I've heard that most people would only invest in VDHG if they had to choose one ETF. May I ask why?

Howdy Genna!

I’m not a fan of «false choices» in investing (growth or income; trader or investor, etc.) but I’ll like to play this game! Thanks for asking such an important question.

Rather than reinvent the wheel here (Dave & Ben said it well) I’d add that we get asked (a lot!) if VDHG is «a one-stop shop» or «the only ETF I need». We say it’s a fantastic ‘Core’ holding in a long-term portfolio but it’s only the start. The primary reason is diversification. Vanguard is a fantastic ETF provider but, personally, I would find it hard to put all of my money in one investment or with one provider. I just wouldn’t sleep as comfortably as I’d like.

So, I’d agree with most of what the guys say here but maybe note that I like to be diversified across ETF providers as well. Having said that, if I had to pick one provider (another false choice) it would be Vanguard.

Kate & I recently did a ‘deep dive’ of sorts into VDHG: https://www.youtube.com/watch?v=nymvnVYn_gg

In summary, VDHG offers:
1) low fees
2) diversified across asset classes & geographies
3) auto rebalancing
4) high growth (not for every investor – note: Vanguard has other options)
5) pays distributions, and
6) is run by Vanguard

I hope this helps. Happy to field any follow-ups.

Cheers!
Owen

Hey Genna, great question.

It’s sort of like when someone asks you: «if you could only eat one cuisine for the rest of your life, what would it be?» I’d pick Italian, because the Italians have all the good stuff I want and need.

VDHG as a fund is highly diversified, has low fees, is a huge fund so nice and stable, has a long strong track record of performance, and pays a solid dividend income yield with some franking tax credits attached. Also, because this fund is internally diversified between Australian shares, international shares, and defensive investments it avoids some of the need for rebalancing your portfolio over time.

It’s one of my personal favourites, and one that we advise on quite a lot for our financial advice clients. I feel like it is important to note that this investment isn’t for everyone as it does have a high allocation to growth investments (shares) which means before investing you should make sure this investment fits in with the other things you’ve got planned for your money.

Hope this helps 🤑 🚀

Ben

I believe people say that because VDHG is extremely well diversified. It’s really an entire portfolio inside one fund, meaning there is not much benefit (or need) to adding other things alongside it.

That makes the investing process very simple and completely hands off, making it quite attractive for many ppl. Hope that helps!

Hey Genna

Firstly, great QU – I have heard this question a lot so thank you for asking it!

Why people love VDHG is because you’re not just buying one company (like Tesla) you’re buying lots of companies and asset classes too (shares, bond or cash ETFs)… For those playing along at home and are like exsssqueeze me WTF is VDGH that’s the ticker code for Vanguard’s Diversified High Growth Index ETF – it’s in the name. It’s diversified, it’s high growth and it’s an Index ETF!

Let’s use a chocolate analogy (cause that’s how my brain works)

When you buy a box of Cadbury Favourites (mmmm) you’re buying a whole mix of chocolates Cherry Ripe, Picnic, Moro, Dream (not my fave).

When you buy VDHG it’s like you’re buying a mix box of chocolates cause it’s made up of not just the one type but also:
Vanguard Australian Fixed Interest Index Fund
Vanguard Australian Shares Index Fund
Vanguard Emerging Markets Shares Index Fund
Vanguard Global Aggregate Bond Index Fund (Hedged)
Vanguard International Shares Index Fund
Vanguard International Shares Index Fund (Hedged)
Vanguard International Small Companies Index Fund

All in the one product! Wowzier!

Another reason this ETF is popular in my view is it has low fees which people love – the fees are 0.27% p.a