Category: Stock Market

S&P/ASX 200 Index (ASX: XJO) lithium shares counted amongst the hottest stocks to have in your portfolio through much of 2022.

That’s because the rapid growth in EVs and the lithium-ion batteries that power them saw the demand for lithium outpace new supply to the market. Which in turn saw the price of the battery-critical metal notch all-time highs back in November.

As you’d expect, that was good news for investors in the big lithium stocks.

Yet, 2023 has seen the leading ASX 200 lithium shares fall back to earth. As new supplies are hitting the market, with further increases forecast, lithium prices have roughly halved since November’s peak.

Despite a big surge amongst most lithium companies last Tuesday – spurred by US-based lithium giant Albemarle Corporation’s (NYSE: ALB) takeover proposal of Liontown Resources Ltd (ASX: LTR) – the blue-chip lithium stocks are vastly trailing the benchmark over the past month.

The ASX 200 is down 0.8% since this time last month.

Here’s how these ASX 200 lithium shares have performed over that same period:

• Pilbara Minerals Ltd (ASX: PLS) shares are down 8.7%
• Core Lithium Ltd (ASX: CXO) shares are down 9.9%
• Allkem Ltd (ASX: AKE) shares are down 5.3%
• IGO Ltd (ASX: IGO) shares are down 9.1%
• Mineral Resources Ltd (ASX: MIN) shares are down 10.4%

With that in mind, the latest compromise in the European Union’s energy transition plan could throw up some fresh headwinds for the stocks down the road.

Could this further cloud the outlook for ASX 200 lithium shares?

With a population north of 445 million people and a GDP of some US$16 trillion, the EU’s world-leading charge to carbon-neutral transportation is being closely watched by the rest of the world.

Among the recent proposals that were exciting for ASX 200 lithium shares was a law that would ban the sale of new internal combustion engine (ICE) vehicles in the EU by 2035.

EVs, mostly lithium powered, were the most likely candidates to take their place.

But EU negotiators ran into a roadblock with Germany and Italy. The two member nations argued new cars should also be allowed to run on e-fuels.

These combustion engines would then be fuelled via a process that takes carbon dioxide out of the air and hydrogen out of water using renewable energy sources. While the vehicles do emit carbon dioxide when running, this is balanced by what was taken from the air in creating the e-fuel.

Now, as Reuters reports, the European Commission has caved to the demands and will create a new category for vehicles that run on e-fuels post-2035. They have yet to determine how to prevent those vehicles from tapping into conventional petrol.

To be clear, this is unlikely to upend ASX 200 lithium shares in the short to medium term. Especially as e-fuels remain a niche product and are not yet available on a commercial level or at a competitive price.

But the EU’s about-face on the legislation does highlight the reality that there is a large range of alternative ways to power the world’s vehicles into the future. And lithium-ion batteries are only one of them.

Diversify your investments accordingly.

The post Could this further cloud the outlook for ASX 200 lithium shares? appeared first on The Motley Fool Australia.

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More reading

• Why Austal, Netwealth, Perseus, and Pilbara Minerals shares are dropping
• What on earth happened to the Core Lithium share price in March?
• These are the 10 most shorted ASX shares this week
• Buy these ASX 200 shares for massive dividends: analysts
• Top brokers name 3 ASX shares to buy next week

Motley Fool contributor Bernd Struben has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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The Accent Group Ltd (ASX: AX1) share price has started the week strongly.

In afternoon trade, the footwear focused retailer’s shares are up 2% to $2.42.

This latest gain means this ASX 300 share is now up 45% since the start of the year.

Can this ASX 300 share keep rising?

The good news for investors is that one leading broker believes that this ASX 300 share still has plenty of room to climb higher from current levels.

According to a note out of Goldman Sachs, its analysts have reiterated their buy rating with an improved price target of $3.10.

Based on the current Accent share price, this implies potential upside of 28% for investors over the next 12 months.

In addition, the broker is forecasting fully franked dividends per share of 15 cents in FY 2023. This boosts the total potential return by a further 6.2% to beyond 34%.

Earnings potential better than you think

Goldman is bullish on this ASX 300 share due to its belief that the market is underestimating its earnings potential. It also highlights that its target demographic is less likely to be impacted by rising rates. The broker commented:

We believe the market is underestimating the full earnings potential of AX1’s business, which comprises an attractive distribution business, a set of vertically owned brands, and a portfolio of strong retail banners. We see AX1 as well protected from a potential slowdown in discretionary spend given its exposure to a younger consumer and performance footwear.

