What is the average return of the Vanguard Australian Shares Index ETF (VAS)?

Is this ASX ETF delivering good returns?

| More on:
ETF written on cubes sitting on piles of coins.

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) is a very popular exchange-traded fund (ETF) on the ASX, with $15 billion in funds under management (FUM). But being large is one thing, how it has performed is a completely different matter.

Vanguard aims to provide investors with access to share markets at a very low cost. The investors are the owners of Vanguard itself, and the provider shares its profit with investors by keeping the fees as low as possible.

ETFs can be an effective way to invest and help diversify against risks. On Vanguard's website, it says:

Rather than trying to pick the winning investment each year, spreading your investments across a wide variety of assets will help reduce the risk of loss. Investors who are well diversified tend to enjoy a smoother investment ride over the long term.

Let's look at how good the VAS ETF returns have been.

Adequate long-term returns

Every month, Vanguard informs investors how the Vanguard Australian Shares Index ETF has performed over time.

As of 31 May 2024, the VAS ETF has delivered an average net return of:

  • 8.98% per annum since its inception in May 2009
  • 7.72% per annum over the prior decade
  • 7.81% per annum over the last five years
  • 6.54% per annum over the last three years

These are not bad returns, but not Earth-shattering either.

It's interesting to note that in each time period I mentioned, the distribution element of the return from the ASX ETF made up most of the net return, highlighting that dividends are an important part of ASX returns.

In the last 12 months, the VAS ETF has delivered a net return of 12.81% thanks to the rise in the S&P/ASX 300 Index (ASX: XKO).

What is the VAS ETF invested in?

The performance of the underlying holdings decides the returns of an ETF.

Unsurprisingly, ASX financial shares (29.7%) and ASX mining shares (22.7%) still make up more than half of the ASX ETF's total portfolio.

The top ten positions in the portfolio are some of Australia's strongest businesses:

Consider other ASX ETFs for additional diversification

The ASX only makes up a very small percentage of the global share market, so it could be wise to diversify with other ETFs that provide exposure to international stocks.  

For example, the Vanguard MSCI International Shares Index ETF (ASX: VGS) invests in more than 1,300 businesses in 'developed' countries worldwide. Since its inception in November 2014, the VGS ETF has delivered an average annual return of 12.8% thanks to its exposure to numerous growing businesses. This sort of investment could work well if mixed with the VAS ETF.

Should you invest $1,000 in Vanguard Australian Shares Index Etf right now?

Before you buy Vanguard Australian Shares Index Etf shares, consider this:

Motley Fool investing expert Scott Phillips just revealed what he believes are the 5 best stocks for investors to buy right now... and Vanguard Australian Shares Index Etf wasn't one of them.

The online investing service he’s run for over a decade, Motley Fool Share Advisor, has provided thousands of paying members with stock picks that have doubled, tripled or even more.*

And right now, Scott thinks there are 5 stocks that may be better buys...

See The 5 Stocks *Returns as of 6 March 2025

Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has positions in and has recommended CSL, Goodman Group, Macquarie Group, and Wesfarmers. The Motley Fool Australia has positions in and has recommended Macquarie Group and Wesfarmers. The Motley Fool Australia has recommended CSL, Goodman Group, and Vanguard Msci Index International Shares ETF. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

More on ETFs

A young well-dressed couple at a luxury resort celebrate successful life choices.
ETFs

Buy and hold these world class ASX ETFs for 5 years

Here's why it could pay to hold onto these funds for the next five years.

Read more »

Cubes placed on a Notebook with the letters "ETF" which stands for "Exchange traded funds".
ETFs

I think these 2 ASX ETFs are unmissable buys in this sell-off

These funds are now a lot cheaper.

Read more »

Smiling woman with her head and arm on a desk holding $100 notes out, symbolising dividends.
ETFs

Where to invest $10,000 into ASX ETFs

Let's take a look at three top picks for Aussie investors to consider buying.

Read more »

Cheerful boyfriend showing mobile phone to girlfriend in dining room. They are spending leisure time together at home and planning their financial future.
ETFs

3 of the best ASX ETFs to buy for your SMSF

These funds could be good options for a self-managed super fund. Let's find out why.

Read more »

ETF written on cubes sitting on piles of coins.
Defensive Shares

Power up your defences: 2 ASX utility ETFs for steady income

I think these ETFs offer investors some of the ASX's most reliable dividends.

Read more »

A happy young couple lie on a wooden deck using a skateboard for a pillow.
ETFs

Invest $5,000 into these excellent ASX ETFs

Here's why these funds could be worth considering if you don't enjoy stock picking.

Read more »

ETF spelt out with a piggybank.
ETFs

Why this ASX ETF could be a great buy for returns and diversification

Looking for the world’s strongest businesses? Have a look at this ETF.

Read more »

Person handling Australian dollar notes, symbolising dividends.
ETFs

How I'd use this top ASX ETF for a 5% passive income yield

ASX ETFs can be a surprising source of cash flow.

Read more »