cheap” comment may refer to the fact that the VAS ETF has an annual management fee of 0.10%. This is a fraction of the fee that active fund managers typically charge.

However, Felicity Thomas was less enthusiastic about the ASX-based ETF. She called the VAS ETF a “hold”. Ms Thomas noted that the ASX 300 is trading at 14 times its earnings. However, the VAS ETF share price is “quite high” according to the expert. In her opinion, the Vanguard Australian Shares ETF could be more attractive in a dip like the market saw during January and February 2022.

How is an ETF price affected?

The Vanguard Australian Shares ETF return is dictated by the movement of share prices of the underlying holdings.

So, the bigger holdings like BHP, CBA, CSL, National Australia Bank Ltd. (ASX: NAB), Westpac Banking Corp (ASX: WBC), Australia and New Zealand Banking Group Ltd (ASX: ANZ), Macquarie Group Ltd (ASX: MQG), Wesfarmers Ltd (ASX: WES) and Telstra Corporation Ltd (ASX: TLS) have a larger influence on the returns of the ETF.

The smaller positions are part of the overall picture, but they have a much smaller impact on the price change of the VAS ETF. Names like Estia Health Ltd (ASX: EHE), Mystate Limited (ASX: MYS), Sigma Healthcare Ltd (ASX: SIG), Service Stream Limited (ASX: SSM) and Austal Limited (ASX: ASB) are some of the smallest positions in the portfolio.

According to Vanguard, at the end of February 2022, the ETF had a dividend yield of 4.2% and a price/earnings ratio (P/E ratio) of 14.

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 Austal Limited and 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 and Westpac Banking Corporation. 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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