So many Australians love the 70/30 VGS and VAS portfolio, and it makes sense: two ETFs, low fees and around 1,500 companies worldwide. But what if you could do something similar with a single ETF? Enter VDHG, Vanguard’s Diversified High Growth Index ETF: Australian, international, emerging market and global small company shares plus bonds, in one ticker, with Vanguard managing the mix.
Don’t sell VAS and VGS just yet. When you pull the two apart, the differences go much deeper than fees or VDHG’s 10% in bonds: hidden currency exposure, US concentration and tax treatment all change the decision. Tap any button to jump to that part of the video.
There’s no clear winner. VGS/VAS is cheaper, 100% shares, about half in the US and ~70% exposed to foreign currency, and it has delivered stronger returns over 5+ years, largely because US mega caps and a weak Aussie dollar led. VDHG is broader and simpler, with emerging markets, small companies, partial currency hedging and 10% bonds, at a higher fee. Choose based on whether you want control or fewer decisions.
Part 1: What are these two portfolios made of?
VGS/VAS 70/30: 70% in VGS, which holds 1,200+ large and mid-size companies in developed markets outside Australia (Nvidia, Apple, Microsoft, Amazon), and 30% in VAS, roughly 300 of the largest ASX companies (CBA, BHP, Westpac, Wesfarmers). You don’t get emerging markets such as China, India or Brazil, international small companies or bonds, and all the international portion is exposed to currency movements.
VDHG spreads your money across six asset categories:
Those are the visible differences, but not the most important ones.
Part 2: Where your money really ends up
VGS sounds evenly spread around the world, but it weights companies by market value, and the US market is so large that about 73% of VGS is in US companies. At 70% of your portfolio, that’s roughly half of everything you own in US shares. The top 10 companies are about 29% of VGS, or around a fifth of the whole 70/30 portfolio. Not automatically a problem, but a concentration worth understanding.
VDHG makes a bigger bet somewhere else: Australia. Both are heavily overweight Australia compared with its ~2% share of global markets, known as home bias. There are good reasons for some of it (franking credits, income, assets in the currency you spend), but the Australian market has its own concentration: almost 60% of VAS is financials and materials, and its top 10 holdings are about 47.6% of the ETF.
VGS and VAS complement each other well: VAS adds banks, miners and income; VGS adds technology, healthcare and global consumer businesses. The question is balance. VGS/VAS gives you more US mega caps; VDHG gives you more Australian banks and miners plus small companies, emerging markets and bonds. It depends on how much Australian exposure you already have through super, your job and property. Many people are more exposed than they realise.
Part 3: The currency difference most people miss
VGS doesn’t hedge back to Australian dollars, so its return depends on how the companies perform and how the Aussie dollar moves.
About 70% of the VGS/VAS portfolio is exposed to foreign currency, versus about 38% for VDHG, because part of its international shares and its international bonds are hedged. When the Aussie dollar weakens, VGS/VAS gets a bigger boost; when it strengthens, a bigger drag. That’s a far larger structural difference than the fee gap, and it matters when you read past returns. (More on hedging in 7 ETF investing lessons.)
Part 4: What the performance numbers really show
VDHG won the most recent 12 months, but VGS/VAS delivered the stronger result over 3 years, 5 years and since VDHG’s launch. That gap is far too large to be explained by fees. It won because the period favoured the risks it takes: developed markets, US shares, big tech and unhedged currency. Emerging markets and small companies lagged, and bonds had an unusually difficult time; VDHG held more of those by design.
2022 is revealing: inflation surged, rates rose, and shares and bonds fell together, so VDHG’s bonds didn’t prevent a loss. Bonds aren’t guaranteed to protect you every time shares fall, and with only 10% in bonds VDHG can still fall heavily in a serious downturn.
The past shows how each structure behaved, not which will win next. If US mega caps and a weak Aussie dollar keep dominating, VGS/VAS may keep leading. If leadership broadens, the Aussie dollar rises or bonds become more useful again, the gap could narrow or reverse.
Part 5: Fees, tax and control
The fee gap matters as your portfolio grows, but what’s inside each portfolio is a much bigger driver of returns. VDHG has also paid out more in distributions. That isn’t a free extra return (the price falls when it’s paid), but in the accumulation stage it can mean more taxable income, even if you reinvest.
Control: with two ETFs you can direct new money into whichever is below target instead of selling to rebalance, choose which parcels to sell and when (more say over capital gains), and choose which ETF to sell when you withdraw. With VDHG, Vanguard rebalances internally and every sale is a proportional slice. Easier, but less flexible.
Part 6: Which one is likely to suit you?
- You want 100% shares, no bonds
- You’re comfortable with ~half in the US and ~70% in foreign currency
- You want lower fees and more control
- You’ll rebalance two ETFs once or twice a year
- You want one ETF with automatic rebalancing
- You want emerging markets and small companies included
- You prefer a mix of hedged and unhedged exposure
- You want a small bond buffer and will pay for simplicity
Rebalancing two ETFs isn’t technically hard. The hard part is behavioural: if VGS beats VAS for years, will you still buy VAS? If markets fall sharply, will you stick to the plan? VDHG removes many chances to second-guess the strategy, which can be valuable even for capable investors.
So the real question isn’t one ticker or two. It’s whether extra control improves your investing or creates more chances to interfere with it. Read more in VAS and VGS portfolio in 2026 and How to buy your first ETF.
Watch the full video on YouTube →
General information only, not a recommendation to buy or sell any ETF. Allocations, exposures and fees are approximate and change over time; check the providers’ websites and PDSs. Returns are past performance for the periods shown and are not a reliable indicator of future performance. Tax outcomes depend on your circumstances. Consider your objectives, financial situation and needs before investing.
Frequently asked questions
Is VDHG better than VAS and VGS?
Neither is clearly better. A 70/30 VGS/VAS portfolio is cheaper (about 0.15% vs 0.27%), 100% shares and more exposed to the US and foreign currency, and it delivered stronger returns over 5 years to May 2026. VDHG is broader, includes emerging markets, small companies, some currency hedging and 10% bonds, and rebalances automatically.
How much US exposure does a VGS and VAS portfolio have?
About 73% of VGS is in US companies, so in a 70/30 VGS/VAS portfolio roughly half of everything you own is in US shares. VDHG’s US exposure is closer to 35–36%.
Is VDHG currency hedged?
Partly. VDHG holds about 16% in hedged international shares and its international bonds are hedged, leaving about 38% unhedged foreign exposure. A 70/30 VGS/VAS portfolio has about 70% unhedged foreign currency exposure.
What are the fees for VDHG vs VGS and VAS?
VDHG charges about 0.27% a year. A 70/30 VGS/VAS portfolio costs about 0.15% a year weighted, roughly $147 vs $270 a year on $100,000.