Vanguard’s VDGR Diversified Growth ETF, is a “set-and-forget” investment, aimed at delivering growth and income through a mix of asset classes. But how does it work, and how does it compare to other options like VDHG, VGS, VAS and even Stockspot portfolios?
Investing can feel complicated, especially when there are so many ETFs and diversified options available, so we break it down.
What is VDGR and how does it work
VDGR is a managed ETF designed to provide growth over the long term by investing in a diversified portfolio of underlying indexed assets. It combines global shares, Australian shares, bonds, and cash to reduce volatility compared to pure equity ETFs.
Investors don’t have to pick individual ETFs, the VDGR ETF predominantly invests in a mix of unlisted Vanguard managed funds, rebalances periodically, and distributes income; making it a simple option for hands-off investors or those not wanting to hold a number of ETFs from different issuers.
What is VDGR’s investment strategy or objective?
VDGR aims for moderate to high growth and is biased towards growth assets, designed for investors seeking long-term capital growth. The ETF targets a 30% allocation to defensive asset classes and a 70% allocation to growth asset classes. At Stockspot this aligns with our growth (Emerald) risk profile.
VDGR is ideal for investors who want exposure to global markets without managing multiple ETFs themselves. In other words, it’s designed for those who want a core, diversified growth investment in their portfolio.
How is VDGR constructed?
VDGR invests in a mix of unlisted Vanguard funds across four main asset classes:
- Australian shares: providing local market exposure
- Global shares: for international diversification
- Fixed income: to smooth volatility and provide income
- Cash: for liquidity and stability
The allocation is tilted toward growth assets (equities) but still retains a fixed income component.
Vanguard VDGR asset allocation
Source: Vanguard product factsheet target asset allocation as at 30 September 2025.
How has VDGR performed?
Performance can vary depending on market conditions, and past performance is no indication of future performance.
VDGR returns as of September 2025:
1 year return: 12.9%
3 year return: 14.6%
5 year return: 9.6%
Source: ASX. Data as at 30 September 2025.
VDGR vs Stockspot performance
| Ticker code | 1 Year returns | 3 year returns (p.a.) | 5 year returns (p.a.) |
| VDGR (growth) | 12.9% | 14.6% | 9.6% |
| Stockspot Emerald (growth) | 20.0% | 17.6% | 11.2% |
Source: Stockspot and ASX. Data as at 30 September 2025.
Stockspot’s portfolios have a lot in common with Vanguard’s VDGR, including diversification and exposure to global markets. There are however important differences that can affect returns and risk:
- ETF selection flexibility: Vanguard ETFs are limited to offering only Vanguard products, while Stockspot portfolios can choose the best ETFs in each asset class. For example, at Stockspot we use IOO, which historically outperformed Vanguard’s VGS ETF generating a 5 year return of 19.7% over the past five years (data source ASX as at 30 September 2025) vs VGS which returned 16.4% over the past 5 years.
- Exposure to gold: All stockspot portfolios include 12.3% allocation to gold. Gold has historically moved with a negative correlation to shares, meaning when sharemarkets fall, gold rises. This acts as a cushion for portfolios during market downturns, reducing drawdowns and benefiting long-term returns. The inclusion of gold has helped smooth the ride for investors in Stockspot portfolios vs products without meaningful exposure to gold.
This defensive quality has been especially valuable over the past few years, as markets have faced inflation shocks, rising interest rates, and geopolitical uncertainty. During these periods, gold has acted as a reliable stabiliser, protecting portfolios when traditional assets like shares and bonds have fallen together. - Personalisation: Stockspot allows investors with portfolios over $20,000 access to Stockspot Themes, which allows investors a satellite exposure to additional assets, countries or market sectors like cryptocurrency or tech.
Stockspot Emerald is most comparable to VDGR due to its asset allocation weighting ~70% to growth and 30% to defensive
How has VDGR compared to other diversified options?
A number of ETF issuers have introduced diversified ETFs into their suite of products, including BetaShares and iShares.
| Ticker code | Name | % growth assets / % defensive assets | 1 year return | 3 year returns (p.a.) | 5 year returns (p.a.) |
| VDGR | Vanguard Diversified Growth ETF | 70 / 30 | 12.9% | 14.6% | 9.6% |
| DGGF | BetaShares Ethical Diversified Growth ETF | 70 / 30 | 8.7% | 13.6% | 8.3% |
| IBAL | iShares Balanced ESG ETF | 50 / 50 | 9.6% | 11.2% | N/A |
| Stockspot Emerald | Stockspot | 70 / 30 | 20.0% | 17.6% | 11.2% |
How volatile is VDGR?
