We're not quite yet through with the month of September just yet. But since the last trading day of the month is just about to wrap up, we can conclude with almost absolute certainty that this month has been a shocker for the Vanguard Australian Shares Index ETF (ASX: VAS).
VAS units started September at a price of $91.06 each. But today, at the time of writing, those same units are going for just $88.44 each. This means that the Vanguard Australian Shares ETF has lost 2.88% of its value over the month so far.
Unless the ASX share market pulls off a late Friday afternoon miracle and shoots the moon, this ASX exchange-traded fund (ETF) is heading for a decidedly red month.
So why has the ASX's most popular ETF had such a month to forget?
Well, to answer that, we'll need to go over how this ETF works.
The Vanguard Australian Shares ETF is an index fund, tracking the S&P/ASX 300 Index (ASX: XKO). This index is made up of the 300 largest shares on the ASX by market capitalisation. But each share is also given a weighting that reflects its size and impact on the broader markets.
As such, large companies like BHP Group Ltd (ASX: BHP) command a far greater influence in this ETF's portfolio than smaller companies like Zip Co Ltd (ASX: ZIP).
To illustrate, BHP shares make up roughly 10.24% of VAS's portfolio at present, while Zip shares account for just 0.00945%.
This means we can pretty much look to the largest shares in VAS's portfolio to find a reason why this ETF has had such a poor September performance.
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Why the ASX's VAS ETF has had such a bad September
After all, BHP, together with the big four banks and CSL Limited (ASX: CSL) are only six out of the 300 or so shares in this ETF's portfolio. But together, they account for approximately 35% of the portfolio's weight.
So let's look at how these shares have performed over September to date.
BHP shares have lost 0.94% of their value.
Commonwealth Bank of Australia (ASX: CBA) is down 2.42%.
CSL shares have tanked by 8.45%.
The National Australia Bank Ltd (ASX: NAB) share price has gained 0.05%.
Westpac Banking Corp (ASX: WBC) shares have lost 3.5%.
And the ANZ Group Holdings Ltd (ASX: ANZ) share price has risen by 1.54%.
As you can see, the losses have outweighed the gains for the biggest ASX 300 shares. Thus, it's no surprise to see the Vanguard Australian Shares Index ETF reflect this reality in its own September performance.
So who knows how things will go for the VAS ETF in October. But investors do have this ETF's next dividend distribution to look forward to next month. VAS investors can circle 17 October on their calendars as payday.