In respect to its earnings potential, the broker highlights its store roll out opportunity and potential market share gains. It adds:

The business is yet to achieve its full earnings potential, in our view, notwithstanding a strong recovery post lockdowns. Key sources of incremental upside will be: (1) store roll out in key banners; (2) market share gains among key distributed brands; and (3) vertical product margin upside from a growing mix of apparel. We believe this can be unlocked through the more focused execution strategy prioritising core banners/brands with increased ROIC hurdles (~30%) and improved product execution, particularly in apparel.

Overall, Goldman believes this will underpin EBIT of $170.6 million by FY 2025, which is up $62.3 million from FY 2021 and 12.7% ahead of consensus estimates.

This could make Accent one to consider if you’re looking for exposure to retail sector.

The post Don’t underestimate the earnings potential of this ASX 300 share: Goldman Sachs appeared first on The Motley Fool Australia.

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More reading

• Brokers name 3 ASX shares to buy now
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• Why A2 Milk, Accent, Northern Star, and Select Harvests shares are dropping
• Buy Westpac and this ASX dividend share next week: analysts

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has recommended Accent Group. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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The PPK Group Limited (ASX: PPK) share price was having a stunning day before being slammed into a trading halt this afternoon.

The investment company’s shares were up as much as 30% to $1.23 before they were halted.

Though, this is little consolation for longer term shareholders. Even after today’s remarkable gain, this ASX share is down over 75% since this time last year.

Why is this ASX share rocketing higher?

Investors were bidding this ASX share higher today after one of its major investments revealed that a material announcement would be coming this week.

That investment is in fellow ASX share, Li-S Energy Ltd (ASX: LIS). It is a battery technology company that is aiming to develop new lithium sulfur and lithium metal batteries to power the world’s future energy needs.

This morning, Li-S Energy requested a trading halt until the earlier of the commence of trade on Wednesday or the release of an announcement. The latter will be something material according to its request. It commented:

The Company requests the trading halt pending a material announcement in relation to research and development results.

Judging by the performance of the PPK share price today, some investors appear to believe something exciting will be announced that drives the Li-S Energy share price higher, dragging the PPK share price along with it.

At the last count, PPK owned approximately 45% of Li-S Energy. This values its investment at roughly $19.2 million. As a comparison, following its strong gain today, the PPK market capitalisation now stands at almost $110 million.

On Wednesday (or potentially earlier) we will find out whether this news was worthy of driving this ASX share 30% higher today.

The post Guess which ASX share just rocketed 30% before being halted appeared first on The Motley Fool Australia.

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More reading

• Guess which ASX All Ords share is rocketing 20% on lithium battery news

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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With so many shares to choose from on the ASX, it can be hard to decide which ones to buy. The good news is that brokers across the country are doing a lot of the hard work for you.

Three top ASX shares that leading brokers have named as buys this week are listed below. Here’s why they are bullish on them:

ALS Ltd (ASX: ALQ)

According to a note out of Goldman Sachs, its analysts have initiated coverage on this testing services company’s shares with a buy rating and $14.60 price target. Goldman feels confident about ALS’ outlook. This is due to its belief that the company is positioned to benefit from short-term mining exploration and long-term green metals trends. The ALS share price is trading at $12.57 on Monday.

Karoon Energy Ltd (ASX: KAR)

A note out of Morgans reveals that its analysts have retained their add rating on this energy producer’s shares with an improved price target of $3.80. This follows news that the company’s second production well at Patola has come online ahead of expectations. Outside this, the broker believes its shares are thoroughly undervalued and that investors should be taking advantage of this to snap them up. The Karoon Energy share price is fetching $2.30 this afternoon.

Lynas Rare Earths Ltd (ASX: LYC)

Analysts at Bell Potter have upgraded this rare earths producer’s shares to a buy rating with a trimmed price target of $8.06. Although the broker acknowledges that there are some near term earnings risks to consider, it feels the recent Tesla-induced selloff has been an overreaction. Bell Potter sees multiple long-term growth pathways underpinned by arguably the best rare-earth deposit at Mt Weld. The Lynas share price is trading at $6.55 today.

