VAS Review

What is VAS?

VAS gives you a slice of the 300 largest companies on the Australian Securities Exchange in a single trade. CBA, BHP, CSL, the major banks, Wesfarmers, Woodside — they're all in here, alongside a long tail of mid-cap and smaller Australian businesses.

It tracks the S&P/ASX 300 Index, rebalanced semi-annually, and holds shares directly rather than through a fund-of-funds structure. At 0.14% MER and nearly $24.3 billion in assets, it's one of the largest and most established ETFs on the ASX.

The reason most Australian investors hold VAS isn't just market exposure — it's the franking credits. Australian companies pay heavily franked dividends, and those credits can significantly reduce the tax you owe on investment income. VAS distributes those credits quarterly, making it a genuine after-tax income asset for Australian investors.

Why franking credits matter for VAS investors

Australian companies pay company tax at 30% (or 25% for smaller companies) before distributing profits as dividends. Franking credits represent that tax already paid. When those credits flow through to you as a VAS unitholder, you can use them to offset your own tax bill.

In practice, a fully franked $1.00 distribution carries a $0.43 franking credit (at 30% company tax). For investors in the 32.5% tax bracket, the credits can effectively increase your after-tax return. For investors in the 0% bracket (for example, retirees in pension phase), excess franking credits are refunded in cash by the ATO.

Our take on VAS

"VAS is the default Australian equities ETF for a reason. It's cheap, it's well run by one of the world's most trusted index managers, and the franking credit income is a real structural advantage for Australian investors. The main consideration is that the ASX is a concentrated market — financials and materials dominate. Most investors pair VAS with a global fund to balance out that concentration."