VDGR is generally less volatile than pure equity ETFs like VAS or VGS due to its mix of bonds and cash, but more volatile than Vanguard’s conservative ETF, VDCO (Vanguard Diversified Conservative Index ETF), which has a 30% allocation to growth assets and a 70% allocation to defensive assets.
How large is VDGR?
VDGR has grown steadily over the past few years, reflecting increasing investor interest in diversified ETFs.
| Ticker code | FUM ($M) 30 September 2025 | FUM ($M) 30 September 2024 | Fum growth ($M) | Fund growth YoY (%) |
| VDGR | $1,231.60 | $910.28 | $321.32 | +35.3% |
What is the management fee for VDGR?
VDGR charges 0.27% p.a., which is competitive for a managed diversified ETF.
Is VDGR better than other investment options?
Which option is ‘best’ is dependent on an investor’s personal risk tolerance and preferences.
VDGR vs VDHG
VDHG (Vanguard Diversified High Growth) is a more aggressive investment option with a higher growth asset allocation (90%). It aims for higher long-term growth but comes with greater volatility.
| Ticker code | 1 year returns | 3 year returns (p.a.) | 5 year returns (p.a.) |
| VDGR (growth) | 12.9% | 14.6% | 9.6% |
| Stockspot Emerald (growth) | 20.0% | 17.6% | 11.2% |
| VDHG (high growth) | 15.7% | 17.6% | 12.8% |
| Stockspot Topaz (high growth) | 20.7% | 18.6% | 12.3% |
VDGR vs pure equity ETFs (like VGS and VAS)
VGS invests only in global shares whereas VAS only invests into Australian shares. These offer higher potential returns over the long term but can come with significant short-term volatility. VDGR’s bond allocation acts to smooth returns. Increased exposure to defensive assets like bonds and gold can significantly reduce how much you lose when markets fall, which is why many investors who subscribe to modern portfolio theory look for a mix of growth and defensive assets within their portfolio, with their allocation to each driven by their risk profile and time horizon.
| Ticker code | 1 year returns | 3 year returns (p.a.) | 5 year returns (p.a.) |
| VDGR | 12.9% | 14.6% | 9.6% |
| VGS | 23.1% | 22.7% | 16.4% |
| VAS | 11.9% | 16.5% | 14.2% |
What are the tax implications of VDGR
One lesser-known drawback of VDGR is its potential tax inefficiency. Because it’s structured as a ‘fund-of-funds’, the underlying managed funds may trigger capital gains when selling assets to meet redemptions. These gains flow through to investors, creating unexpected tax bills.
By contrast, Stockspot portfolios are built entirely from ETFs, which can trade in-kind and minimise realised capital gains. This makes them generally more tax-efficient over time.
Unlike unlisted managed funds, ETF portfolio managers do not need to sell the shares they’ve invested in to raise cash to pay investors who redeem or sell the fund, which helps reduce capital gains distributions.
While VDGR is an ETF, it is constructed as a ‘fund of funds’, created by holding a number of unlisted funds, meaning that it doesn’t hold the underlying shares or bonds directly. While this may not sound like a big deal, it can make a difference at tax time. This structure can make VDGR less tax-efficient than a portfolio constructed of pure ETFs. When the underlying managed funds within VDGR sell assets to meet redemptions, they trigger capital gains which flow through to investors. This is different to ETFs that hold the underlying assets directly, as these are structured to allow in-kind trades, minimising the need to sell holdings and reducing capital gains distributions for investors.
FAQs
Why would investors pick VDGR?
Investors may choose VDGR for a number of reasons:
- For a “core” diversified ETF instead of buying multiple ETFs to build a portfolio
- Hands-off investors wanting a balanced growth and income mix
- A simple “set-and-forget” solution
What countries does VDGR invest in?
VDGR invests globally, including exposure to Australia, the US, Europe, Japan, and emerging markets.
Does VDGR have an allocation to gold?
No, unlike Stockspot which has historically held a 10-15% allocation to gold, VDGR does not directly invest in gold.
How liquid is VDGR?
As a listed ETF on the ASX, VDGR is highly liquid with high volumes of daily trading.
Has VDGR outperformed similar diversified products?
VDGR generally tracks closely with other diversified growth ETFs, offering moderate returns with lower volatility than pure equities, but slightly less growth than high-growth portfolios like VDHG. You can see how Stockspot portfolios performed comparatively here.
Verdict: is VDGR right for you?
VDGR provides a simple, all-in-one way to access diversified growth through a single ETF. Stockspot portfolios, on the other hand, use a mix of ETFs to offer broader diversification across asset classes, including gold, and provide more direct exposure to underlying investments, features that can help manage risk and support more resilient portfolio outcomes.
Stockspot matches investors to a personalised portfolio based on their investing goals and preferences, with the aim of minimising risk while maximising returns.