The post Leading brokers name 3 ASX shares to buy today appeared first on The Motley Fool Australia.

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More reading

• 5 things to watch on the ASX 200 on Monday
• Here are the top 10 ASX 200 shares today
• Why ALS, Centaurus Metals, Pilbara Minerals, and Westgold shares are rising today
• 5 things to watch on the ASX 200 on Tuesday
• Why is the Lynas share price down 25% in a month?

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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In afternoon trade, the S&P/ASX 200 Index (ASX: XJO) is on course to start the week with a solid gain. At the time of writing, the benchmark index is up 0.65% to 7,225.2 points.

Four ASX shares that are climbing more than most today are listed below. Here’s why they are racing higher:

Electro Optic Systems Holdings Ltd (ASX: EOS)

The EOS share price has jumped 35% to 61.5 cents. This morning, EOS revealed that its Defence Systems business has secured a contract with SpetsTechnoExport, a Ukrainian state-owned foreign trade enterprise. The deal will see EOS supply SpetsTechnoExport with up to 100 heavy remote weapon systems (RWS).

Lake Resources N.L. (ASX: LKE)

The Lake Resources share price is up 10.5% to 49.2 cents. This has been driven by the release of an update on the lithium developer’s Kachi operation in Argentina. Lake revealed that independent testing of lithium carbonate produced from Kachi with its Lilac DLE technology has confirmed grades and purity greater than 99.8%.

Tyro Payments Ltd (ASX: TYR)

The Tyro share price is up 8% to $1.55. This appears to have been driven by speculation that Tyro could be about to receive another takeover approach from Potentia Capital Management. The two parties are currently in discussions in relation to a possible change of control transaction.

Woodside Energy Group Ltd (ASX: WDS)

The Woodside share price is up 3% to $34.37. Investors have been buying Woodside and other energy shares on Monday after OPEC announced a surprise production cut. This has sent oil prices surging higher during Asian trade. It has also driven the S&P/ASX 200 Energy index 2.6% higher this afternoon.

The post Why EOS, Lake Resources, Tyro, and Woodside shares are racing higher today appeared first on The Motley Fool Australia.

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More reading

• Electro Optic Systems share price rockets 53% on Ukraine deal
• Why are ASX 200 energy shares off to such a great start on Monday?
• Why is the Lake Resources share price rocketing 19% on Monday?
• Down 27% in a month, is the Lake Resources share price finally cheap enough to buy?
• Why Appen, Harvey Norman, Healthco, and Lake shares are dropping today

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The S&P/ASX 200 Index (ASX: XJO) is having yet another positive day so far this Monday. At the time of writing, the ASX 200 has gained another 0.76%, putting the index back over 7,230 points. If these levels hold until the end of the trading day, it will be the sixth day in a row of gains for the ASX 200.

As you might expect, many ASX 200 shares are having top days today. In fact, there are at least seven that have just hit new 52-week highs. What a way to start the week.

So let’s check out these new ASX 200 high watermarks.

Seven ASX 200 shares hitting new 52-week highs today

First up is United Malt Group Ltd (ASX: UMG) United Malt shares are currently enjoying a 0.95% bump to $4.80 a share. But this morning, this malt producer climbed as high as $4.87, which is the company’s new 52-week high point. United Malt shares are now up a whopping 37.4% in 2023 year to date.

Next, we have Fisher & Paykel Healthcare Corporation Ltd (ASX: FPH). Fisher & Paykel shares have had a bouncy day, spending time in both positive and negative territory. Right now, this ASX 200 healthcare share is up by 0.12% at $24.89 each.

But this morning, we saw this company head all the way past $25 to a new 52-week high of $25.02 a share. Year to date, Fisher & Paykel Healthcare is now up a pleasing 16.7%.

ASX 200 travel share Webjet Ltd (ASX: WEB) is also worth a gander today. It’s been a long time since Webjet had any ASX news to share with investors. But that hasn’t stopped this company from having a stellar start to 2023.

Today, the Webjet share price has soared another 3% to $7.25 a share a present, which is right on the company’s new 52-week high. Webjet has now climbed 17.5% in 2023 so far.

Next, let’s examine ASX 200 real estate company REA Group Ltd (ASX: REA). REA shares are also enjoying some time in the sun today. The owner of realestate.com has gained a decent 1.42% so far today to $140 a share, but went as high as $141.13 this morning, a new 52-week high. REA shares are now up a happy 28.8% in 2023 to date.

