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Houston, we have lift off! The share price of tiny tech stock Vection Technologies Ltd (ASX: VR1) is rocketing after the company revealed it will develop the world’s first virtual reality (VR) metaverse platform to promote space travel.

The platform, dubbed Lunar City, is set to launch ahead of NASA’s Artemis Program. The US space agency is working to send astronauts to the Moon for the first time in more than 50 years. The mission is expected to set the stage for a long-term presence on the lunar surface and a future voyage to Mars.

Here’s how the ASX tech share fits into the astronomical plan.

Right now, the Vection Technologies share price is soaring 10% to trade at 7.7 cents.   

ASX tech share signs on to help the public ‘reach space’

ASX tech company Vection Technologies has shaken on a memorandum of understanding that will see it providing VR and metaverse technologies to help train astronauts and space tourists.

Perhaps more excitingly though, it intends to allow the public to ‘reach space’ alongside NASA’s actual space journey. We might soon be able to do so through the fully immersive technology.

The agreement’s ultimate goal is to showcase the Artemis lunar program.

Until then, Vection Technologies, along with partners Thales Alenia Space, Next One Film Group, and ALTEC, will test technology and opportunities on space missions with commercial companies.

That will provide video imaging data from space modules and spacecraft, which will be used to create Lunar City.

Thales Alenia Space is a satellite and space modules manufacturer and owner of ALTEC – an aerospace logistics technology engineering outfit – alongside the Italian Space Agency.

Beyond NASA’s mission, the entities also share a vision to foster business opportunities by leveraging their planned space content.

They aim to develop a business plan, seek content exclusivity arrangements, and establish sales channels for the Lunar City platform. They expect to receive revenue from those they help to ‘experience’ space travel.

While the financial impact of the deal is not yet clear, the ASX tech share expects it will be material. That’s based on the calibre of the partners involved and the company’s strategy in the defence and aerospace sector.  

The post Shooting for the Moon: ASX tech share leaps 10% on deal that could send you to space appeared first on The Motley Fool Australia.

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More reading

• Majority of ASX 200 investors confident despite recession speculations: survey
• ASX 200 tech share WiseTech wobbles on $327 million US acquisition
• 3 ASX 200 resources shares on the move following quarterly updates
• Accent Group share price jumps 11% on strong sales update
• How much profit could Wesfarmers shares make in 2023?

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 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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2022 saw S&P/ASX 200 Index (ASX: XJO) investors facing the most difficult market in many years.

Certainly, some ASX 200 stocks, predominantly energy and select resource shares, certainly did very well last year.

But soaring inflation, and the subsequent series of rapid interest rate hikes from the RBA and other global central banks, pressured the wider market with the ASX 200 finishing 2022 down 5.5%.

Yet, according to the latest quarterly Retail Investor Beat survey from social investing network eToro, Aussie retail investors are broadly shrugging off the downturn, with many viewing last year’s retrace as a buying opportunity.

ASX 200 investors looked at buying the dip

The survey of 1,000 Australian retail investors revealed that 55% were either positive or ambivalent about the tough market conditions in 2022.

18% of respondents said the downturn had actually increased their appetite for investing while 16% had ventured to buy the dip.

Commenting on the survey results, market analyst at eToro Josh Gilbert pointed to the long-term investment plans in play for many ASX 200 investors.

According to Gilbert:

It might be surprising to see investors so upbeat after the bear market of 2022, but the majority of this cohort think in years and decades – and history is on their side. Consecutive down years are rare for equities and bonds, with an average 18% S&P 500 annual gain following big falls.

For those with longer time horizons, the back end of 2022 offered the opportunity for Australian investors to buy companies at lower valuations, improving the outlook for long term returns.

Confidence up as perceived inflation threat recedes

The survey also revealed an 11% quarter-on-quarter uptick in ASX 200 investors who feel confident about their portfolios, with that number reaching 77%. That comes as the threat of inflation looks to be waning.

Investors now feel that a global recession represents the biggest risk to share markets, with 24% seeing this as the main threat.

And they’re not sitting on their laurels, with many adjusting their ASX 200 and other portfolio holdings defensively in preparation for future opportunities.

Respondents holding cash assets increased from 60% in Q3 to 79% in Q4.

Traditional defensive sectors also saw a boost, with healthcare and utilities stocks both increasing by more than 10% in Q4.

Staple consumer goods and energy also increased by more than 10% quarter on quarter.

