One of the most popular exchange-traded funds (ETFs) on the Australian share market is the Vanguard Australian Shares Index ETF (ASX: VAS).
How popular? Well, at the last count, it had over $12 billion of assets under management.
Let's put that into context. That is greater than the market capitalisations of shares such as AGL Energy Limited (ASX: AGL), Qantas Airways Limited (ASX: QAN), and Medibank Private Ltd (ASX: MPL).
In fact, the VAS ETF is so large it would scrape into the illustrious ASX 50 index if it were a listed company.
But what actually is the Vanguard Australian Shares Index ETF? Let's dig deeper into it.
The Vanguard Australian Shares Index ETF
The VAS ETF is a low-cost (0.07% p.a. management fee), diversified, index-based exchange-traded fund that aims to track the ASX 300 index.
This index is home to 300 of the largest Australian companies measured by market capitalisation.
So, as well as giving you access to the large caps listed above, in addition to behemoths such as BHP Group Ltd (ASX: BHP) and Commonwealth Bank of Australia (ASX: CBA), the ETF also give you exposure to smaller listed companies.
The latter includes footwear retailer Accent Group (ASX: AX1), computer hardware and software distributor Dicker Data Ltd (ASX: DDR), and AV network developer Audinate Group Ltd (ASX: AD8).
This arguably makes it a more diverse portfolio of holdings compared to what you will find with the benchmark ASX 200 index.
The fund manager, Vanguard, believes the Vanguard Australian Shares Index ETF would be suitable for buy and hold investors that are seeking long-term capital growth, some tax-effective income, and a higher risk tolerance.
In respect to the buy and hold part, it is hard to argue against this. Over the last 10 years, the ETF has generated a total gross return of 8.61% per annum.
This would have turned a $10,000 investment in the VAS ETF into almost $23,000 today.