WiseTech Global Ltd (ASX: WTC) is our next ASX 200 share worth a look. This company has gained an impressive 2.75% so far this season to $66.93 at the time of writing. But we saw Wisetech climb as high as $67.25 a share this morning.

Not only is that a new 52-week high for the company, but an all-time high to boot. Wisetech Global shares are now basking in a year-to-date gain of 36%.

The best until last?

Telstra Corporation Ltd (ASX: TLS) is one of the most famous and widely held shares on the ASX 200. So many investors will be popping the champagne today with Telstra’s new 52-week high. The telco closed at $4.22 a share last week but shot up to $4.24 just before midday today.

That’s the new high watermark for the past 12 months that investors can boast of today. The Telstra share price is now up 6.8% in 2023 to date.

And finally, our next 52-week high to discuss comes from ASX 200 veteran Washington H. Soul Pattinson and Co Ltd (ASX: SOL). This investing house has been on fire of late, putting on a pleasing 5.4% over the past month alone.

This morning, Soul Patts notched up another 52-week high by climbing all the way to $30.63 a share. Right now, investors have cooled their jets a little, with Soul Patts at $30.34 a share. Even so, this ASX institution is now sitting on an 11.9% gain for 2023 so far.

The post 7 ASX 200 stocks smashing new 52-week highs on Monday appeared first on The Motley Fool Australia.

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More reading

• Why did the Telstra share price beat the ASX 200 in March?
• 5 things to watch on the ASX 200 on Monday
• For $400 in monthly passive income, buy 28,236 shares of this ASX 200 stock
• These were the best performing ASX 200 shares in March
• Here are the top 10 ASX 200 shares today

Motley Fool contributor Sebastian Bowen has positions in Telstra Group and Washington H. Soul Pattinson and Company Limited. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Washington H. Soul Pattinson and Company Limited and WiseTech Global. The Motley Fool Australia has positions in and has recommended Telstra Group, Washington H. Soul Pattinson and Company Limited, and WiseTech Global. The Motley Fool Australia has recommended REA Group. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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In afternoon trade, the S&P/ASX 200 Index (ASX: XJO) is on course to start the week with a decent gain. At the time of writing, the benchmark index is up 0.7% to 7,228.5 points.

Four ASX shares that have failed to follow the market higher today are listed below. Here’s why they are dropping:

Austal Ltd (ASX: ASB)

The Austal share price is down 3% to $1.67. Investors have been selling this shipbuilder’s shares after it revealed that the United States Department of Justice has indicted three former Austal USA employees. They have been indicted for allegedly making or causing to be made false and misleading statements about Austal USA’s performance and financial condition between 2012 and 2016. The US SEC has also filed civil charges against the same three individuals.

Netwealth Group Ltd (ASX: NWL)

The Netwealth share price is down 7% to $12.57. This morning, this investment platform provider released its quarterly update. Although it revealed $1.7 billion in net inflows, this is slower than previous quarters. Nevertheless, together with favourable market movements, Netwealth’s FUA increased by 5.45% or $3.4 billion to $65.8 billion.

Perseus Mining Limited (ASX: PRU)

The Perseus Mining share price is down 8% to $1.63. This follows broad weakness in the gold industry after investor sentiment improved. This has seen the S&P/ASX All Ordinaries Gold index fall 1.9% today. In other news, this morning, the Africa-focused gold miner announced a new US$300 million syndicated revolving corporate facility. This replaces its existing US$150 million facility.

Pilbara Minerals Ltd (ASX: PLS)

The Pilbara Minerals share price is down over 3% to $3.81. A number of lithium shares are dropping today. This may be due to a bearish note out of Citi regarding lithium prices or the release of Tesla’s deliveries numbers overnight. The latter was a record but still fell short of the market’s expectations.

The post Why Austal, Netwealth, Perseus, and Pilbara Minerals shares are dropping appeared first on The Motley Fool Australia.

