It has been an interesting 12 months for the share market.
Income-focused shares, particularly banks and miners, have done a lot of the heavy lifting. At the same time, many growth names and technology stocks have struggled, with sentiment weighed down by valuation concerns and uncertainty around AI disruption.
That shift in leadership has had a clear impact on how different strategies have performed.
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Why the Vanguard Australian Shares High Yield ETF has performed well
One ETF that has quietly benefited from this environment is the Vanguard Australian Shares High Yield ETF (ASX: VHY).
The VHY ETF focuses on higher-yielding shares within the Australian market. That naturally leads it toward sectors like financials and resources, which have been among the stronger performers over the past year.
For example, companies such as Westpac Banking Corp (ASX: WBC) and BHP Group Ltd (ASX: BHP) have both delivered solid gains, supported by strong earnings.
I think this highlights an important point. Market returns are not evenly distributed. Leadership changes over time, and in the past year, income has been back in favour. The Vanguard Australian Shares High Yield ETF is designed to capture that.
The role of distributions
It is also worth remembering that returns from an ETF like this do not just come from the share price.
Distributions play a big role. Over the past 12 months, the VHY ETF has paid distributions of 81.14 cents, 65.83 cents, 109.69 cents, and 200.17 cents per unit.
That adds up to a meaningful income stream on top of any capital growth.
What is the investment in the VHY ETF worth now?
Putting it all together. If you had invested $10,000 into the Vanguard Australian Shares High Yield ETF a year ago at $71.63, you would have received around 139.6 units.
At today's price of $82.98, those units would now be worth approximately $11,580.
On top of that, the total distributions over the year come to approximately $4.56 per unit. Across 139.6 units, that equates to roughly $637 in income.
That brings the total value of the investment to around $12,217.
In other words, a $10,000 investment has grown by just over 22% in a year.
Foolish Takeaway
I think this is a good example of how different parts of the market can take the lead at different times.
The VHY ETF has benefited from strong performance in dividend-paying sectors, as well as the income those companies generate. That combination has worked well over the past year.
Looking ahead, I think it reinforces the value of diversification. Income strategies can have their moment, just as growth strategies do. The key is having exposure to both and staying invested for the long term.