“Although the RBA might still be able to navigate a soft landing, investors will know that most experts are predicting at least a mild global recession,” Gilbert said. “Many are repositioning accordingly, with more looking into defensive stocks as well moving to cash in Q4.”

The post Majority of ASX 200 investors confident despite recession speculations: survey appeared first on The Motley Fool Australia.

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More reading

• ASX 200 tech share WiseTech wobbles on $327 million US acquisition
• 3 ASX 200 resources shares on the move following quarterly updates
• Accent Group share price jumps 11% on strong sales update
• How much profit could Wesfarmers shares make in 2023?
• Goldman Sachs gives its verdict on the IAG share price

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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S&P/ASX 200 Index (ASX: XJO) tech share WiseTech Global Ltd (ASX: WTC) is edging into the green after falling in early trade.

The logistics software developer’s shares closed yesterday trading for $56.05 each and are currently swapping hands for $56.08 apiece, 0.05% higher. That’s after recovering from a drop of 0.1% at $55.50 a share this morning.

It comes after the blue-chip technology stock announced a major United States acquisition.

What acquisition was announced?

The WiseTech share price slipped after the ASX 200 tech share reported it has acquired US-based Envase Technologies in a transaction valued at US$230 million (AU$327 million).

Envase provides transport management system software for trucking and landside logistics in North America. WiseTech is acquiring the company from private investment business Firmament and a few other sellers.

With more than 1,300 customers across North America, WiseTech expects Envase to generate some US$35 million of revenue in the 2023 calendar year. The ASX 200 tech share forecasts an earnings before interest, taxes, depreciation and amortisation (EBITDA) margin in the low to mid 20% range.

Commenting on the acquisition, WiseTech CEO Richard White said:

This is a strategically significant acquisition in landside logistics, which extends and strengthens our position in one of our six key CargoWise development priority areas, and we’re extremely pleased to have the Envase team join the WiseTech Global group.

Envase CEO Larry Cuddy added:

Over the past few years, we have assembled and integrated a powerful suite of landside logistics solutions. Combined with the strength and size of WiseTech and its CargoWise platform and depth in international logistics, we have a powerful platform that we expect to further increase capacity and utilisation and drive innovation in what is an intensely complex and highly fragmented ecosystem.

WiseTech said it will fund the acquisition with 70% cash (US$161 million) and 30% new WiseTech Global shares issued to the vendors (equivalent to US$69 million).

The ASX 200 tech share expects the acquisition to be completed in February.

How has this ASX 200 tech share been tracking?

The WiseTech share price is off to a strong start in 2023, up 13%.

As you can see in the chart below, the ASX 200 tech share has gained 16% over the past 12 months.

The post ASX 200 tech share WiseTech wobbles on $327 million US acquisition appeared first on The Motley Fool Australia.

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More reading

• Top ASX growth shares to buy in 2023
• 2 ASX 200 growth shares to watch for a boom 2023: expert
• Here are the top 10 ASX 200 shares today
• 3 ASX 200 tech shares with mission-critical products
• ASX 200 tech shares are leading the market higher today

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 positions in and has recommended WiseTech Global. The Motley Fool Australia has positions in and has recommended WiseTech Global. 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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There has been a lot of activity in the mining sector on Wednesday, with a number of ASX 200 resources shares releasing their quarterly updates.

While some of these updates have gone down well with investors, others haven’t been received particularly well.

Here is a summary of what these three ASX 200 resources shares have reported today:

Iluka Resources Limited (ASX: ILU)

The Iluka share price is rising 2% today after the mineral sands producer released its fourth quarter and full year update. Iluka reported Zircon/Rutile/Synthetic Rutile (Z/R/SR) production of 157,000 tonnes for the fourth quarter, taking its full year production to 679,400 tonnes.

And while its production and sales volumes were lower year over year, stronger prices led to revenue growing 16.3% to $1,727.4 million. The company also revealed that it sold out of zircon during FY 2022.

Ramelius Resources Limited (ASX: RMS)

The Ramelius share price is falling 2% on Wednesday after the gold miner’s quarterly update disappointed investors. Ramelius reported gold production of 56,756 ounce at an all-in sustaining cost (AISC) of A$2,153 an ounce.

The latter was an increase of 12% quarter on quarter and driven largely by lower grades. However, management has reaffirmed its full year guidance of 240,000 to 280,000 ounces at an AISC of A$1,750 to A$1,950 an ounce.