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More reading

• These ASX 200 lithium shares could be takeover targets: Morgans
• Here are the 3 most heavily traded ASX 200 shares on Friday
• Brokers name 3 ASX shares to buy now
• ‘Sky-high demand’: 2 ASX 200 mining shares that could head to the moon
• 5 things to watch on the ASX 200 on Friday

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Austal and Netwealth Group. The Motley Fool Australia has positions in and has recommended Netwealth Group. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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Directors of S&P/ASX 200 Index (ASX: XJO) coal share New Hope Corporation Ltd (ASX: NHC) have been on a buying spree.

Three of the company’s insiders snapped up more than $1.6 million worth of its stock on Thursday – paying an average price of around $5.51 apiece.

And that looks to have been a bargain. The New Hope share price is currently trading 2.47% higher at $5.82.

Insider buying can sometimes signal that those in the know are expecting big things from a stock.

So, could now be a good time to jump on board New Hope shares? Let’s take a look.

Insiders snap up New Hope shares

Billionaire Robert Millner and son Tom Millner – both of whom sit on the New Hope board – saw their respective indirect interest in the company bolstered by 300,000 shares last week.

The pair both hold an interest in J. S. Millner Holdings Pty Limited, which snapped up the stake for a total of around $1.65 million on Thursday. It paid between $5.45 per share and $5.62 per share for the parcel.

Meanwhile, director Jacqueline McGill got an even better deal, bolstering her position in the ASX 200 coal favourite by 10,000 shares, paying $5.41 apiece on market – a total spend of $54,100.

Is the stock a buy?

So, is now a good time to buy New Hope shares? Well, that depends on who you ask.

The company itself seemingly thinks so. It resumed its $300 million on-market share buyback last month.

Meanwhile, Morgans has an add rating and a $6.35 price target on the stock, my fool colleague James reports. That represents a potential 10% upside on its current level.

The broker is said to expect the company to continue growing its already whopping dividends in the coming years.

On the other hand, Goldman Sachs believes the New Hope share price overvalues the company given its expectation that coal prices will soon slump.

It has a sell rating and a $3.70 price target on the stock – a potential 36% downside.

The post Directors have bought more than $1.6m of New Hope shares in a week. Should you buy? appeared first on The Motley Fool Australia.

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More reading

• Passive income: Broker says buy this ASX 200 share for an 18% dividend yield
• 3 dividend stocks with the biggest ASX 200 yields. Time to buy?
• How I’d invest $20k in ASX 200 shares to earn a second income of $140 a month
• BHP share price dips as coal mines catch attention
• Top brokers name 3 ASX shares to buy next week

Motley Fool contributor Brooke Cooper has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Goldman Sachs Group. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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Investors have been understandably hesitant when it comes to S&P/ASX 200 Index (ASX: XJO) banks of late.

But legendary investor Warren Buffett has some handy tips for allaying those fears before investing in the sector.

Global bank stocks have been roiled in recent weeks, commencing with the collapse of United States-based Silicon Valley Bank and subsequently Signature Bank.

Regional banks in the US remain under pressure, as the crisis has spread to Europe.

Credit Suisse was the first victim there. The venerable bank was taken over by UBS in a desperate deal engineered by the Swiss government to stave off its collapse. Other European banks, including Deutsche Bank, have also come under pressure.

So, are ASX 200 banks any different?

Here are three tips from Warren Buffett to keep in mind when researching the sector.

Three Warren Buffett tips on how to invest in ASX 200 banks

First, before Warren Buffett invests in any bank stock, he carries out thorough research to ensure it has a good margin of safety. Buying a stock, the Oracle of Omaha says, is just like buying an entire business.

So do your homework!

When it comes to ASX 200 bank shares, you want to make sure they’re resilient to any potential liquidity crunch, like those that are rocking some banks in the US and Europe.

The good news here is that the big four ASX 200 banks are reported to be in the strongest shape of any in the world, in terms of their Common Equity Tier 1 (CET1) ratio.

CET1, if you’re not familiar, measures the core equity capital of a bank in comparison to its risk-weighted assets.

The Australian Prudential Regulation Authority (APRA) requires the ASX 200 banks to have a minimum 10.25% CET1 ratio. And all of the big four banks handily exceed that level.

Speaking at The Australian Financial Review Banking Summit, APRA chair John Lonsdale said, “Australians can be confident of two things: their banking system is among the strongest and most resilient in the world, with prudential safeguards above and beyond minimum international requirements.”

The second Warren Buffett tip for investing in ASX 200 banks is to look for economic moats.

