The Vanguard Australian Shares Index ETF (ASX: VAS) is the most popular exchange-traded fund (ETF) on the ASX by a large margin. So we know from the name itself that this ETF invests in Australian ASX shares. But which ones exactly? Time for a deep dive into the Vanguard Australian Shares ETF.
So the Vanguard Australian Shares Index ETF is an index fund at its core, as the name suggests. Instead of the more pervasive S&P/ASX 200 Index (ASX: XJO), this ETF instead follows the S&P/ASX 300 Index (ASX: XKO).
Thus, every share in the ASX 300 is also found in the underlying portfolio of the Vanguard Australian Shares ETF.
The ASX 300 is similar to the ASX 200, but instead of following the top 200 ASX shares on the share market by market capitalisation, it includes an additional 100 shares from the lower end of the market. This adds diversification and scope at the expense of weightings towards the top end of the ASX.
For example, the ASX's largest share, BHP Group Ltd (ASX: BHP), would have a weighting of around 10.4% in an ASX 200 ETF today. But in Vanguard's ASX 300 ETF, BHP only represents 9.02% of the portfolio at present. A small but significant difference.
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Which ASX stocks make up the Vanguard Australian Shares ETF?
But let's get into the weeds of the Vanguard Australian Shares ETF. So as of 31 October, these were the top ten holdings of the fund and their weightings in the fund's portfolio:
- BHP with a portfolio weighting of 9.02%
- Commonwealth Bank of Australia (ASX: CBA) with a weighting of 8.53%
- CSL Limited (ASX: CSL) with a weighting of 6.45%
- National Australia Bank Ltd (ASX: NAB) with a weighting of 4.91%
- Westpac Banking Corp (ASX: WBC) with a weighting of 4.03%
- Australia and New Zealand Banking Group Ltd (ASX: ANZ) with a weighting of 3.65%
- Woodside Energy Group Ltd (ASX: WDS) with a weighting of 3.26%
- Macquarie Group Ltd (ASX: MQG) with a weighting of 2.94%
- Wesfarmers Ltd (ASX: WES) with a weighting of 2.46%
- Telstra Group Ltd (ASX: TLS) with a weighting of 2.16%
So that's the top ten. But following these companies, there are names like Woolworths Group Ltd (ASX: WOW), Rio Tinto Limited (ASX: RIO), Fortescue Metals Group Limited (ASX: FMG) and Coles Group Ltd (ASX: COL) all in the top 20.
Like all index funds, constituents in the Vanguard Australian Shares ETF depend on the weightings of the index itself. So if a company does badly and its share price falls, its weighting in the index (and thus, the ETF) will also fall. Conversely, shares that are doing well will also rise over time.
That's why NAB, for example, is now the second-largest ASX bank share, where it was in fourth place just a few years ago. This makes an index ETF like this one a perfect 'bottom drawer' investment since it requires very little diligence from the investors themselves.
