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Why would I want to own the VDHG ETF over A200?

There are some very good reasons why I would prefer to own Vanguard Diversified High Growth Index ETF (ASX: VDHG) over BetaShares Australia 200 ETF (ASX: A200).

What’s an exchange traded fund (ETF)?

If you don’t know what an ETF is then it could be a smart idea to look at Rask’s free beginner ETF investor course.

An ETF basically lets you invest in a whole bunch of different businesses with a single investment. Very handy if you want to get good diversification, but you don’t want to buy 50, or 100 or 1,000 businesses yourself. In fact, I’d say buying 1,000 different companies yourself would be a very poor choice for all the brokerage costs alone.

A200 ETF

A200 is a very good option if you’re focused on investing in ASX 200 shares. The A200 ETF is over $1.1 billion in size, so it has a lot of good scale. It is also the cheapest way to invest in ASX shares, with an annual management fee of just 0.07%.

If you’re looking for ASX blue chips then this investment is full of them – Commonwealth Bank of Australia (ASX: CBA), BHP Group Ltd (ASX: BHP), CSL Limited (ASX: CSL), National Australia Bank Ltd (ASX: NAB), Westpac Banking Corp (ASX: WBC), Australia and New Zealand Banking Group Ltd (ASX: ANZ), Wesfarmers Ltd (ASX: WES) and so on.

Why I’d prefer VDHG over A200

A200 isn’t a terrible idea, I just think the VDHG is better for multiple reasons.

The Australian share market provides a decent level of diversification, but the ASX is made up of a large number of banks, miners and other cyclical businesses. They haven’t been doing very well in recent years. Also, because it’s an Australian investment it is largely limited to earnings from Australia and New Zealand. The returns of the ETF have been rather disappointing – since inception in May 2018, the ETF has only made returns of an average of 7% per year.

VDHG is much more diversified. It offers exposure to several ETFs within a single investment.

Those other ETFs within VDHG give exposure to: Australian shares, international shares, international small companies, emerging market shares, global bonds and Australian bonds. You get a large amount of diversification from one investment. Even so, there’s still a major weighting to Australia shares with a weighting of around 35.6%.

With the international shares element, I think you’re getting more growth potential over the long term. Over the past three years, the VDHG ETF has returned a net of 8.4% per annum (after 0.27% per annum costs) – this is better than the ASX 200 return by around 1.7% per annum, which adds up when you’re talking about thousands of dollars.

However, my favourite investments of all are ASX growth shares with long term growth potential. Two of the ones I like right now are Pushpay Holdings Ltd (ASX: PPH) and Magellan Financial Group Ltd (ASX: MFG).

Is BNPL the opportunity of a lifetime or is the sector a ticking time bomb?

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Is BNPL the opportunity of a lifetime or is the sector a ticking time bomb?

Rask's analyst has just finished a 7,500-word report, The Ultimate BNPL Sector Report, taking a deep dive into this booming ASX sector. It shines a spotlight on each of the major players. You can get the full analyst report for FREE by CLICKING HERE NOW.

Note: the report is 100% free.

At the time of publishing, the author of this article does not have a financial or commercial interest in any of the companies mentioned.

Information warning: The information on this website is published by The Rask Group Pty Ltd (ABN: 36 622 810 995) is limited to factual information or (at most) general financial advice only. That means, the information and advice does not take into account your objectives, financial situation or needs. It is not specific to you, your needs, goals or objectives. Because of that, you should consider if the advice is appropriate to you and your needs, before acting on the information. If you don’t know what your needs are, you should consult a trusted and licensed financial adviser who can provide you with personal financial product advice. In addition, you should obtain and read the product disclosure statement (PDS) before making a decision to acquire a financial product. Please read our Terms and Conditions and Financial Services Guide before using this website. The Rask Group Pty Ltd is a Corporate Authorised Representative (#1280930) of AFSL #383169.

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Rask Media’s Ultimate BNPL Sector Report

Afterpay, Zip, Sezzle… is this the opportunity of a lifetime? Or is BNPL a ticking time bomb? This 7,500-word analyst report takes a deep dive into the BNPL sector and shines a spotlight on each of the major players in this booming market. 

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