Vanguard’s VDHG Diversified High Growth ETF, is a “set-and-forget” investment designed for long-term growth through a globally diversified mix of assets. It combines Australian and global shares, bonds and cash in one fund. But how does it actually perform, and how does it compare to alternatives like VDGR, VGS, VAS or even Stockspot’s diversified portfolios?
For investors looking to build wealth without managing multiple ETFs, VDHG seeks to offer diversification and convenience with a focus of aggressive growth.
What is VDHG and how does it work?
VDHG is a managed ETF that aims to provide long-term capital growth by investing in a diversified portfolio skewed towards growth 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 VDHG 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 VDHG’s investment strategy or objective?
VDHG’s objective is to deliver long-term growth with higher risk and volatility compared to more balanced ETFs or investment portfolios as it is biased towards growth assets. The ETF targets 90% growth assets (Australian and international shares) and 10% income assets (bonds and cash). This heavier weighting toward equities means investors are taking on more market risk in exchange for potentially higher long-term returns. At Stockspot our high growth portfolio (Topaz) has a 78% allocation to growth assets and is modelled using modern portfolio theory.
VDHG is ideal for investors who want exposure to global markets without managing multiple ETFs themselves. In simple terms, VDHG suits investors who want a “set-and-forget” core, diversified growth investment in their portfolio.
How is VDHG constructed?
VDHG 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
This structure gives investors exposure to thousands of companies globally, with a strong bias towards equities to drive long-term capital growth.
Vanguard VDHG asset allocation
Source: Vanguard product factsheet target asset allocation as at 30 September 2025.
How has VDHG performed?
Performance can vary depending on market conditions, and past performance is no indication of future performance.
VDHG returns as of 30 September 2025:
1 year return: 15.7%
3 year return: 17.6%
5 year return: 12.8%
Source: ASX. Data as at 30 September 2025.
VDHG vs Stockspot performance
| 1 Year returns | 3 year returns (p.a.) | 5 year returns (p.a.) | |
| VDHG | 15.7% | 17.6% | 12.8% |
| Stockspot Topaz | 20.7% | 18.6% | 12.3% |
Source: Stockspot and ASX. Data as at 30 September 2025.
Stockspot’s portfolios share many similarities with Vanguard’s diversified ETFs, including diversification and exposure to global and local 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 $20,000 access to Stockspot Themes, which allows investors a satellite exposure to additional assets, countries or market sectors like cryptocurrency or tech.
Stockspot’s Topaz portfolio is a lower risk comparable product to VDHG (~78% growth and 22% defensive), but returns have not tracked dissimilarly the more aggressive VDHG. Over the past five years, VDHG has delivered solid returns, though its performance has lagged slightly behind Stockspot’s Topaz portfolio due to our strategic allocation to gold and ETF selection flexibility.
How has VDHG compared to other diversified options?
A number of ETF issuers have introduced diversified ETFs into their suite of products, including BetaShares and iShares.
| Ticker code | Name | % growth assets / % defensive assets | 1 year return | 3 year returns (p.a.) | 5 year returns (p.a.) |
| VDHG | Vanguard Diversified High Growth ETF | 90 / 10 | 15.7% | 17.6% | 12.8% |
| DZZF | BetaShares Ethical Diversified High Growth ETF | 90 / 10 | 10.5% | 16.5% | 10.2% |
| IGRO | iShares High Growth ESG ETF | 90 / 10 | 14.6% | 19.0% | N/A |
| Stockspot Topaz | Stockspot | 78 / 22 | 20.7% | 18.6% | 12.3% |
How volatile is VDHG?
VDHG is more volatile than its growth counterpart VDGR or Vanguard’s conservative ETF, VDCO (Vanguard Diversified Conservative Index ETF – which has a 30% allocation to growth assets and a 70% allocation to defensive assets), due to its higher allocation to growth assets. Diversification across geographies and sectors however helps smooth some of the sharp movements for VDHG, often seen in single-market ETFs.
Normalised price of VDHG and VGS
Source: Vanguard (Daily NAVs) as at 30 September 2025.
VGS shows a deeper mid-year drawdown and a stronger rebound, comparative to VDHG which is less volatile with smoother, shallower swings.
How large is VDHG?
VDHG has seen strong investor inflows as diversified ETFs become more popular among long-term investors.
| Ticker code | FUM ($M) 30 September 2025 | FUM ($M) 30 September 2024 | Fum growth ($M) | Fund growth YoY (%) |
| VDHG | $3,342.50 | $2,548.53 | $793.97 | +31.2% |
What is the management fee for VDHG?
VDHG charges 0.27% p.a., which is competitive for a managed diversified ETF.
Is VDHG better than other investment options?
The “best” option depends on an investor’s personal risk tolerance and time horizon.
VDHG vs VDGR
VDGR (Vanguard’s Diversified Growth ETF) is a less aggressive investment option, but still growth focused, with a 70% allocation to growth assets.
| Ticker code | 1 Year returns | 3 year returns (p.a.) | 5 year returns (p.a.) |
| VDHG (high growth) | 15.7% | 17.6% | 12.8% |
| Stockspot Topaz (high growth) | 20.7% | 18.6% | 12.3% |
| VDGR (growth) | 12.9% | 14.6% | 9.6% |
| Stockspot Emerald (growth) | 20.0% | 17.6% | 11.2% |
VDHG 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. VDHG’s inclusion of bonds slightly reduces risk and smooths out returns, ideal for investors who want high growth but not the extreme swings of a pure equity ETF. 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.) |
| VDHG | 15.7% | 17.6% | 12.8% |
| VGS | 23.1% | 22.7% | 16.4% |
| VAS | 11.9% | 16.5% | 14.2% |
What are the tax implications of VDHG?
One lesser-known drawback of VDHG 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 VDHG 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 VDHG less tax-efficient than a portfolio constructed of pure ETFs. When the underlying managed funds within VDHG 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 VDHG?
VDHG is ideal for investors who:
- Want a high-growth, globally diversified core investment
- Hands-off investors wanting a growth and defensive asset mix
- A simple “set-and-forget” solution
What countries does VDHG invest in?
VDHG has broad exposure to Australia, the US, Europe, Japan, and emerging markets.
Does VDHG invest in gold?
No, unlike Stockspot which has historically held a 10-15% allocation to gold, VDHG does not directly invest in gold.
How liquid is VDHG?
As a listed ETF on the ASX, VDHG is highly liquid, allowing investors to buy and sell units during market hours.
Has VDHG outperformed similar diversified products?
VDHG generally tracks closely with other diversified growth ETFs, offering moderate returns with lower volatility than pure equities. You can see how Stockspot portfolios performed comparatively here.
Verdict: Is VDHG right for you?
VDHG 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.