Regis Resources Ltd (ASX: RRL)

The Regis Resources share price is down 3% this morning. This follows the release of the gold miner’s quarterly update. That update reveals that Regis delivered quarterly gold production of 117,300 ounces at an AISC of $1,760 an ounce.

And although management has reaffirmed its FY 2023 guidance of 450,000 to 500,000 ounces at an AISC of $1,525 to $1,625 an ounce, it expects the latter to be at the high end of its guidance range. This is due to gold production increases and strip ratios decreasing at Duketon North.

The post 3 ASX 200 resources shares on the move following quarterly updates appeared first on The Motley Fool Australia.

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More reading

• 5 things to watch on the ASX 200 on Tuesday
• Here are the top 10 ASX 200 shares today
• 5 things to watch on the ASX 200 on Thursday
• 5 things to watch on the ASX 200 on Tuesday
• 5 things to watch on the ASX 200 on Thursday

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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The Accent Group Ltd (ASX: AX1) share price is soaring shortly after the market open today after the footwear retailer released a positive 1H FY23 trading update.

Accent is the company behind popular brands such as Hype DC, The Athlete’s Foot, Glue, Platypus, Sneaker Lab, and Stylerunner.

The Accent Group share price is currently up 10.7% at $2.12.

Let’s take a look at the details.

Accent Group share price goes skywards on 33% lift in sales

Accent Group reported continued strong trading through November and December.

Total sales for 1H FY23 (including franchisees) were up 33% on the same period in FY22 at $825 million. Including week 27 of the first half, sales were up 39%.

Earnings before interest and tax (EBIT) for H1 FY23 are expected to be in the range of $90 million to $92 million.

Accent said it estimates the impact of week 27 was about $36 million in sales, contributing about $10 million in marginal EBIT contribution.

What did management say?

Accent Group CEO Daniel Agostinelli said:

Deliveries of fresh new product throughout H1 and in the lead up to Christmas helped to drive higher than expected sales. Despite the impact of currency and clearance of discontinued brands, we are pleased with the year-on-year improvement in gross margin.

Overall inventory levels are clean and well positioned for the start of H2, reflecting a strong in-stock position in core lines and early deliveries of wholesale product for H2 sales.

ASX retail shares reporting strong sales despite inflation

Accent Group isn’t the only ASX retail share reporting strong continuing sales recently.

This is significant given rising inflation has worried many investors that sales in the consumer discretionary category will fall.

JB Hi-Fi Limited (ASX: JBH) recently surprised the market with record sales and earnings in its preliminary FY23 half-year results. Group sales increased 8.6% year-over-year to $5,278.5 million. Net profit after tax (NPAT) screamed 14.6% higher to $329.9 million.

Super Retail Group Ltd (ASX: SUL) also reported a record first half.

Accent Group will release its official 1H FY23 results after the market close on 23 February.

The post Accent Group share price jumps 11% on strong sales update appeared first on The Motley Fool Australia.

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More reading

• Buy ANZ and this ASX dividend share: analysts
• ASX income stocks: A once-in-a-decade chance to get rich?
• 2 of the best ASX dividend shares to buy right now: analysts
• Buy these ASX passive income shares now: experts
• Experts say these top ASX dividend shares are buys right now

Motley Fool contributor Bronwyn Allen 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 Super Retail Group. The Motley Fool Australia has positions in and has recommended Super Retail Group. The Motley Fool Australia has recommended Accent Group and Jb Hi-Fi. 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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Wesfarmers Ltd (ASX: WES) shares report significant profit each year. But how large will the earnings total be in 2023?

For readers who don’t know, Wesfarmers is the parent company of a number of businesses including Bunnings, Kmart, Officeworks, Target, Priceline, and various industrial businesses.

Retail is currently a considerable part of the business, though Wesfarmers’ chemicals, energy, and fertilisers segment (WesCEF) is generating a very sizeable amount of profit these days.

Investors may be wondering how the company is going to perform in 2023 considering the negative impacts of inflation and higher interest rates. But the company may still report a solid year of earnings as consumers keep spending.

The conflicting factors are probably why the Wesfarmers share price has been so volatile over the last year.

Let’s look at some of the projections for the 2023 financial year.

Earnings estimates for Wesfarmers shares

Current forecasts on Commsec suggest the ASX share could generate good profit after a solid first half.

Wesfarmers may make $2.22 of earnings per share (EPS), which represents growth of close to 7% compared to the 2022 financial year.

