Vanguard’s Diversified High Growth ETF (VDHG) sounds bold at first glance. After all, “high growth” suggests ambition. Long-term gains. Something punchy.

But some people question the name.

You might ask questions like, “Is it aggressive enough?” or “Am I giving up too much growth?”. Those questions make sense, especially if you’re weighing up VDHG against 100% share portfolios or other growth-focused funds.

This article unpacks these common questions. We’ll take a closer look at VDHG’s asset allocation, how it’s built, and why it includes bonds at all. We’ll then look at how it compares to more aggressive options and explore how its asset mix affects growth potential.

We’ll also break down how “conservative” a fund like VDHG really is and what that might mean for someone with long-term goals.

What is VDHG?

VDHG is one of Vanguard’s diversified exchange-traded funds (ETFs ). It’s designed to offer broad exposure to different investments through a single fund. It’s often described as an “all-in-one” portfolio. That means investors don’t need to combine multiple ETFs or manage asset splits themselves.

VDHG holds a mix of asset classes. Around 90% is invested in growth assets like shares. The other 10% sits in defensive assets such as bonds. Shares aim to grow in value over time. Bonds are generally used to reduce risk. They’re often considered more stable but don’t usually offer the same long-term growth.

The fund automatically maintains its target mix using a process called rebalancing. When markets move, Vanguard adjusts the holdings to stay close to the original balance.

VDHG is also a fund of funds. That means it invests in other Vanguard funds that include Australian shares, global shares, bonds, and emerging markets. Because it uses this structure, investors get exposure to thousands of companies and a range of economies, without needing to pick and choose.

The allocation and underlying holdings can change slightly over time, so it’s a good idea to check the latest Vanguard factsheet for the most accurate details.

What does "conservative" even mean in this context?

The word “conservative” can mean different things depending on the situation. In investing, it often signals lower risk. But that depends on what you’re comparing.

It’s about more than whether a fund holds bonds or shares. Other factors also shape how a fund behaves. Here’s what to consider:

• Risk tolerance : How much risk you’re willing or able to take. This varies from person to person.
• Volatility : How much an investment goes up and down in value. More volatility usually means more noticeable swings.
• Drawdown : How far an investment drops in a downturn. Some funds fall harder than others. Some bounce back faster.

As mentioned above, VDHG includes a small allocation to bonds, which can reduce both volatility and drawdowns. Other investments like Betashares Diversified All Growth ETF (DHHF) , Vanguard Australian Shares Index ETF (VAS) and Vanguard International Shares Index ETF (VGS) are fully invested in shares. These options tend to rise more in strong markets and fall harder during downturns.

Compared to them, VDHG may seem more conservative. But how that plays out depends on the market and the investor. We’ll take a closer look at how VDHG compares to these alternatives later in the article.

How VDHG’s asset mix affects growth potential

Growth assets like shares tend to offer higher returns over the longer term. But that trend is based on historical performance, which isn’t a reliable indicator of future performance. Shares also tend to fluctuate more in value.

Bonds, as defensive assets, are typically more stable and may hold their value better in a downturn . But they usually grow more slowly.

As mentioned, 10% of the VDHG portfolio is allocated to bonds. This small piece plays a specific role:

• It can help cushion the impact of market drops
• It may lower overall volatility
• It slightly reduces the potential for higher returns during strong markets

Some investors see this bond allocation as a trade-off. It might be viewed as:

• A drag if you’re aiming for maximum growth
• A shock absorber if you prefer a smoother ride

This difference becomes more noticeable when comparing VDHG to all-equity funds, which may deliver stronger growth along with deeper dips. Long-term, the impact of a 10% bond holding may seem small. But in the short to medium term, it can shape how the portfolio behaves during market ups and downs.

Why would Vanguard include bonds in a "high growth" portfolio?

It might seem odd to include bonds in a fund designed for growth. But there are reasons for that decision. Bonds don’t usually drive long-term growth. However, they can serve a few other purposes in a portfolio like VDHG.

Here’s why Vanguard might include them:

• To reduce short-term risk : Bonds may help soften the impact when share markets fall. That can make the overall performance less volatile.
• To support long-term behaviour : Some investors sell during downturns . A smoother investment experience can make it easier to stay the course.
• To increase diversification : Diversifying the portfolio spreads risk across different asset types. This looks beyond returns to also stay invested through tough periods.
• To suit a broad range of investors : VDHG is built for general use. Not everyone wants or needs a fully aggressive investment approach.

The 10% bond allocation won’t eliminate risk. But it may potentially help reduce the chances of large, short-term drops that some investors find hard to manage.

How VDHG compares to more "aggressive" alternatives

While VDHG includes a small allocation to bonds, other popular portfolios skip this and invest entirely in shares. As we highlighted earlier, funds like DHHF or the popular VAS + VGS mix don’t include bonds or other defensive assets.

These options are often seen as more aggressive because they aim for higher growth. That means taking on more risk.

