Things to Know About this Popular ETF - Vanguard Australian Shares ETF

Things to Know About this Popular ETF - Vanguard Australian Shares ETF

Summary

  • ETF investment is popular amongst investors who have limited funds to invest.
  • Investment in ETFs provides cost-effective, easy trading marked with diversification and transparency.
  • Vanguard's Australian Shares ETF offers low-cost and diversified exposure to Australian companies and property trusts.
  • As at 30 June 2020, Vanguard Australia had issued A$20.54 billion under management.

Any investor who enters the market aims to make a profit. The investment could be into various financial products including shares, bonds, debentures, any other fixed incomes, ETFs, Managed funds and many more.

For new traders, investing a substantial amount seems risky, prompting them to look for investments that are less expensive and require small investment amount. ETFs provide them with opportunities to make a profit with a small amount. The most significant advantage of investing in the ETF is that they can be traded throughout the trading duration and are highly liquid. An ETF offers passive investment opportunity and follow a particular index. The value of the ETF is directly influenced by the fluctuation in the index value and specific commodity like gold.

In Australia, most of the ETFs are passive. The Australian ETF industry AUM values over A$65.5 billion. Across the quarter, Australian equities are amongst the most popular asset class with investors, accounting for accounts for 45% of new cash flows to the ETF industry.

In this article, we will be discussing one of the popular ETFs, Vanguard's Australian Shares ETF and understand this ETF.

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About Vanguard Australian Shares ETF:

Vanguard Australian Shares ETF (ASX:VAS) is cost-effective, diversified and covers ASX listed Australian companies and property trusts. The fund tracks the S&P/ASX 300 Index and allows long-term capital growth along with income from dividend and franking credits.

The fund charges 0.10% per annum as a management fee. The NAV of the fund was A$76.26 as of 29 July 2020.

Vanguard was established in 1975. The company focuses on positioning itself as the highest-value provider of investment products and services in the world. Vanguard also has a constant focus on its clients with a dedication to champion what is best for investors by delivering the best possible service while maintaining costs low.

As of 31 May 2020, Vanguard has over A$8.9 trillion assets under management including A$1.8 trillion AUM in ETFs.

Characteristics of this fund as at 30 June 2020:

  • The number of holdings is 306 while the benchmark is 301.
  • The median market cap of the fund is A$27.15 billion.
  • Equity yield (dividend) is 4.07%.
  • P/E ratio is 16.89x.
  • P/B ratio is 1.84x.
  • Equity ratio return is 13.16%.
  • The earnings growth rate of this fund is 5.93%.

The market allocation of this fund comprises of 96.4% from Australia and the remaining 3.6% from other regions.

A Glance at top 10 holdings of Vanguard's Australian Shares ETF:

Holding Name

Ticker

Sector

% of net assets

 

 

 

 

CSL Ltd.

 

CSL

Biotechnology

 

7.82270%

 

Commonwealth Bank of Australia

 

CBA

Diversified Banks

 

7.36715%

 

BHP Group Ltd.

 

BHP

Diversified Metals & Mining

 

6.32965%

 

Westpac Banking Corp.

 

WBC

Diversified Banks

 

3.87994%

 

National Australia Bank Ltd.

 

NAB

Diversified Banks

 

3.50240%

 

Australia & New Zealand Banking Group

 

ANZ

Diversified Banks

 

3.18039%

 

Wesfarmers Ltd.

 

WES

General Merchandise Stores

 

3.05884%

 

Woolworths Group Ltd.

 

WOW

Food Retail

 

2.81806%

 

Macquarie Group Ltd.

 

MQG

Diversified Capital Markets

 

2.33589%

 

Transurban Group

 

TCL

Highways & Rail tracks

 

2.30943%

 

 

Sector Allocation:

The significant contribution of Vanguard's Australian Shares ETF fund is towards the financial sector, followed by Materials and healthcare. In these sectors, the fund has a double-digit allocation of 26.9%, 19.5% and 12.2% respectively.

As at 30 June 2020, the sector allocation of the fund is as follows:

Products Offered by Vanguard:

Vanguard offers products like Managed Funds and Exchange-traded funds. The company assures its customers that irrespective of the product they choose, they can be sure that each product offered by the company is built with the principles which are applied across all its investment strategies. These investment strategies create clear investment goals, develop a suitable asset allocation using broadly diversified funds, minimise cost and maintain perspective and long-term discipline.

Vanguard’s Sales In 2020:

In 1H 2020, Vanguard Australia was the largest seller of ETFs post the release of sales for the June 2020 quarter. The June quarter witnessed the record quarterly sales increase with new flows hitting A$4.3 billion.

From the beginning of 2020 till 24 July 2020, Vanguard Australia noted inflow of A$2.66 billion. The value represents 32% of the industry inflows of $8.2 billion. The sale of the Vanguard Australian Shares Index ETF gained an astonishing level of investor support and contributed to more than 50% of overall ETF sales of Vanguard in the June quarter.

As at 30 June 2020, Vanguard Australia had issued A$20.54 billion under.

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