Of all the exchange-traded funds (ETFs) on the ASX, it is the Vanguard Australian Shares Index ETF (ASX: VAS) that routinely tops the list as our local favourite. For years now, this index fund has commanded more funds under management than any other. Each month, that total seems to climb higher, too.
At the time of writing, Vanguard tells us that VAS has just over $24.3 billion in funds under management. That's almost $10 billion more than its closest rival, which happens to be another Vanguard ETF – the Vanguard MSCI Index International Shares ETF (ASX: VGS).
So there are more than a few Australian investors who have a stake in the Vanguard Australian Shares ETF.
However, these investors may or may not know exactly what they are buying when they purchase VAS units. Index funds change over time, and most investors who invest in them in the first place do so because they prefer passive, hands-off investing.
Additionally, the S&P/ASX 300 Index (ASX: XKO), which VAS tracks, has undergone some significant changes in recent months. So let's dive into what you are really buying with this ASX ETF today.
Image source: Getty Images
Diving into the Vanguard Australian Shares ETF
As you may gather from its index, the Vanguard Australian Shares ETF offers investors exposure to the 300 largest publicly listed companies in Australia.
However, an investment isn't just split 300 ways. Like most index funds, Vanguard allocates more capital to larger companies than to smaller ones. So while in theory, VAS allows investors to put money into stocks ranging from Harvey Norman Holdings Ltd (ASX: HVN) and JB Hi-Fi Ltd (ASX: JBH) to Ampol Ltd (ASX: ALD) and Myer Holdings Ltd (ASX: MYR), in practice, the lion's share of most invested cash ends up with just a handful of stocks.
The ASX has long had a reputation for being heavy with bank and mining stocks. That was always true. However, it has become even more so of late. Investors can thank CSL Ltd (ASX: CSL) for that. For years, healthcare giant CSL was one of the largest companies in Australia, at times ranking third and even second in the ASX 300 Index.
However, CSL has lost a lot of goodwill with investors over the past few years, with its shares dropping from over $270 last August to $90 earlier this month. At the time of writing, they are trading at just over $102 each. At this price, CSL is now the 12th largest ASX 300 share.
Buying VAS on the ASX: What are you really getting?
This void has, naturally, been filled by bank shares and mining stocks. Check out the current (as of 30 April) largest holdings in the Vanguard Australian Shares ETF below to see for yourself:
- Commonwealth Bank of Australia (ASX: CBA) at 10.68% of VAS' portfolio
- BHP Group Ltd (ASX: BHP) at 10.03%
- Westpac Banking Corp (ASX: WBC) at 4.84%
- National Australia Bank Ltd (ASX: NAB) at 4.50%
- ANZ Group Holdings Ltd (ASX: ANZ) at 4.06%
- Macquarie Group Ltd (ASX: MQG) at 3.06%
- Wesfarmers Ltd (ASX: WES) at 3.04%
- Woodside Energy Group Ltd (ASX: WDS) at 2.34%
- Rio Tinto Ltd (ASX: RIO) at 2.29%
- Goodman Group (ASX: GMG) at 2.22%
As you can see, you have to get to VAS' seventh-largest holding to find a stock that isn't a bank or a miner. In fact, only two stocks on this top-ten list aren't banks or miners (Woodside is technically an energy stock, but the point still arguably stands).
As you may have also gathered, $10 of every $100 invested in the Vanguard Australian Shares ETF goes into CBA alone, and another $10 or so heads to BHP. Of that $100, more than $25 finds its way to one bank stock or another.
Of course, many investors won't mind this. Banks tend to be phenomenal dividend payers and have been relatively stable investments over decades. But some might. Perhaps even investors who already own VAS units in their portfolios. Keep these facts in mind if that's you, or if you are eyeing off this popular ASX ETF in 2026.