Here’s how they compare:

Feature	VDHG	DHHF	VAS + VGS combo
Asset mix	~90% shares, ~10% bonds	100% shares	100% shares
Rebalancing	Automatic	Automatic	Manual (you manage it)
Management style	Fund of funds	Fund of funds	DIY combination
Level of control	Lower	Lower	Higher
Expected volatility	Lower than 100% share funds	Higher than VDHG	Higher than VDHG
Management fee (approximately, as of publication)	~0.27%	~0.19%	~0.25% combined

Each approach comes with trade-offs:

• VDHG prioritises simplicity and built-in rebalancing.
• DHHF offers full share exposure with fewer defensive assets.
• VAS + VGS gives full control, but you manage the mix and updates.

We’ll soon explore why an investor might go for VDHG relative to more aggressive options.

How has VDHG performed over time?

Reviewing how a fund has behaved in different markets can offer useful context.

VDHG has generally delivered stable long-term returns, though slightly below those of all-share portfolios like DHHF or a VAS + VGS mix. That’s expected, given the small bond component.

In bull markets , VDHG tends to grow, but not as rapidly as 100% equity portfolios. This is usually because the bond allocation slightly reduces its exposure to rising share prices. DHHF and VAS + VGS, meanwhile, usually rise faster in bull markets because they have no defensive assets holding back returns.

In bear markets, the 10% bond allocation in VDHG provides some downside protection, so it tends to fall less than pure equity portfolios during market downturns.

Since DHHF and a VAS + VGS combo are 100% equities, they can be more volatile and will generally experience larger declines during bear markets.

The effect isn’t unique to VDHG – any diversified fund with a bond allocation (like the Vanguard Diversified Growth Index ETF ) will show similar characteristics. That typically means smoother returns, less upside in bull markets, and less downside in bear markets.

However, past performance doesn’t predict future results. That’s important to remember when looking at any fund’s history.

Long-term growth goals: is VDHG “enough”?

Whether VDHG meets someone’s long-term goals depends on a few things: risk tolerance , investing style, and personal preferences. While its blend of mostly shares with a small percentage of bonds works well for many, others may want a different mix.

Let’s explore when investing in VDHG long-term might feel like enough – and when it might not.

When someone might want more than VDHG offers

1. Investors aiming for maximum equity exposure

Some investors, particularly those with long timeframes, aim for 100% shares. Their thinking is simple: more shares, more potential growth.

For example, a 25-year-old with 40+ years to invest may want full exposure to shares and avoid bonds altogether. They might see VDHG’s 10% bond allocation as unnecessary, especially if they’re comfortable with market dips and long-term volatility.

2. FIRE strategies with specific growth targets

Those pursuing Financial Independence, Retire Early (FIRE) often build portfolios focused on high growth . This might involve an all-equity setup to accelerate wealth building.

If someone plans to retire in their 30s or 40s, they may want higher risk early on to reach their targets sooner. In that context, VDHG could feel slightly too moderate, especially during bull markets.

3. Preference for a DIY setup

Some investors prefer building their own portfolio using separate ETFs like VAS (Australian shares) and VGS (international shares). This approach offers flexibility. You control the mix, the rebalancing and how you respond to market shifts.

A DIY ETF setup can be tailored to personal values, goals or tax strategies. But it also requires time, attention and discipline. That may not suit everyone.

Why others may prefer the VDHG structure

VDHG offers a more hands-off experience. That simplicity can be powerful, especially for those who value consistency over constant fine-tuning.

1. Simplicity and convenience

VDHG wraps multiple asset classes into one fund. There’s no need to choose individual ETFs or worry about proportions. This removes the stress of building and managing a diversified portfolio from scratch.

2. Automatic rebalancing

Over time, markets shift and allocations drift. VDHG automatically rebalances to keep things on track. You don’t need to calculate or execute trades yourself. For some, this reduces mistakes and helps them stay focused on the long term.

3. Reduced decision fatigue

Making frequent portfolio decisions can sometimes lead to overthinking or reacting emotionally to short-term market noise. With VDHG, there’s less temptation to tweak things. That structure can support long-term discipline.

A balanced choice?

While building your own portfolio offers more control, it also demands more from you. That trade-off between control and simplicity is worth weighing up.

Whether VDHG is “enough” depends on how you define success. Growth matters, but so does sticking with your plan.

Framing the decision

Finding the right investment option involves more than comparing performance. It helps to think about how you like to invest, how you respond to risk, and how involved you want to be.

Here are a few questions to ask:

• What’s my investment time horizon ? Am I planning to invest for the long term, or will I need access to the money sooner?
• How do I react during market drops? Do I feel comfortable staying invested when my portfolio falls, or do I feel pressure to pull out?
• Do I value simplicity or customisation? Would I rather use a single fund and not worry about the details, or build and manage my own portfolio?
• Am I comfortable managing rebalancing? Can I regularly check and adjust my investment mix, or would I prefer that to happen automatically?

Your answers can help guide you towards a setup that suits your needs and habits.

Final thoughts: it depends on you

There’s no universal answer here. What works for someone else won’t always work for you – and that’s okay. It comes down to what you’re looking for.

If VDHG makes it easier to stay invested and not overthink things, that’s worth something. If you prefer building your own mix and don’t mind tweaking it along the way, that’s valid too.

The best approach is the one you’re likely to stick with for the long haul, not just when things are going well.