DHHF or VAS/VGS?

Hi Olivia.

Yes, any option you choose will have a tax outcome at the end of financial year.

Both assets produce income (and franking credits), so there will be some taxes to pay, but luckily this is fairly straightforward. The income information usually gets pre-filled automatically these days which helps, but in any case, you would receive statements which you can give to your accountant to do the tax return.

As for choosing between an all in one ETF vs a combo of two, this article might be helpful in deciding which way to go: https://strongmoneyaustralia.com/dhhf-vdhg-on...

Cheers, Dave

Hello! When deciding between investing in DHHF or a combination of VAS and VGS for long-term investment, it’s important to consider a few factors including investment strategy, diversification, and tax efficiency.

DHHF (BetaShares Diversified High Growth ETF) is a single diversified ETF that aims to provide high growth over the long term by investing predominantly in a mix of growth assets. It is structured to be a ‘set-and-forget’ investment that automatically rebalances and is designed to be cost-effective and tax-efficient. DHHF avoids creating capital gains events at the fund level, which can be beneficial for tax purposes as it minimizes involuntary capital gains distributions.

On the other hand, combining VAS (Vanguard Australian Shares Index ETF) and VGS (Vanguard MSCI Index International Shares ETF) allows you to tailor your exposure to Australian and international markets. This combination provides flexibility in adjusting the allocation between Australian and international equities. However, each fund operates independently, so they may not be as tax-efficient as a single diversified fund like DHHF. Each ETF within this combo will handle capital gains and distributions based on its holdings and investor activity, potentially leading to capital gains distributions that could be taxable.

Regarding your tax responsibilities, even if you are holding these ETFs long-term and not selling any shares, you may still have tax obligations. ETFs typically distribute dividends and possibly capital gains to their shareholders. These distributions are taxable events, so you would need to report them on your tax return. The exact nature of these distributions can vary year by year.

It’s also worth noting that if any ETFs you invest in do distribute capital gains, you will need to include these in your tax return, regardless of whether you reinvest these gains or receive them as cash.

In summary, both investment options have their merits, and your choice might depend on your p

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