The Vanguard Australian Shares Index ETF (ASX: VAS) is a popular investment on the ASX. How popular? Well, VAS is only the largest exchange-traded fund (ETF) on the ASX by assets under management, as we've documented recently.
It goes without saying that this index fund can be found in many ASX investors' portfolios. And given its diversified nature, many might even have it as their only investment.
Remember, the Vanguard Australian Shares ETF represents an investment in the largest 300 shares listed on our stock market. These are weighted by market capitalisation, meaning that the largest stocks, such as Commonwealth Bank of Australia (ASX: CBA), impact this ETF's return far more than the smaller ones like Aussie Broadband Ltd (ASX: ABB).
With this in mind, investors might be wondering just how well this index fund has done over the past five years. January 2025 is an interesting period to look back five years from, given that back in early 2020, the COVID-19 pandemic was just about to escalate.
So, without further ado, let's dig into the five-year performance of the Vanguard Australian Shares ETF.
VAS-t ASX gains from the Vanguard Australian Shares ETF?
Let's start at the beginning of 2020. VAS units began the 2020 calendar year priced at $85.45 each.
Today, those same units are worth no less than $102.89 (at the time of writing), up a healthy 1.54% this session thus far.
That's a gain worth 20.41%, or roughly 3.75% per annum, on a compounded annual growth rate (CAGR) basis.
If an investor had bought $10,000 worth of VAS units back at the start of January 2020, they would have been able to buy 117 units, with a little change left over.
At today's pricing, those 117 units would have a value of approximately $12,038.
Now, that's decent, you may argue, but nothing to write home about. After all, you could have probably gotten a better return from a cash savings account over this period.
However, this doesn't account for dividend returns. And, as is typical with an ASX index fund, dividend returns are usually worth even more than capital growth on a long-term basis.
Don't forget about the dividends
From 2020 to 2024, VAS paid out four dividend distributions annually. We'll also include the payment that is scheduled to arrive tomorrow (17 January), as the fund has already traded ex-dividend for this payment.
These annual payments vary rather dramatically. To illustrate, 2020 saw an annual dividend distribution total of $2.17. That rose to $3.17 per unit in 2021 and then to $6.30 for 2022. The year 2023 saw these payments shrink back down to $3.50 per unit and back to $3.27 per unit for 2024. Tomorrow's dividend distribution is set to come in at 97.99 cents per unit, which is a nice jump from last year's equivalent payment of 71.62 cents per unit.
Overall, VAS investors have enjoyed a total of $19.39 per VAS unit in dividend distributions since the start of 2020. For our investor with 117 units, this would have translated into $2,268.63 in additional dividend income.
Adding that to our $12,068 in capital, we get a final holding worth $14,306.63. That's a $4,306.63 gain from our original $10,000 investment, or a 43.1% return (roughly 7.35% per annum).
Now, that's a lot better than a savings account.