If Wesfarmers were to make that much net profit after tax (NPAT) per share, it would mean the Wesfarmers share price is valued at 22 times FY23’s estimated earnings.

That level of profit would allow Wesfarmers to pay a very healthy dividend of $1.86 per share. This translates into a potential forward grossed-up dividend yield of 5.4%.

Profit growth is also expected in FY24, according to the numbers, with potential EPS of approximately $2.31. That would put it at 21 times FY24’s estimated earnings.

Is it good value today?

Commsec collates the opinions of a number of different analysts. I think it’s fair to say the ratings are mixed – there are three buy ratings, four holds, and three sell ratings. Goldman Sachs is one of the brokers that rates it as a sell, with a target price of just $40.60, according to Commsec. That implies a possible fall of close to 20%.

With the Wesfarmers share price up more than 6% over the past month, it’s not as cheap as it used to be.

At close to a six-month high, it may see some more volatility ahead. But, with its growing exposure to long-term tailwinds, such as healthcare and lithium, it could be one that may be able to keep performing for shareholders.

The post How much profit could Wesfarmers shares make in 2023? appeared first on The Motley Fool Australia.

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More reading

• Does Telstra sell bonds to ASX retail investors?
• My top predictions for ASX lithium shares in 2023
• Wesfarmers shares: A potential source of secondary income
• 2 of the best ASX dividend shares to buy right now: analysts
• Wesfarmers shares: Here are the dividend forecasts for 2023 and 2024

Motley Fool contributor Tristan Harrison 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 positions in and has recommended Wesfarmers. 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 Insurance Australia Group Ltd (ASX: IAG) share price has been a strong performer over the last 12 months.

Since this time in 2022, as you can see below, the insurance giant’s shares have risen over 18%.

Can the IAG share price keep climbing?

Unfortunately, one leading broker believes the IAG share price could be close to reaching its peak.

According to a note out of Goldman Sachs, its analysts have initiated coverage on the insurer with a neutral rating and $5.29 price target.

Based on its current share price of $5.06, this suggests potential upside of just 4.5%.

And while Goldman is expecting an attractive partially franked 4.7% dividend yield in FY 2023, stretching the total potential return beyond 9%, it isn’t enough for a more positive recommendation. Particularly when other insurance shares offer greater potential returns.

What did the broker say?

Goldman has outlined a number of reasons why its analysts prefer Suncorp Group Ltd (ASX: SUN) over IAG at present. It said:

We note that IAG and SUN are currently facing similar trends from an earnings perspective however we have a slight preference for SUN on valuation. SUN also has higher upside to our PT. We also note that SUN has possible catalysts on the horizon with the proposed sale of the bank/capital management as well as a possible reinsurance QS arrangement which could be supportive to margins. IAG’s QS renewal on materially consistent financial outcomes bodes favourably for SUN in this regard.

The broker has initiated coverage on Suncorp with a buy rating and $13.88 price target.

Though, it is worth noting that Goldman’s top pick in the insurance sector is QBE Insurance Group Ltd (ASX: QBE). There are seven reasons why this is the case, and you can read about them here.

The post Goldman Sachs gives its verdict on the IAG share price appeared first on The Motley Fool Australia.

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More reading

• Bought $1,000 of IAG shares 10 years ago? Here’s how much dividend income you’ve pocketed
• What do IAG shares have in common with Warren Buffett?
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• Why AMP, Computershare, IAG, and Telix shares are dropping today

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 positions in and has recommended Insurance Australia 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 share price of multifaceted materials giant Mineral Resources Ltd (ASX: MIN) is in the red this morning following the release of its latest quarterly report.

Additionally, the company’s takeover target, Norwest Energy NL (ASX: NWE) announced it will accept the material giant’s all-scrip bid after the market closed yesterday.  

The Mineral Resources share price is $93.225 at the time of writing. That’s 3.17% lower than its previous close.

Mineral Resources share price falls despite lithium wins

Here are the key takeaways from the S&P/ASX 200 Index (ASX: XJO) company’s December quarter compared to the prior quarter:

• Iron ore shipments fell 9% to 4.1 million wet metric tonnes (wmt)
• Average realised iron ore price rose 33% to US$97 per dry metric tonne (dmt)
• Spodumene concentrate shipments rose 18% to 97,000 dmt
• 7,418 tonnes of lithium hydroxide and lithium carbonate was converted last quarter
• 6,612 tonnes of which was sold – marking a 75% improvement
• Average realised lithium hydroxide and lithium carbonate revenue was US$65,996 a tonne, exclusive of China VAT

Production at the company’s Mt Marion lithium project lifted 12% last quarter. The project also shipped 59,000 dmt of spodumene concentrate – up 5% quarter-on-quarter for an average realised price of US$4,151 per dmt.

