Invested in VAS shares? Here's what to watch in 2022

What does 2022 hold in store for VAS?

| More on:
young woman sitting cross legged with large tub of popcorn and surprised facial expression

Image Source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The Vanguard Australian Shares Index ETF (ASX: VAS) has had a reasonably solid year in 2021 (touch wood). VAS units have, as of today, appreciated by roughly 10.65% over the year to date. Including dividend distributions, investors have enjoyed a return of roughly 14.6%.

That compares pretty well against VAS's 10-year average of 10.26% per annum. But now that 2021 is edging closer to its end, what does 2022 hold for this index ETF?

VAS is, after all, the most popular exchange-traded fund (ETF) on the ASX. And by a mile, too. It currently has more than $9 billion in funds under management, besting the next most popular ETF by several billion.

VAS is a unique ETF in that it is the only major fund to cover the S&P/ASX 300 Index (ASX: XKO). All other major index ETFs covering the Australian share market track the S&P/ASX 200 Index (ASX: XJO).

The additional 100 shares beyond the ASX 200 gives VAS more diversification and exposure to small-cap shares than other ASX index ETFs.

So what should investors look out for in 2022?

2022: A VAS-t opportunity?

VAS, like most ETFs, is weighted by market capitalisation, meaning the largest companies on the index that it tracks have the largest weightings in the fund's portfolio. So if we want to track how VAS might perform next year, we only need to look at its largest holdings. As of 30 November, VAS had the greatest weightings in the following ASX shares:

  1. Commonwealth Bank of Australia (ASX: CBA) with a fund weighting of 7.47%
  2. CSL Limited (ASX: CSL) with a weighting of 6.56%
  3. BHP Group Ltd (ASX: BHP) with a weighting of 5.45%
  4. National Australia Bank Ltd (ASX: NAB) with a weighting of 4.23%
  5. Australia and New Zealand Banking Group Ltd (ASX: ANZ) with a weighting of 3.57%
  6. Westpac Banking Corp (ASX: WBC) with a weighting of 3.54%
  7. Macquarie Group Ltd (ASX: MQG) with a weighting of 3.27%
  8. Wesfarmers Ltd (ASX: WES) with a weighting of 3.03%
  9. Woolworths Group Ltd (ASX: WOW) with a weighting of 2.32%
  10. Telstra Corporation Ltd (ASX: TLS) with a weighting of 2.27%

So even though VAS invests in a portfolio of 300 ASX shares, these top 10 stocks make up more than 40% of the ETF's weighting. ASX bank shares (the big 4 and Macquarie) make up 22% just by themselves.

As such, we can say with some conviction that VAS's fortunes are rather intertwined with those of ASX bank shares. If ASX bank shares have a year in 2021 like they have had (so far) in 2021, then VAS will likely also have a solid year.

If CSL and BHP join the party, then things will get even better for VAS units.

So if you're invested in VAS, keep an eye on these shares next year. Generally, whenever ASX banks go up, the VAS share price tends to follow.

 

Motley Fool contributor Sebastian Bowen owns National Australia Bank Limited and Telstra Corporation Limited. The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns and has recommended CSL Ltd. The Motley Fool Australia owns and has recommended Telstra Corporation Limited and Wesfarmers Limited. The Motley Fool Australia has recommended Macquarie Group Limited and Westpac Banking Corporation. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

More on ETFs

Man holding a calculator with Australian dollar notes, symbolising dividends.
ETFs

$10,000 invested in CRYP ETF a year ago is now worth…

This exchange-traded fund allows investors to gain exposure to cryptocurrency in a different way.

Read more »

The letters ETF with a man pointing at it.
ETFs

Where to invest $5,000 in ASX ETFs in June

These funds could be worth a look if you have money to invest this month.

Read more »

A woman sits at her computer with her chin resting on her hand as she contemplates her next potential investment.
ETFs

3 things about the Vanguard Australian Shares Index ETF (VAS) every smart investor knows  

This fund has a number of interesting characteristics. Here’s what I’m focused on.

Read more »

ETF on different coloured wooden blocks.
ETFs

BetaShares reaches $50 billion FUM: What are their 5 most popular ASX ETFs?

Do any of these 5 ASX ETFs appeal to you?

Read more »

ETF written on cubes sitting on piles of coins.
ETFs

2 amazing ASX ETFs I wish I'd bought a decade ago

These funds are impressive with their holdings and returns.

Read more »

tick, approval, business person with device and tick of approval in background
ETFs

Why this could become my favourite ASX ETF to buy

This ASX ETF ticks all my boxes.

Read more »

Three happy office workers cheer as they read about good financial news on a laptop.
ETFs

The best ASX ETFs to ride the AI and tech megatrends

Let's see what these exciting funds are invested in.

Read more »

A woman sits at her computer with her chin resting on her hand as she contemplates her next potential investment.
ETFs

BetaShares ETF provider to expand into private credit. Should you be interested?

Private credit could be coming to the ASX.

Read more »