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INVESTING STRATEGY

DHHF vs VDHG

Hi everyone, I was wondering about people's thoughts on VDHG vs DHHF? I'm really interested in the idea of shifting to an 'all-in-one' ETF, because I can't help but tinker at the edges, and I need to stop. I quite like DHHF, because it does not have any funds allocated to bonds, and as a young person, I'm comfortable with a pure equities portfolio - and have mentally survived market dips. (I've got a 30+ year time horizon). Some other points that come to mind: - While DHHF has some tax drag due to their underlying holding being US-domiciled, my understanding is VDHG has issues related to capital gains tax due to the fact it is comprised of unlisted managed funds. - I'm not sure if I'm entirely comfortable with Betashares' philosophy of continually bringing new niche ETFs to the market. I feel that I align a lot more with Vanguard's passive investing approach. And I'm a little worried that DHHF, which to date has only $185 million in funds under management, compared to Vanguard's 1.4 billion. Would it be possible that DHHF changes its asset allocations in the future? Or closes down the fund due to it not being profitable. - There's no track record really with DHHF, and I'm not quite sure what the buy/spread costs and liquidity are over the long-term (and if that matters)? Keen to hear people's thoughts.

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JULIAN FERGUSON

17 August 2022

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Owen Rask

INVESTMENT ADVISER

about 2 years ago

Hey Julian, what a spicy šŸŒ¶ question.

First up: my response here is strictly general in nature, so it does not relate to your financial circumstances, goals or objectives. A qualified financial adviser can help you with that (you can find one on the Moneysmart website). The Rask Group Pty Ltdā€™s financial services guide (FSG) is available on our website. Iā€™d encourage you to read that before continuing with my comment. Also, I know you know this (but for others reading this after you) please ensure you read an ETFā€™s Product Disclosure Statement (PDS) before investing.

Now that thatā€™s done. The spicy bit.

You have done an excellent job identifying the tax implications and long-term philosophies of Vanguard and Betashares, and how they differ. I agree with much of what you said in that with diversified ETFs there is no ā€˜one size fits allā€™ because there are different tax implications, holding structures, philosophies, and so on to consider. Tax drag becomes a bigger issue as an investorā€™s marginal tax rate goes up and, typically, this occurs at the same time as the balance of an investment goes up ā€” a double-whammy. This is why some older investors still prefer LICs or direct shares (where tax issues are more deliberate).

šŸ’” Philosophy šŸ’”

For me, Vanguard wins hands down here. Having been to their offices, spoken with numerous Vanguard personnel and researched them over the years, there is no doubt in my mind that Vanguard is true to label: low costs, simplicity, transparency. Basically, putting members/investors first. The way this works in practice is I believe Vanguard will continue to lower its fees over time, choose products and strategies that will result in lower turnover (good for tax), and drive better outcomes for investors.

Conversely [insert axe to grind šŸŖ“] Iā€™ve been disappointed by some of the ā€˜nicheā€™ or thematic ETFs (e.g. CRYP) offered by Betashares and the poor levels of disclosure in

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