It's been a decent, if not spectacular, start to the short trading week for most ASX shares this Tuesday. At the time of writing, the S&P/ASX 300 Index (ASX: XKO) has advanced by 0.12%, putting the index at just over 7,850 points. But let's talk about what's going on with the Vanguard Australian Shares Index ETF (ASX: VAS).
VAS units are seemingly not enjoying the same kind of goodwill as the ASX 300 index that it tracks. This exchange-traded fund (ETF) ended last week at $98.84 per unit. But this morning, those same units opened at $98.50, and have since fallen to just $98.05 each at present. That's a drop worth a not-insignificant 0.8%.
This is rather strange at first glance. After all, VAS is an ASX index fund that just happens to track the ASX 300 index itself. That means that these two instruments should, at least in theory, mirror each other almost exactly. So to see a divergence like this is highly unusual.
Well, it would be, if we didn't have a fairly simple explanation as to what's going on in this particular situation.
Why are VAS units taking an ASX hit today?
Today is the Vanguard Australian Shares ETF's ex-distribution day.
Last week, we warned that the latest dividend distribution from this ASX ETF was incoming. Vanguard recently revealed that the latest quarterly dividend distribution, covering the three months to 31 March 2024, would be worth 84.9 cents per unit.
That is a pleasing 47.1% rise over last year's quarterly dividend of 57.7 cents that investors received for the same period.
It takes VAS' full-year ASX payout to $3.74 per unit.
However, as we warned last week, the last day investors could buy VAS units on the ASX with the rights to this payment attached was last Thursday. Today is the day that Vanguard scheduled its index fund to trade ex-distribution for this upcoming payment.
This means that from this Tuesday, VAS units don't come with the rights to receive this dividend distribution, and any new investors will have to wait for the next quarterly payout.
As such, those Vanguard units just became inherently less valuable. And as a result, we are seeing a bit of a fall in the fund's value on the ASX this morning. This is a normal occurrence anytime an investment goes ex-dividend (in this case, ex-distribution).
Eligible Vanguard investors can now look forward to receiving their dividend later this month on 17 April.
At the current Vanguard Australian Shares ETF pricing, this index fund has a dividend distribution yield of 3.81%.
