The Vanguard Australian Shares Index ETF (ASX: VAS) is one of the most popular ways to invest in the ASX share market, because the exchange-traded fund (ETF) provides exposure to the S&P/ASX 300 Index (ASX: XKO).
A lot has happened in the last few weeks, with events in the Middle East, a rising oil price and the RBA move to increase interest rates by another 25 basis points to 4.1%.
While this isn’t identical to what happened a few years ago following the Russian invasion of Ukraine, there are a lot of similarities related to energy prices and the anticipation of higher inflation.
I think there two reasons why this could be a good time to invest and one why it isn’t.
Dollar cost averaging
Some Australian investors may have a strategy to regularly invest in the ASX stock market by using the VAS ETF to invest in 300 of the largest and most profitable businesses Aussies can invest in.
If someone regularly invests â regardless of whether the price is up or down â that can be called dollar cost averaging. It’s probably good to take emotion and guesswork out of making investment decisions. I’d happily continue with this investment strategy if that’s what I were doing.
There will be volatility along the way, but bull markets will happen too. We don’t know when those changes will happen, but it’s good to be invested for when conditions do eventually improve.
Bank earnings to increase?
Plenty of experienced investors may say not to make investment decisions based on macroeconomic (news) events.
The Middle East events are certainly troubling and it’s difficult to say how this is going to play out.
But, with the RBA increasing the interest rate â and who knows if there will be more rate rises in 2026 â it’s likely to have a net positive impact on the profitability of ASX bank shares.
According to the February 2026 update, around a third of the VAS ETF is allocated to financial shares such as Commonwealth Bank of Australia (ASX: CBA), National Australia Bank Ltd (ASX: NAB), Westpac Banking Corp (ASX: WBC), ANZ Group Holdings Ltd (ASX: ANZ), Macquarie Group Ltd (ASX: MQG) and Bendigo and Adelaide Bank Ltd (ASX: BEN).
A higher RBA rate means banks can lend out money that they aren’t paying (much) interest on, such as transaction accounts, for a higher loan rate. But, the banks will have to hope the higher RBA rate doesn’t lead to a noticeable increase in bad debts and arrears.
If it does lead to higher profits, that can help send the share prices of the banks higher, which would help the VAS ETF because of how large of an allocation in the portfolio they are.
Even better opportunities?
The VAS ETF is a good investment, but I think there are even better ideas out there for Aussies to look at.
There are plenty of investments that have fallen harder than the VAS ETF (it’s down 6% in recent weeks). Those other names could make excellent long-term buys today, producing stronger returns over time.
VAS ETF is a solid choice, but companies like Temple & Webster Group Ltd (ASX: TPW), Tuas Ltd (ASX: TUA), TechnologyOne Ltd (ASX: TNE) and Breville Group Ltd (ASX: BRG) have major growth ambitions. There are plenty of other appealing investments to consider.
The post Is this a good time to invest in the Vanguard Australian Shares Index (VAS) ETF? appeared first on The Motley Fool Australia.
Should you invest $1,000 in Vanguard Australian Shares Index ETF right now?
Before you buy Vanguard Australian Shares Index ETF shares, consider this:
Motley Fool investing expert Scott Phillips just revealed what he believes are the 5 best stocks for investors to buy right now… and Vanguard Australian Shares Index ETF wasn’t one of them.
The online investing service he’s run for over a decade, Motley Fool Share Advisor, has provided thousands of paying members with stock picks that have doubled, tripled or even more.*
And right now, Scott thinks there are 5 stocks that may be better buys…
* Returns as of 20 Feb 2026
.custom-cta-button p {
margin-bottom: 0 !important;
}
More reading
- 3 ASX ETFs to weather market turmoil
- Should I invest $2,000 in the VAS ETF?
- What I’d do as a beginner with $50,000 to invest in ASX shares
- How investing $50 a day into ASX shares could become $1 million faster than you think
- 4 ASX ETFs to ride through recessions and market crashes
Motley Fool contributor Tristan Harrison has positions in Breville Group, Technology One, Temple & Webster Group, and Tuas. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Macquarie Group, Technology One, and Temple & Webster Group. The Motley Fool Australia has positions in and has recommended Macquarie Group. The Motley Fool Australia has recommended Technology One and Temple & Webster Group. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.