Want diversification in your portfolio?
How about 16,000 ASX and international shares purchased in one transaction (for one brokerage fee)?
Introducing the Vanguard Diversified High Growth Index ETF (ASX: VDHG).
Let's look into this portfolio option.
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ASX VDHG: The diversifier extraordinaire share
The ASX VDHG is unusual because it's an exchange-traded fund (ETF) full of other ETFs.
Most ASX ETFs hold a basket of individual shares. Not VDHG.
Instead, it holds seven Vanguard index funds, each comprising hundreds or thousands of stocks.
That's how the ASX VDHG allows ASX investors to buy more than 16,000 shares in one trade.
Those 16,000 stocks comprise 90% global and ASX shares and 10% bonds.
Here are some of the big company names held by ASX VDHG.
The big names among those 16,000 shares
The big household name stocks found within the ASX VDHG are all within its top two holdings.
The biggest holding within ASX VDHG is the Vanguard Australian Shares Index Fund (ASX: VAS). VAS comprises the top 300 shares on the ASX by market capitalisation.
The portfolio weighting within ASX VDHG is 35.7%.
The big-name stocks inside the VAS ETF are BHP Group Ltd (ASX: BHP), CSL Ltd (ASX: CSL), Commonwealth Bank of Australia (ASX: CBA), National Australia Bank Ltd (ASX: NAB), Woodside Energy Group Ltd (ASX: WDS), Wesfarmers Ltd (ASX: WES), and Woolworths Group Ltd (ASX: WOW).
The second biggest holding in ASX VDHG is the Vanguard International Shares Index Fund (APIR: VAN0003AU), which is comprised of 1,456 stocks listed on various exchanges across the world.
The portfolio weighting within ASX VDHG is 26.5%.
This ETF holds all the big-name global tech shares, including Apple Inc (NASDAQ: AAPL), Microsoft Corp (NASDAQ: MSFT), Amazon.com Inc. (NASDAQ: AMZN), NVIDIA Corp (NASDAQ: NVDA), Alphabet Inc (NASDAQ: GOOG, GOOGL), and Meta Platforms Inc (NASDAQ: META).
On top of that are other big names we know well: Tesla Inc (NASDAQ: TSLA), Berkshire Hathaway Inc (NYSE: BRK.A), Johnson & Johnson (NYSE: JNJ), Visa Inc (NYSE: V), Nestle SA (SWX: NESN), and Coca-Cola Co (NYSE: KO).
The dangers of too much diversification
Good diversification spreads your investment dollars across a range of sectors and industries.
But is 16,000 shares spreading yourself too thin?
You could probably line up 10 market experts on both sides of the yes and no argument here — all of them with reasonable views.
My colleague Sebastian offers his own opinion on the matter here.
To help you answer this question for yourself, let's look at the ASX VDHG's recent performance as a guide.
While past returns are no guarantee of future returns, it's still useful information for our research.
So, in short, the ASX VDHG fund has delivered solid returns in recent years.
The ETF was only set up in November 2017, so we don't yet have data for 10-year returns or longer.
What we do have is the per annum average total gross returns over five years, which is 8.08%, and also three years, which is 10.69%. The one-year average is sitting at 11.69%.
You can compare this to a bunch of other options using Vanguard's latest long-term returns chart.
If you're interested in investing in the ASX VDHG, check out its latest fact sheet here.
ASX VDHG share price snapshot
The Vanguard Diversified High Growth Index ETF is trading down 0.27% on Wednesday afternoon at $59.04.
Its 52-week low is $50.29 per share, and its 52-week high is $59.50 per share.
Over the past 12 months, the ASX VDHG has risen 10.13%.
By comparison, the S&P/ASX All Ordinaries Index (ASX: XAO) has gained 5.84% over the year.
