Understanding Vanguard Australian Shares Index ETF Dividend Yield and Its Importance for Returns.

The Vanguard Australian Shares Index ETF (VAS) has a dividend yield of 3.3% as of June 2025. The yield is weight-adjusted based on the dividend payout ratio and size of each business in the portfolio. Over the past ten years, the VAS ETF returned an average of 8.8%, with the distribution accounting for approximately 4.5% of the total return.

The Vanguard Australian Shares Index ETF (VAS) has been a prominent player in the Australian ETF market, offering investors exposure to the S&P/ASX 300 Index. As of June 2025, the VAS ETF boasts a dividend yield of 3.3%, which is weight-adjusted based on the dividend payout ratio and size of each business in the portfolio. This yield is a significant contributor to the fund's total return, with the distribution accounting for approximately 4.5% of the total return over the past ten years.

Over the past decade, the VAS ETF has delivered an average annual return of 8.8%. This performance, while robust, is slightly lower compared to some global ETFs such as the iShares S&P 500 ETF (ASX: IVV), which has returned an average of 15.2% per year over the same period. However, the VAS ETF's performance is commendable, particularly when considering its focus on the Australian market and the diversity of sectors it invests in.

The VAS ETF's dividend yield is competitive within the Australian ETF landscape. While it is not the cheapest ETF available, with a management fee of 0.07%, it offers a balanced approach to investing in the Australian share market. The fund's 300 holdings provide broad exposure to the market, although the top ten holdings account for nearly half of the fund's total value, indicating a concentration in large-cap stocks.

Investors should be mindful of the sector diversification within the VAS ETF. Over half of the fund is invested in financials and materials, reflecting the significant presence of these sectors in the Australian economy. This focus may limit the fund's exposure to growth sectors such as technology, which have driven returns for many global ETFs.

In conclusion, the Vanguard Australian Shares Index ETF (VAS) offers a well-diversified investment in the Australian share market, with a competitive dividend yield and a strong track record of performance. However, investors should consider the fund's sector concentration and the availability of other ETFs that provide exposure to global markets. As with any investment, it is essential to carefully evaluate the fund's characteristics and align them with your investment objectives and risk tolerance.

References:
[1] https://www.investing.com/etfs/vanguard-aus.-shares-index
[2] https://www.fool.com.au/2025/07/23/3-things-about-the-vanguard-australian-shares-index-etf-vas-every-smart-investor-knows-2/