What is Vanguard?
Vanguard is a funds management business that is owned by its own investors. It was founded in 1975 and now has (or had) around AU$9.7 billion. It has 192 funds in the US, and 232 funds in markets outside the US. It’s a world leader in providing low-cost ETFs.
What makes VDHG so special?
The VDHG ETF provides low-cost access to a range of sector funds, offering broad diversification across multiple asset classes. It’s an all-in-one option for people who don’t want to try to decide their own levels of which ETF to own.
The ETF targets a 10% allocation to income asset classes and a 90% allocation to growth asset classes. At the end of April the allocations were:
- Vanguard Australian Shares Index Fund (Wholesale) 37.0%
- Vanguard International Shares Index Fund (Wholesale) 25.9%
- Vanguard International Shares Index Fund (Hedged) – AUD Class (Wholesale) 15.7%
- Vanguard Global Aggregate Bond Index Fund (Hedged) 6.9%
- Vanguard International Small Companies Index Fund (Wholesale) 6.5%
- Vanguard Emerging Markets Shares Index Fund (Wholesale) 4.9%
- Vanguard Australian Fixed Interest Index Fund (Wholesale) 3.1%
Is VDHG a good investment?
There’s always a risk when investing that you put too many eggs in one basket. Particularly if you invest in individual businesses. What happens if half your portfolio is in one business and it goes bust?
Not only is this ETF invested in seven underlying ETF, but each of those ETFs are invested in loads of shares themselves. The allocation to bonds is also useful to lower volatility. However, considering the ASX is only a small part of the global index, some people may say it’s invested too much in Australian businesses, particularly financial and resource shares.
Plenty of investments within the Vanguard Diversified High Growth Index ETF are growth focused, hence the name. Being invested in growth is probably the best way to grow your wealth over the long term. The returns offered by bonds (and cash) are so low these days with central banks trying to stimulate the economy. Shares have proven to create the best returns over the long term.
Takes the guesswork out of things
Investing in one share ETF alone takes plenty of the investing guesswork out of things for a regular investor. Choosing this all-in-one option can be a clever way to make your investments very automated.
If you’re thinking about a diversified ETF you can access a full review of the Vanguard VDHG ETF, you should know the Best ETFs Australia team has
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