There's a wide variety of exchange-traded funds (ETFs) out there that investors can choose. The Vanguard Australian Shares Index ETF (ASX: VAS) is the most popular ASX-listed ETF, and for good reason, in my opinion.
When I say it's the most popular, I'm talking about how much money is currently invested in the ETF.
At the end of August 2026, $26.9 billion was invested in the VAS ETF, a significant sum that has grown substantially over the last few years as more investors allocate money to ETFs.
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Easy way to invest in the ASX 300
ETF investing has made it very easy for everyday Australians to gain access to the stock market without needing an advanced understanding of shares to gain access to the market average return.
You don't need to make gigantic returns to see pleasing financial results thanks to the power of compounding. If an investment delivers an 8% return per year, it will double in value in approximately nine years.
Investing in the VAS ETF gives investors exposure to the S&P/ASX 300 Index (ASX: XKO), an index of 300 of the largest and most impressive ASX shares.
The biggest businesses get the largest allocation in the portfolio. For the Vanguard Australian Shares Index ETF, the largest 10 holdings represent 47.5% of the total ETF. Those 10 holdings are:
- BHP Group Ltd (ASX: BHP)
- Commonwealth Bank of Australia (ASX: CBA)
- National Australia Bank Ltd (ASX: NAB)
- Westpac Banking Corp (ASX: WBC)
- ANZ Group Holdings Ltd (ASX: ANZ)
- Wesfarmers Ltd (ASX: WES)
- Macquarie Group Ltd (ASX: MQG)
- CSL Ltd (ASX: CSL)
- Rio Tinto Ltd (ASX: RIO)
- Woodside Energy Group Ltd (ASX: WDS)
Another underrated aspect of investing in the VAS ETF (and others like it) is that the portfolio regularly updates. We don't need to think about which stocks to buy and sell – the ETF does that for us and simply holds the names that correspond with where they fit in the index.
If a current holding suffers, it will drop down the holding list and play a smaller part in the ETF's future returns. If there's a newcomer that is soaring, it will play a bigger part in the ETF's holdings as time goes on.
Passive income
One advantage the ASX share market offers, compared with many other share markets, is the scale of passive income it provides.
The ASX 300 has a pleasingly high dividend yield thanks to the fact that the largest businesses have a high dividend payout ratio and a relatively low price/earnings (P/E) ratio compared to other sectors like technology and healthcare.
According to Vanguard, at the end of August, the VAS ETF had a dividend yield of 3.1%, excluding franking credits. Compared to most share markets, that's a solid level of dividend income.
It's a good idea to re-invest dividends for long-term compounding, but investors can also enjoy the passive income payments for their life spending.
Low costs
One of the best reasons to invest in the VAS ETF is the very cheap management costs. The lower the fees, the more of the net returns stay in the hands of the investor.
According to Vanguard, the VAS ETF has an annual management fee of just 0.07%. That's extremely low and means we can virtually match the ASX 300 return.
Of course, it's important to note that the VAS ETF does provide a lot of exposure to the largest holdings, so it could be a good idea to balance with other investments.
For example, an investor could utilise the VanEck Australian Equal Weight ETF (ASX: MVW) or pick market-beating individual ASX stocks to boost their portfolio's overall return.
