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VAF

$44.89-0.49%Bonds & Fixed Income67/100
Fund Page ↗

Vanguard Australian Fixed Interest Index ETF · Vanguard

Data as at 29 March 2026

TL;DR

Tracks the broad Australian bond market — government, state government, and investment-grade corporate bonds — paying monthly distributions. Over $5 billion in AUM makes it the largest Australian bond ETF.

MER (Annual Fee)
0.20%
#2 lowest in Bonds & Fixed Income
1Y Return
+0.9%
3Y Return (p.a.)
+1.7%
Dividend Yield
3.11%
Trailing 12 months
AUM
$3,491M
Assets under management
Avg Daily Turnover
$4.0M
Avg shares × unit price
Unit Price
$44.89
As at 29 March 2026
Provider
Vanguard
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Strategy

Physically holds Australian government and corporate bonds across all maturities, weighted by market capitalisation. Managed by Vanguard at 0.20% per year. Monthly distributions make it practical for income-focused investors.

Top Holdings

Key Fact

VAF pays monthly distributions, which distinguishes it from some competitors that pay quarterly or annually. Monthly income makes it practical for retirees managing regular cash needs.

Suited for

Investors adding fixed income to reduce portfolio volatility, generate regular income, or as a counterweight to equity holdings. Bonds typically rise in value when interest rates fall.

Risks

Rising interest rates cause bond prices to fall. The fund's average duration of approximately 5-6 years means a 1% interest rate rise will reduce the fund's value by approximately 5-6%.

VAF Comparisons

ETFCheck Score67/100
Fees (40%)70
Fund Size (25%)68
Liquidity (20%)63
Yield (15%)62
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Frequently Asked Questions - VAF

How much could VAF fall if the RBA raises rates by 1% from current levels?+
VAF holds Australian composite bonds with an average duration of approximately 5-6 years, meaning a 1% rise in interest rates would cause roughly a 5-6% capital loss on the portfolio. This duration risk is VAF's key structural vulnerability. While the 3.42% yield provides some cushion, a rapid rate increase could easily wipe out more than a full year's income. Investors concerned about further RBA hikes should consider shorter-duration alternatives for reduced interest-rate sensitivity.
Does VAF hold corporate bonds, and how does it differ from VGB for risk management?+
Yes, VAF holds a mix of Australian government bonds, semi-government bonds, and investment-grade corporate bonds, making it a composite bond fund. VGB, by contrast, holds only Australian Government bonds with no corporate credit exposure. During market stress or financial crises, VGB typically outperforms VAF because government bonds benefit from flight-to-safety flows while corporate bond spreads widen. VAF suits investors wanting higher yield; VGB suits those prioritising capital preservation during downturns.
How are VAF distributions taxed for Australian investors compared to share ETFs?+
VAF distributions are treated as ordinary income with no franking credits, making them less tax-efficient than bank-heavy ETFs like QFN or XFJ for Australian investors. Interest income from bonds is taxed at your marginal rate without any franking offset. For high-income earners, this means up to 47% tax on VAF distributions. SMSF investors in accumulation phase pay 15% on VAF income, making super a more tax-effective vehicle for holding bond ETFs compared to personal accounts.
Who should hold VAF in their portfolio and what role does it play?+
VAF suits conservative investors, retirees seeking capital stability, or balanced portfolio builders needing defensive fixed-income allocation alongside growth assets. It acts as a volatility dampener - when equities fall sharply, bonds typically hold value or appreciate, smoothing overall portfolio returns. With a 4.2% one-year return, VAF won't match equity ETF performance in bull markets, but its 0.20% MER makes it an efficient way to add Australian investment-grade bond exposure for portfolio construction purposes.