If I'd put $5,000 in ASX index funds 5 years ago, here's what I'd have now!

Atop potential capital gains, investors in ASX index funds also receive regular dividend payouts.

| More on:
A person sitting at a desk smiling and looking at a computer.

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

If you're not comfortable investing in a very broad range of ASX companies, then an ASX index fund offers a great alternative.

Indeed, as legendary investor Warren Buffett has previously advised, "A low cost index fund is the most sensible equity investment for the great majority of investors."

Now, there is a range of exchange-traded funds (ETFs) that provide instant diversity and aim to track the performance of the S&P/ASX 200 Index (ASX: XJO) or S&P/ASX 300 Index (ASX: XKO).

Vanguard Australian Shares Index ETF (ASX: VAS), for example, offers exposure to the top 300 listed Aussie companies that you'll find on the ASX 300.

As you'd expect, the top three holdings of the ASX index fund correspond to the three biggest companies on the ASX by market cap. Namely BHP Group Ltd (ASX: BHP), Commonwealth Bank of Australia (ASX: CBA) and CSL Ltd (ASX: CSL).

Two other popular ASX index funds that aim to track only the top 200 Aussie companies listed on the ASX 200 are the iShares Core S&P/ASX 200 ETF (ASX: IOZ) and the BetaShares Australia 200 ETF (ASX: A200).

All three ETFs have low management fees.

So, just how much would I have today if I'd invested $5,000 in these funds five years ago?

Let's dig in.

How much have these ASX index funds returned?

First, turning to the ASX 200 five years ago, on 23 July 2019, we would have been about eight months out from the massive pandemic market crash of February 2020.

But with stocks roaring back from late March 2020, the ASX 200 and the ASX index funds that aim to track them, have managed to deliver some healthy gains.

Over the past five years, the ASX 200 has gained 17.34%. Of course, that doesn't include the dividends many of these companies pay shareholders.

To see how much of an impact those dividends can have on our returns, we turn to the S&P/ASX 200 Gross Total Return Index (ASX: XJT), which includes all cash dividends reinvested on the ex-dividend date. The total return index has gained 41.97% over the five years.

So, how do our ASX index funds stack up?

Well, as at 30 June, the iShares Core S&P/ASX 200 ETF has delivered a total return of 41.4%.

That would have seen my $5,000 investment grow to $7,070 today.

As for the BetaShares Australia 200 ETF, as of 22 July, the ASX index fund had returned 42.8% over five years. This would have turned my $5,000 investment into $7,140 over five years.

And the Vanguard Australian Shares Index ETF, which you'll recall tracks the top 300 stocks listed on the ASX 300, has returned 41.8%, as at 30 June. Certainly! This means that my $5,000 investment from five years ago would have grown to $7,090 today.

Motley Fool contributor Bernd Struben 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. The Motley Fool Australia has recommended CSL. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

More on ETFs

Multiracial happy young people stacking hands outside - University students hugging in college campus - Youth community concept with guys and girls standing together supporting each other.
ETFs

5 of the best ASX ETFs to buy now

Do you have any of these top funds in your investment portfolio?

Read more »

Concept image of a man in a suit with his chest on fire.
ETFs

3 ASX ETFs to buy for 2025's hottest investment trends

These funds are highly rated for a reason in 2025. Let's see what they are.

Read more »

Man smiling at a laptop because of a rising share price.
ETFs

I think this is a top ASX ETF to buy for the long-term

There are plenty of good reasons to like this investment.

Read more »

Happy diverse colleagues or team of people give high five together to celebrate great teamwork and results.
ETFs

Only want to invest in the Magnificent Seven? There's an ASX ETF for that

The Global X Fang+ ETF makes it easy for Aussie investors to gain concentrated exposure to the Mag 7.

Read more »

a man with a wide, eager smile on his face holds up three fingers.
ETFs

3 reasons I'd still buy the iShares S&P 500 ETF (IVV) after big gains

The US share market has been a very good place to be invested.

Read more »

A group of young people lined up on a wall are happy looking at their laptops and devices as they invest in the latest trendy stock.
ETFs

4 excellent ASX ETFs for Aussie investors to buy right now

Let's see why these funds could be among the best out there for Aussie investors.

Read more »

Happy man working on his laptop.
ETFs

Why these amazing ASX ETFs could be top picks for growth investors

Here are a few funds that could be quality picks for Aussie growth investors.

Read more »

ETF written on wooden blocks with a magnifying glass.
ETFs

5 myths about ASX ETFs debunked

ASX exchange-traded funds provide an easy way for investors to build a diversified low-cost investment portfolio.

Read more »