Last week, I purchased some additional units of the Vanguard Australian Shares Index ETF (ASX: VAS). It was my first top-up of this exchange-traded fund (ETF) for a while. And I'm very happy with my purchase. Let's talk about why.
The Vanguard Australian Shares ETF is the most popular index fund on the ASX. It represents an investment in the 300 largest shares on our stock market. That's everything from Westpac Banking Corp (ASX: WBC) and Telstra Group Ltd (ASX: TLS) to JB Hi-Fi Ltd (ASX: JBH) and Lovisa Holdings Ltd (ASX: LOV).
The first reason I like having this ETF in my portfolio is this broad but passive exposure to such a large swathe of ASX shares. An investment in VAS units is inherently diversified, and a perfect bottom-drawer investment.
So why last week for my long-awaited top-up? Well, it seemed to me that VAS was on sale.
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Why I just bought additional VAS units for my ASX share portfolio
As most of us would be aware, the past month or two has been rough for most ASX shares. Between 15 September and 30 October, the S&P/ASX 300 Index (ASX: XKO) experienced a drop of 7%. Since the Vanguard Australian Share ETF tracks the ASX 300, it had a very similar fall, dropping 8.24%.
That extra lil' bit there probably relates to Vanguard's September quarterly dividend distribution, from which VAS units traded ex-distribution on 2 October.
I try to follow the advice of Warren Buffett in my investing – 'be greedy when others are fearful' and 'price is what you pay, value is what you get'.
As such, I view any big dip in a quality index fund like VAS as a compelling opportunity to buy this ETF when it's on sale. Not only did my dollars stretch to buy more VAS units than they would have on 15 September, but I got the opportunity to secure a larger dividend yield from this investment.
As a case in point, the $3.50 per unit that the Vanguard Australian Shares ETF has paid out over the past 12 months would have resulted in a (trailing) starting yield of 3.83% on 15 September, but a yield of 4.18% on 30 October.
To conclude, I was pleased to pick up some additional units of this quality investment while they were on sale. The Vanguard Australian Shares ETF is a long-term holding for and in my portfolio, and one I was delighted to top up at what was close to a 52-week low.
