The Vanguard Diversified High Growth Index ETF (ASX: VDHG) is trading at $73.16 per unit, down 0.58% on Tuesday.
Designed for growth investors, this somewhat unusual exchange-traded fund (ETF) provides diversification on steroids.
Instead of investing in a few hundred or even thousand shares, as is the norm with ASX ETFs, it's exposed to more than 16,000.
How is that possible?
Instead of investing in lots of individual stocks, the VDHG ETF invests in scores of other exchange-traded funds.
Vanguard explains that the VDHG ETF seeks to track the weighted average return of the indices of the underlying funds it's invested in, in proportion to a strategic asset allocation, before fees and taxes.
The strategic allocation is 90% growth assets and 10% defensive assets.
Vanguard says:
The ETF provides low-cost access to a range of sector funds, offering broad diversification across multiple asset classes.
The ETF invests mainly into growth assets, and is designed for investors with a high tolerance for risk who are seeking long-term capital growth.
VDHG ETF's make up is 36% ASX shares, 26.5% unhedged international shares, 16% hedged overseas shares, 7% international fixed interest (hedged), 6.5% international small companies, 5% emerging markets, and 3% Aussie fixed interest.
There's a management fee of 0.27% per year.
So, if you invested $10,000 in the VDHG ETF 3 years ago, where would your investment be today?
Let's do some calculations…
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$10,000 in VDHG ETF 3 years ago…
On 18 November 2022, the VDHG ETF closed at $54.82 apiece.
If you had put $10,000 into VDHG then, it would have bought you 182 units (for $9,977.24).
There's been a capital gain of $18.34 per unit since that time. This equates to $3,337.88 in dollar terms.
Thus, your VDHG holding is now worth $13,315.12.
But wait, it gets even better…
Although this ETF is focused on growth, it still pays distributions (or dividends) and does so every quarter.
Since 18 November 2022, VDHG has paid distributions of just over 672 cents per unit.
So, you've also received $1,223.04 in income over the past three years.
Total annual returns…
Your capital gain of $3,337.88 plus $1,223.04 in dividends gives you a total dollar return of $4,560.92 over the past three years.
As stated earlier, you invested $9,977.24 buying your 182 VDHG ETF units in 2022.
This means you have received a total return, in percentage terms, of just over 45%, or an average annual return of 15%.
Enjoy.
