Global share markets have been on a tear lately. Bloomberg reported last week that 14 of the world's largest stock markets were currently "at or near their peaks" — Australia included. In fact, the S&P/ASX 300 index (ASX: XKO) hit an all-time high in March and has climbed 10% since January last year.
The Vanguard Australian Shares Index ETF (ASX: VAS) tracks the performance of the 300 companies listed on the ASX 300. And Aussie investors have long been drawn to the VAS ETF as a low-fuss investment option for growing their wealth.
Winding back the clock, here's a look at how a $10,000 investment in the VAS ETF at the start of January 2023 has fared up until the close on Monday.
The ASX VAS ETF at a glance
The Vanguard Australian Shares Index ETF is an exchange-traded fund (ETF) launched in 2009. It provides exposure to the top 300 companies listed on the ASX, offering a combination of long-term capital growth potential and regular income through dividends.
When you buy this fund, you are backing the long-term outlook of Australia.
At the latest count, the VAS ETF has $14.7 billion in funds under management – more than the market capitalisation of some ASX large-cap companies.
And what does it cost to own a piece of Australia's largest 300 listed companies in one share? Well, the VAS ETF charges just 0.07% per annum on all funds invested. That's more attractive than the performance fee charged by some active managers.
$10,000 investment in VAS ETF in 2023
If you had invested $10,000 in the VAS ETF at the start of 2023, you would have purchased units at $85.80 each on 3rd January. This investment would have secured you approximately 117 units of the ETF.
Fast-forward to today. With VAS trading at $97.92 apiece, your initial investment would now be worth $11,452. That's a reasonable capital gain of about $1,450, or 14.5%, excluding dividends.
What about dividend income?
But the story doesn't end with capital appreciation. VAS also provides regular income through dividends. Since January 2023, VAS has paid total dividends of $4.31 per share. Given the original unit price, this means you would have received a dividend yield of 5% to date when including all distributions paid.
This amounts to an additional $502.55 in dividend income for your 116.53 units. Combined with your capital gains, the total return on your $10,000 investment would be around $1,952.55, or 19.5%.
This return excludes the 74.97 cents per share dividend received on 8 January, as the ex-entitlement date fell on 3 January. Including this, total dividends are $5.07 per share.
Why consider the ASX VAS ETF?
VAS offers diversified exposure to the Australian market, featuring major players like BHP Group Ltd (ASX: BHP), National Australia Bank Ltd (ASX: NAB), CSL Limited (ASX: CSL), and ANZ Group Holdings Ltd (ASX: ANZ), just naming a select few.
In my opinion, this diversification can help mitigate risk while providing access to the growth potential of these top Australian companies.
Plus, as you saw earlier, the dividend income adds another source of return to consider. Who doesn't like passive income?
Foolish takeaway
Investing in the ASX VAS ETF has proven rewarding over the past year, delivering both capital growth and steady income.
Whether you're a seasoned investor or just starting out, the fund offers a balanced way to participate in the Australian share market.