Meanwhile, the Wodgina lithium project shipped 38,000 dmt of spodumene concentrate – up 45% – with 9,000 dmt sold at US$5,131 per tonne.

What else happened last quarter?

The December quarter was a busy one for Mineral Resources and its share price. The stock jumped 17.4% over the three-month period.

However, it’s being weighed down today amid news of Mt Marion’s expansion. The expansion – set to increase the project’s production capacity to 900 kilotons annually – has been delayed by the slower-than-expected arrival of processing equipment and labour shortages. The upgrade is now tipped to kick off in April and reach full run-rate from July.

Meanwhile, the company extended the terms of the Mt Marion Tolling Agreement with Jiangxi Ganfeng Lithium to the end of 2023.

Finally, the ASX 200 giant posted a takeover bid for Norwest Energy in December, offering one share for every 1,367 shares in the smaller energy stock.

After initially rejecting the offer, Norwest announced it will accept a new bid after the market closed yesterday. The approved offer will see shareholders receiving one MinRes share for 1,300 Norwest stocks. That values Norwest shares at 7.41 cents apiece and the takeover target at $497 million.

What’s next?

Despite posting lower iron ore production, the company says it is on track to meet its financial year 2023 production and shipments guidance of between 17.2 million wmt and 18.8 million wmt.

However, delays at Mt Marion have forced the company to drop its shipped guidance for the project to between 250,000 dmt and 280,000 dmt. Of that, 40% is expected to be high grade. Mt Marion’s FOB cost guidance has also increased to between $540 a tonne and $590 a tonne.

Finally, Wodgina remains on track to achieve its shipped guidance of 190,000 dmt to 210,000 dmt.

Mineral Resources share price outperforms ASX 200

The Mineral Resources share price has gained a notable 24% so far this year. Meanwhile, the ASX 200 is up 8%.

The stock has also risen 63% over the last 12 months, beating the index’s 8% gain in that time.

The post Mineral Resources share price tumbles as lithium business takes off appeared first on The Motley Fool Australia.

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More reading

• Guess which four ASX 200 lithium shares charged higher today
• Here are the top 10 ASX 200 shares today
• I’d buy 100 shares of this ASX lithium stock for $700 a year in passive income
• Move over bank deposits! These ASX 200 mining shares are forecasting yields of over 5%
• 5 ASX 200 shares rocketing to new 52-week highs on Tuesday

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 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 Woodside Energy Group Ltd (ASX: WDS) share price is rising following the release of its fourth quarter and full year update.

At the time of writing, the energy producer’s shares are up 0.5% to $37.96.

Woodside share price higher on update

• Q4 production up 0.7% quarter on quarter to a record of 51.6 MMboe
• Full year production of 157,706 MMboe
• Q4 revenue down 12% quarter on quarter to US$5,160 million
• Record FY 2022 revenue of US16,851 million

What happened during the quarter?

For the three months ended 31 December, Woodside reported a 12% decline in quarterly revenue to US$5,160 million. This reflects an 8.5% decline in sales volumes to 52.2 MMboe and a 4% decline in its average realised price to US$98 per barrel of oil equivalent (boe).

This led to Woodside generating full year revenue of US$16,851 million, which was up 142% from US$6,973 million in FY 2021. The merger with the petroleum assets of BHP Group Ltd (ASX: BHP) played a key role in this increase.

In respect to production, Woodside delivered record production of 51.6 MMboe for the fourth quarter. This took its full year production to a record of 157,706 MMboe. Pleasingly, this was ahead of its guidance range of 153 MMboe to 157 MMboe.

How does this compare to expectations?

According to a note out of Morgans, its analysts were expecting full year production of 146MMboe and revenue of US$15,864 million.

This means that the company has smashed both estimates, which may explain why the Woodside share price is rising today despite oil prices sinking overnight.

Management commentary

Woodside’s CEO, Meg O’Neill, was pleased with the company’s strong finish to the year. She said:

The result lifted output for calendar 2022 to 157.7 million boe, surpassing guidance and marking the highest annual production in Woodside’s history. Consistent strong operational performance and favourable operating conditions across the combined portfolio was a key driver in achieving record quarterly and full-year production.

