I love investing in ASX exchange-traded funds (ETFs), with several of these funds currently in my personal stock portfolio. But if I had to choose just one ASX ETF to invest in, it would probably be the Vanguard Australian Shares Index ETF (ASX: VAS).
As most investors would know, the ASX is home to dozens and dozens of exchange-traded funds. Some are very niche, covering specific corners of the market, such as lithium stocks or oil futures. Others are incredibly wide, tracking thousands of underlying shares drawn from dozens of countries around the world.
The Vanguard Australian Shares ETF sits in the comfortable middle, allowing its investors access to the largest 300 shares listed on the ASX, and weighted by market capitalisation.
So, why would I buy the VAS ETF on the ASX over any other exchange-traded fund?
Well, there are three reasons.
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Three reasons why I would choose VAS as an ASX ETF
Instant diversification
Firstly, VAS is a diversified index fund that covers almost every ASX share you can think of. Buying into this fund will result in an investor gaining an indirect interest in companies ranging from Commonwealth Bank of Australia (ASX: CBA), Telstra Group Ltd (ASX: TLS) and Woolworths Group Ltd (ASX: WOW) to Ampol Ltd (ASX: ALD), JB Hi-Fi Ltd (ASX: JBH) and Xero Ltd (ASX: XRO).
As such, this ETF is a perfect candidate who just want one single, hands-off investment that will hopefully rise over time, pay out decent dividend income and isn't too concentrated in one sector of the economy.
A low-fee ASX ETF
Secondly, the Vanguard Australian Shares Index ETF is relatively cheap. As it currently stands, VAS will charge an investor a fee of 0.07% per annum. That's $7 every year for every $10,000 invested.
Now, there are other, market-wide ASX ETFs available that charge even lower fees than VAS. The BetaShares Australia 200 ETF (ASX: A200) is a good example, with its fee of just 0.04% per annum.
However, I believe VAS' unique exposure to the largest 300 shares on the ASX, rather than the more common 200, makes up for this with its added diversification.
A long track record of solid performance
Thirdly, VAS has a long track record of delivering solid investment performance which I think ASX investors can draw confidence from. Past returns are never a guarantee of future success, of course. However, I think they can still guide us in making our future decisions.
As of 28 February, the Vanguard Australian Shares Index ETF has delivered an average return of 9.09% per annum since its inception in 2009. That beats many other investments, including government bonds, and term deposits, over the same period.
Foolish takeaway
It's for these three reasons that I would choose the Vanguard Australian Shares Index ETF over any other ASX option if I had to pick only one fund to invest in. There are few other ASX ETFs on our market that make such a fine case for a passive, hands-off investment that you can just set, periodically add money to, and forget. And that is a beautiful thing.
