June was one of many hardest months in recent times for the Vanguard Australian Shares Index ETF (ASX: VAS).

In June 2022, the VAS ETF dropped by 8.7%. We haven’t seen a drop that arduous for the reason that COVID-19 crash in 2020.

Keep in mind, an exchange-traded fund’s (ETF) return is determined by the returns of the underlying companies.

The Vanguard Australian Shares Index ETF follows the S&P/ASX 300 Index (ASX: XKO), comprising 300 of the largest companies on the ASX.

This implies, collectively, the ASX 300 fell by 8.7%. On the finish of Could 2022, these had been the positions with a weighting over 3%: BHP Group Ltd (ASX: BHP), Commonwealth Financial institution of Australia (ASX: CBA), CSL Restricted (ASX: CSL), Nationwide Australia Financial institution Ltd (ASX: NAB), Westpac Banking Corp (ASX: WBC), Australia and New Zealand Banking Group Ltd (ASX: ANZ), and Macquarie Group Ltd (ASX: MQG).

As readers can see, a majority of the largest holdings are banks. The large 4 banks accounted for nearly 20% of the portfolio on the finish of Could 2022. Together with Macquarie, it was round 23% of the portfolio. BHP by itself was 10.2% of the portfolio. These few ASX blue-chip shares account for greater than a 3rd of the portfolio.

Declines for ASX blue-chip shares

June was not a form month for lots of the VAS ETF holdings I simply talked about.

The BHP share worth noticed a 7.5% drop over June.

The CBA share worth fell 13.4%.

The NAB share worth dropped 12.4%.

The Westpac share worth declined 18.3%.

The ANZ share worth fell 12%.

I’m not going to checklist each ASX 300 share’s efficiency in June, however the above actions had been a few of the largest contributors to the Vanguard Australian Shares Index ETF’s fall.

Why did they fall?

With BHP, actions within the iron ore worth can have important impacts on the BHP share worth as a result of that’s what generates a number of the revenue for the corporate. Over the month, the iron ore worth fell by round US$20 per tonne.

With the banks, the transfer by the Reserve Financial institution of Australia (RBA) to extend the rate of interest by 50 foundation factors, or 0.5%, in June might have stirred issues up.

Whereas a better rate of interest might help the banks’ internet curiosity margins (NIM), analysts assume it may additionally trigger issues for banks as effectively. For instance, Morgan Stanley famous that larger rates of interest may trigger larger arrears and larger mortgage losses.

Time will inform how low the iron ore worth goes and the way excessive the RBA rate of interest goes to go. One other charge hike is anticipated later in the present day by the RBA.