The Vanguard Australian Shares Index ETF (ASX: VAS) is the biggest exchange-traded fund (ETF) on the ASX. But is it a great opportunity?
It's probably the best way to get exposure to the S&P/ASX 300 Index (ASX: XKO), which represents 300 of the biggest businesses on the ASX.
Investors that have a regular investment plan to automatically invest in the ETF every month probably don't need to worry about what the latest price is – it might be best to keep things automatic and keep investing.
It's understandable why some investors have an automatic investment plan with this option because of the diversified portfolio with 300 ASX blue chip positions, and the low management fee of 0.10%.
Is this a good time to buy the Vanguard Australian Shares Index ETF?
The ETF has risen by 6% since the start of 2023, so it's not as cheap as it used to be. But, it's down by around 5% over the last 12 months.
Within the portfolio, ASX financial shares and materials make up just over 52% of the overall portfolio. So, the valuation of ASX mining shares and ASX bank shares can have a major impact.
I think that the valuations of BHP Group Ltd (ASX: BHP), Rio Tinto Limited (ASX: RIO) and Fortescue Metals Group Limited (ASX: FMG) aren't cheap as the miners are making good profit at the moment thanks to solid iron ore prices.
ASX bank shares like Commonwealth Bank of Australia (ASX: CBA), Westpac Banking Corp (ASX: WBC), National Australia Bank Ltd (ASX: NAB) and ANZ Group Holdings Ltd (ASX: ANZ) have dropped compared to earlier this year, though I wouldn't exactly call them cheap with higher profitability after higher interest rates.
I'm not going to judge whether each individual business is cheap within the Vanguard Australian Shares Index ETF, but overall I'd say that it isn't dirt cheap right now. Last year it was priced at around $80 when it did seem very appealing.
It can perform well
An investment doesn't need to be incredibly cheap to count as a good investment.
Since the ETF's inception in May 2009 to February 2023, it has delivered an average return per annum of around 9%. That's decent, in my opinion. However, 4.6% per annum of that return was distributions, so there hasn't been a lot of capital growth.
If I were looking for long-term capital growth, there are other ETFs I'd pick over Vanguard Australian Shares Index ETF.
