Is it time to buy Vanguard Australian Share ETF (ASX: VAS)?
Vanguard Australian Share ETF is an exchange traded fund (ETF) focused on tracking the ASX 300 (ASX: XKO).
What is Vanguard?
I think Vanguard is great. Vanguard is a world leader in providing access to low-cost investing for investors. It doesn't aim to make a profit. Instead, it passes on those profits to its owners (the investors) in the form of lower management fees.
It offers plenty of ETFs, which allow you to buy a large group of shares in a single investment. One of its biggest ETFs listed in Australia is Vanguard Australian Share ETF.
What shares does Vanguard Australian Share ETF own?
As I said before, it aims to track the returns of the ASX 300. Its largest positions are the biggest companies on the ASX like CSL Limited (ASX: CSL), BHP Group Ltd (ASX: BHP), Commonwealth Bank of Australia (ASX: CBA) and Westpac Banking Corp (ASX: WBC).
It also owns a slither of the shares at the bottom of the ASX 300 like City Chic Collective Ltd (ASX: CCX), Home Consortium Ltd (ASX: HMC), Medical Developments International Ltd (ASX: MVP) and Seven West Media Ltd (ASX: SWM).
I think it's important for the ETF to own some of the smaller ASX shares because some will become tomorrow's blue chips.
What is the Vanguard Australian Share ETF management fee?
One of the main things to look at with index-based ETFs is the management cost. It's just tracking an index, so the costs should be as low as possible.
Vanguard Australian Share ETF currently has an annual management fee of 0.10%.
I think this is very attractive because it leaves more of the net returns in the hands of investors.
What is the dividend yield?
Australian companies are known for having generous dividend yields. I think they may a little too generous. In my opinion it may be better to re-invest more of the profit for growth.
The yield is constantly changing because of the coronavirus volatility. At the end of February 2020, it had a 4.3% dividend yield (not including the franking credits).
However, I think the coronavirus may cause some of Vanguard's holdings to cut dividends. This would mean less dividends passed through to Vanguard investors in the shorter-term.
Is Vanguard Australian Share ETF a good investment?
I believe it's always a decent idea to buy a good Vanguard ETF. You could make it part of a regular investment plan. As a long-term investment I don't think it's at a bad price at all. It's down around 25% since the start of the decline. But I like the idea of other investments even more.
