This article was produced 18 May 2025. 

Key takeaways: 

• The Vanguard Diversified High Growth Index ETF offers exposure to multiple asset classes across different geographic regions, with a target asset allocation of 90% for growth assets, and is automatically rebalanced on a periodic basis. 

• Approximately 70% of the fund’s assets are invested in its three largest holdings, which track the performance of the ASX 300, and global large-cap companies listed in major developed countries. 

• Since its inception, VDHG has achieved an average total return of 8.71% per annum, while the fund’s performance over the last one, three, and five years is 10.40%, 9.10% per annum, and 11.25% per annum respectively. 

• Historically, the fund has paid quarterly distributions to unitholders, while the management fee is 0.27% per annum.  

• VDHG’s growth-oriented focus makes it more susceptible to periods of market volatility, alongside general exposure to interest rates and currency movements. 

• It is important to always do your own research before making decisions about investing. Past performance is not an indicator of future performance. 

–––

A regular sighting among the most actively traded ETFs on the Selfwealth platform, the Vanguard Diversified High Growth Index ETF (ASX: VDHG) is also one of the largest ASX-listed ETFs by funds under management (FUM), with $2.79 billion in net assets, as at April 30, 2025.  

First admitted to the ASX in November 2017, VDHG takes on a somewhat different format than many other exchange-traded funds, being something akin to an ETF of funds. That is, the product is made up of holdings in various other ETFs and managed funds from Vanguard. It is also the largest multi-asset ETF on the ASX, with almost triple the assets of the next largest product in the category. 

Given the popularity of this fund, we’re taking a deep dive into the ETF to provide a comprehensive overview of VDHG’s key features and attributes.   

Fund overview and suitability 

According to Vanguard Australia, VDHG “seeks to track the weighted average return of the various indices of the Underlying Funds in which it invests, in proportion to the Strategic Asset Allocation, before taking into account fees, expenses and tax”. The fund is benchmarked against the High Growth Composite Index, with its listed and base currency both being the Australian dollar. 

Unlike other ETFs, which often invest in direct holdings, VDHG invests in a range of funds spanning multiple asset classes. This is intended to provide investors with low-cost broad diversification through strategic asset allocation. 

As part of the fund’s investment objective, Vanguard Diversified High Growth Index ETF predominantly targets growth assets. More specifically, the fund targets an allocation of 90% of its net assets to growth asset classes. 

By breakdown, the fund’s target asset allocation is as follows: Australian Shares (36%); International Shares (26.5%); International Shares (Hedged) (16%); International Small Companies (6.5%); and Emerging Markets Shares (5%). 

Meanwhile, the remaining 10% of the fund’s net assets are allocated to defensive asset classes that are deemed to serve income purposes. The fund’s target allocation for these assets is: International Fixed Interest (Hedged) (7%); and Australian Fixed Interest (3%). 

The asset class weights are designed by Vanguard to remain robust under various market conditions. Please undertake your own research and note that past performance is not an indicator of future performance. 

Considering the growth-oriented focus of the fund, Vanguard Australia advises that VDHG is suited to “buy and hold investors seeking long term capital growth, and with a higher tolerance for the risks associated with investing in the share market”.  

As such, the product suits individuals who are comfortable with the prospect of significant short-term market fluctuations, whereby there is potential for losses, albeit such volatility is accompanied with the potential for higher returns over the long run. 

Put another way, the fund is targeted to investors with long-term investment horizons, who may be looking to simplify their investment strategy through a diversified holding that maintains broad market exposure, and which is automatically rebalanced on their behalf. 

Underlying holdings and asset allocations 

In terms of asset allocations and holdings, as at April 30, 2025, the Vanguard Diversified High Growth Index ETF held the following underlying investments.  

* Rounded to two decimal places 

The above highlights the multi-fund approach of VDHG, which is designed to offer exposure to multiple asset classes, enhance diversification, and potentially reduce portfolio volatility. 

The fund’s largest underlying investment, the Vanguard Australian Shares Index Fund, provides exposure to the local share market by way of seeking to track the return of the S&P/ASX 300. 

After that, the fund’s next two largest holdings are in international shares, courtesy of the Vanguard International Shares Index Fund and the Vanguard International Shares Index Fund Hedged. These two funds are designed to provide exposure to “many of the world’s largest companies listed in major developed countries”, with the latter utilising currency hedging to mitigate risk associated with foreign exchange movements. 

Combined, the fund’s top three holdings represented 70.72% of all net assets in the fund, as at April 30, 2025. 

Elsewhere, other holdings serve the following objectives: 

• The Vanguard International Small Companies Index Fund invests in small-cap companies from developed markets.  

• The Vanguard Global Aggregate Bond Index Fund (Hedged) invests in a diverse portfolio of global bonds.  

• The Vanguard Emerging Markets Shares Index Fund provides exposure to equities from emerging markets.  

• And finally, the Vanguard Australian Fixed Interest Index Fund invests in Australian fixed income securities. 

Investors will note from the above table that some holdings may seem like duplicates. However, in each case, VDHG holds said positions as an ETF and a Managed Fund. 

Performance, distributions and fees 

Since inception, being November 20, 2017, the Vanguard Diversified High Growth Index ETF has delivered a total return, after considering fees, of 8.71% per annum. 