Just like a moat protects a castle, these are companies with existing competitive advantages that make it more difficult for newcomers to come in and steal their businesses. The sheer size of the big four banks and their broad lending reach gives them all solid moats.

Finally, don’t expect to double your money overnight.

Warren Buffett recommends investing for the long term.

ASX 200 banks may not be immune to any short-term jitters surrounding the global banking industry.

But with world-leading capital positions and lengthy track records of regular dividend payouts, patient investors who’ve done their due diligence should reap the rewards in good time.

How have the big banks been tracking?

Here’s how the big four ASX 200 banks have performed over the past six months:

• Australia and New Zealand Banking Group Ltd (ASX: ANZ) shares are up 2.8%
• National Australia Bank Ltd (ASX: NAB) shares are down 2.9%
• Westpac Banking Corp (ASX: WBC) shares are up 6.5%
• Commonwealth Bank of Australia (ASX: CBA) shares are up 10.2%

The post 3 Warren Buffett tips on how to invest in ASX 200 banks appeared first on The Motley Fool Australia.

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More reading

• Buy these ASX 200 shares for massive dividends: analysts
• Top ASX dividend shares to buy in April 2023
• Why was the Westpac share price sold off in March?
• Why did the ANZ share price crash 7% in March?
• Why did the NAB share price tank more than 7% in March?

Motley Fool contributor Bernd Struben has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has recommended Westpac Banking. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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The S&P/ASX 300 Index (ASX: XKO) and ASX shares are having a stellar start to the trading week so far this Monday. At the time of writing, the ASX 300 is up a healthy 0.78% at just under 7,190 points. So as an index fund covering the ASX 300, by all accounts, the Vanguard Australian Shares Index ETF (ASX: VAS) should be doing something similar.

Yet this ASX exchange-traded fund (ETF) is barely up today. Vanguard Australian Share ETF units closed at $89.78 each last Friday. But today, this ETF is only up by a seemingly paltry 0.29% at $90.04. Index funds like the Vanguard Australian Shares ETF are supposed to mirror the index they track. So this is a rather strange diversion.

Thankfully, this ETF isn’t broken, and neither is the share market. And in fact, investors should be grateful that Vanguard Australian Shares ETF units are in the green at all. This situation is occurring because it is ex-dividend day for the Vanguard Australian Shares ETF. Or more accurately, ex-distribution day.

Vanguard Australian Shares ETF doles out its latest dividend

Just like ASX shares, ETFs can pay out dividends too. These are known as distributions, and occur because an ETF that holds dividend-paying shares in its portfolio has to pass those dividends through to their investors.

In the Vanguard Australian Shares ETF’s case, it owns the 300 largest shares by market capitalisation on the share market. That’s everything from Westpac Banking Corp (ASX: WBC) and Rio Tinto Limited (ASX: RIO) to Xero Limited (ASX: XRO) and Lovisa Holdings Ltd (ASX: LOV).

So there are a lot of dividends to pass on here. As such, this ETF usually pays out quarterly dividend distributions. And the latest one is coming to investors soon.

Late last month, Vanguard announced that the Australian Shares ETF’s latest distribution would be paid on 20 April, with an ex-distribution date of 3 April.

Later, the provider confirmed that this distribution would be worth 57.6988 cents per unit. This is the lowest quarterly distribution that this ETF has paid out since July 2021. For context, last year’s corresponding quarterly payment was worth 199.59 cents per unit. The previous quarterly payment that was doled out in January this year was worth 74.97 cents per unit.

So as of today, new investors in the Vanguard Australian Shares ETF are not eligible for this upcoming dividend distribution. As such, this explains why the ETF isn’t matching the market’s gains and appears to be underperforming.

The post Why is the Vanguard Australian Shares Index ETF (VAS) tumbling on Monday? appeared first on The Motley Fool Australia.

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More reading

• Here are the ASX shares I was buying and selling in March
• Hoping to bag the next Vanguard Australian Shares Index ETF dividend? You’d better hurry
• No savings? Drip-feed $500 a month into ASX shares and aim to retire in comfort
• How much do I need to invest in ASX shares for $100 in weekly passive income?
• Does the fall in the Vanguard Australian Shares Index ETF share price make it a no-brainer buy?

Motley Fool contributor Sebastian Bowen has positions in Vanguard Australian Shares Index ETF. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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