Revenue for the period was $5,160 million, down 12% from the third quarter on the back of lower international crude oil and LNG prices and reduced trading activity. Woodside’s average realised price was $98/boe, down from $102/boe in the preceding period.

Outlook

There has been no change to Woodside’s guidance for FY 2023.

It continues to target production of 180 million to 190 million barrels of oil equivalent.

The post Woodside share price rises on record FY22 production and revenue appeared first on The Motley Fool Australia.

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• Looking to energise returns with this pocket of undervalued ASX shares in 2023
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• Should I buy Woodside shares in 2023?

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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The Vanguard Australian Shares Index ETF (ASX: VAS) is a rather unique exchange-traded fund (ETF) on the ASX. For one, it is the ASX’s most popular ETF, and by a mile too. More ASX investors trust this ETF with their money than any other on the market.

But something else makes this fund a unique one: its structure. Our share market is home to many different ASX-based index funds. But the vast majority of these track the ubiquitous S&P/ASX 200 Index (ASX: XJO).

There’s the iShares Core S&P/ASX 200 ETF (ASX: IOZ), the SPDR ASX 200 Fund (ASX: STW), and the BetaShares Australia 200 ETF (ASX: A200). All of these ETFs mirror the ASX 200 Index, and thus hold the largest 200 shares by market capitalisation in their underlying portfolios.

But not the Vanguard Australian Shares ETF.

Instead of the ASX 200, the Vanguard ETF tracks the S&P/ASX 300 Index (ASX: XKO). As you might guess, this index adds another 100 companies to the ASX 200, meaning that it follows the largest 300 shares on the ASX by market cap. The Vanguard Australian Shares ETF is the only ASX index fund that does this.

But it’s one thing to be unique and special. It’s another to do things differently and get your investors a better return doing so.

So does Vanguard’s unique approach pay off for investors?

ASX 200 vs. ASX 300

Well, there are certainly some benefits that are easy to identify. Vanguard’s ASX 300 ETF is inherently more diversified than an ASX 200 ETF, simply by virtue of its inclusion of ASX shares in its portfolio.

Investors in an ASX 200 ETF will find they have large weightings toward our biggest banks and miners. But an ASX 300 ETF would have slightly less weighting to its top, since it has to make room for those additional 200 companies at the bottom.

We can see this in action if we check out some ETF portfolios. As of 31 December 2022, the iShares Core ASX 200 ETF’s portfolio had BHP Group Ltd (ASX: BHP) as 11.4% of the fund’s total holdings. Commonwealth Bank of Australia (ASX: CBA) was next up with 8.3%.

In contrast, Vanguard’s Australian Shares ETF has BHP at 1.78% of its portfolio, with CBA at 8.11%. Those may seem like small differences, but they can have an impact on a portfolio’s performance over time.

But let’s stop beating around the bush and compare some hard numbers. That’s the only real way we can judge if Vanguard’s ASX 300 approach is a superior one.

Does the Vanguard Australian Shares ETF pay off?

So as of 31 December, the iShares ASX 200 ETF had returned -1.07% over the preceding 12 months. Over the three years to 31 December, it averaged a 5.5% per annum return. That rises to 7.01% per annum on average over five years, and 8.43% per annum over ten. These returns assume any dividend distributions are reinvested.

In the Vanguard ETF’s case, we have a return of -1.78% over the 12 months to 31 December. But over three years, this ETF has averaged 5.58% per annum. Over five, that’s 7.09%, rising to 8.54% over ten years:

So it appears that on every performance metric, aside from the past 12 months, Vanguard’s ASX 300 approach has delivered better returns for its investors than a typical ASX 200 ETF.

Case closed? Well, certainly over the past ten years, it was better to have owned the Vanguard Australian Shares ETF than an ASX 200 ETF. But past performance is no guarantee of future returns, so perhaps the ASX 200 ETFs will have their revenge over the next decade.

The post Does the Vanguard Australian Shares ETF’s unique structure deliver better returns than the ASX 200? appeared first on The Motley Fool Australia.

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More reading

• Did you buy $1,000 of Bank of Queensland shares 10 years ago? Here’s how much dividend income you’ve made
• 10 types of ASX companies that can grow even if the economy tanks
• 5 things to watch on the ASX 200 on Wednesday
• Here are the 3 most heavily traded ASX 200 shares on Tuesday
• Move over bank deposits! These ASX 200 mining shares are forecasting yields of over 5%

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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