In terms of performances over recent years, VDHG achieved a one-year return of 10.40% over the 12-month period ending April 30, 2025. In the three-year period leading up to this date, the fund achieved an average total return of 9.10% per annum. And finally, over the last five years, VDHG’s annual total return averaged 11.25%. These figures assume reinvestment of all distributions. 

It should be noted that past performance is not an indication of future performance. 

As VDHG is a growth-oriented fund, its performance has largely been influenced by the performance of equities markets, in particular, international shares, which represent the greatest weight of assets. With that said, the performance of bond markets has also shaped returns, as have currency movements, notwithstanding the hedging on some underlying investments. 

Another way to understand the performance of VDHG is through a hypothetical investment analysis, depicted below. 

If you invested $10,000 in VDHG five years ago, April 30, 2020, a year later said investment would have been worth $12,743.74. After an investment period of three years, the investment would have been worth $13,673.23. And finally, after five years, the investment would have been worth $17,042.29 as at April 30, 2025. 

The above hypothetical is based on the fund's month-end Net Asset Value (NAV), including the total value of its investments, divided by the number of shares in the fund.  

As far as distributions are concerned, the Vanguard Diversified High Growth Index ETF has paid quarterly distributions since inception. Based on the four most recent quarterly distributions, which total $2.8713 per unit, and a closing trading price of $68.64 as at May 16, 2025, VDHG is currently trading on a trailing 12-month yield of 4.18%. 

The fund declares and pays distributions to unitholders based on income it earns, as well as “any other amounts that Vanguard considers appropriate for distribution”. Furthermore, the fund manager notes that “the amount and timing of distributions will vary from period to period”, and that “investors should be aware that there may be periods (including long periods of time) in which no distribution is made”. 

Past distributions are not an indication of future distributions. 

Investors should note that an investment in the Vanguard Diversified High Growth Index ETF entails fees. 

According to Vanguard, the management fee for VDHG is 0.27% per annum. Furthermore, the fund manager advises that indirect costs, expense recoveries, and net transaction costs associated with the fund are estimated to be nil. 

Management fees are calculated in relation to the net asset value (NAV) of each fund on a daily basis, and prospective investors should note that other fees may apply. 

Please refer to the relevant Product Disclosure Statements for up-to-date details on costs and expenses, which may be deducted from the fund’s assets as and when they are incurred.  

Benefits of holding VDHG in a portfolio 

As VDHG is designed to provide investors with an ‘all-in-one’ instrument with which to gain diversified exposure to multiple asset classes, it is a simple, cost-effective solution to invest in both domestic and international markets, rather than investing in numerous individual securities. 

This includes exposure to asset classes that might otherwise hold greater risk, including the likes of small-cap equities and equities from emerging markets, or asset classes that investors might be less familiar with, including fixed income assets like bonds.  

Additionally, not only does this exposure span across asset classes, but it also spans across geographic regions, thereby offering another layer of portfolio diversification. 

Finally, while the Vanguard Diversified High Growth Index ETF is an index fund, Vanguard automatically rebalances the fund on a periodic basis to realign the fund’s assets with its target asset allocation. Through this, investors are afforded some assurance that the ETF remains aligned with their risk tolerance and investment objectives.  

Considerations of holding VDHG in a portfolio 

Although an investment in VDHG offers potential benefits, there are also some factors that investors should consider when evaluating the fund. 

First, being a growth-oriented ETF, the fund’s assets are more susceptible to periods of market volatility. As such, investors should be prepared for short-term fluctuations that may lead to losses. This is also why the fund is suited to investors with long-term investment horizons, which provide scope for the ‘ups and downs’ of the market cycle. 

Another consideration is that VDHG targets a 10% allocation to defensive assets, namely, fixed income securities. This supports diversification of the fund and seeks to reduce volatility. However, for investors that are seeking complete exposure to growth assets, alternative ETFs may be more suited to serve such an objective. 

In keeping with the fund’s exposure to fixed income assets, particularly bonds, interest rate movements are something that may have a direct impact on the performance of this asset class. 

And finally, while several underlying positions within VDHG are hedged for currency movements, there are also numerous holdings which remain exposed to foreign exchange movements. Accordingly, investors should be comfortable with the risk to portfolio returns that accompanies said exposure. 

Summary 

As a diversified fund, the Vanguard Diversified High Growth Index ETF offers exposure to multiple asset classes, with a strategic asset allocation tailored towards growth assets.  

More than 70% of the fund’s assets are invested in three holdings, being the Vanguard Australian Shares Index Fund, the Vanguard International Shares Index Fund, and the Vanguard International Shares Index Fund Hedged. With this, the fund is largely exposed to the ASX 300 and global large-cap companies listed in major developed countries. 

Since inception, VDHG has achieved an average total return of 8.71% per annum, while the fund’s performance over the last one-, three-, and five-year timelines is 10.40%, 9.10% per annum, and 11.25% per annum. Furthermore, the fund targets quarterly distributions to unitholders. 

With a management fee of 0.27% per annum. VHGD is designed for investors seeking a low-cost instrument to gain access to multiple asset classes, across different geographic regions, and which is automatically rebalanced on a periodic basis.  

However, investors should also note that the growth-oriented focus of the fund makes it more susceptible to periods of market volatility, alongside general exposure to interest rates and currency movements. 

For more information, you can read about the Vanguard Diversified High Growth Index ETF here. Before investing in any ETFs, you should consult the respective product’s Product Disclosure Statement, which will be available on the fund’s website.