BetaShares Diversified All Growth ETF (ASX:DHHF) Review | Captain FI (2024)

Executive summary

Betashares diversified high growth ETF (ASX:DHHF) is an ‘all-in-one’ globally diversified, 100% high growth investment solution. It is efficiently constructed using four index tracking ETFs (ASX:A200, NYSE: VTI, SPDW, SPEM) which hold over 8000 companies across 60 global exchanges, for an extremely competitive 0.19% Management expense ratio. DHHF is referred to as an ‘All-cap’ fund containing large, mid and small capitalisation [size] companies. DHHF does not contain cash or bonds and should therefore have great potential for high growth over the long term, however is most suitable for long term investors with a very high tolerance for risk and volatility.

“An all-in-one investment solution that provides low-cost exposure to a diversified portfolio comprising Australian, global developed and emerging markets equities, in a single ASX trade.”

Betashares

Betashares diversified high growth ETF (ASX:DHHF) is an ‘all-in-one’ investment solution which is a competitor to Vanguards VDHG ETF. However, The Betashares has one major advantage: it is 100% growth (wheras VDHG is 90% growth). The Betashares fund does not contain Cash or Bonds, which produce a drag penalty on the growth of the fund.

DHHF is constructed using a passive blend of efficient index tracking ETFs that hold companies which are traded on over 60 global exchanges. DHHF contains ETFs which cover large, mid and small caps (including emerging markets) which means it is referred to as an ‘All-cap’ fund – it contains over 8000 large, mid and small capitalisation [size] companies. This means DHHF has a really good potential for high growth over the long term.

“DHHF aims to provide low-cost exposure to a diversified portfolio with high growth potential, that may suit investors with a very high tolerance for risk.”

Betashares

It is worth noting that the DHHF fund previously operated as a different financial product under the same ASX ticker code, so some of the historical information you may read online will not be relevant to what the fund is today.

Betashares DHHF fund contains an ‘all-in-one’ solution for a diversified growth portfolio. This contains a split of approximately one third Aussie shares, one third US shares, and the remainder a split between global developed markets (ex US) and 7% emerging markets. These are constructed using the following ETFs;

• Betashares Australian top 200 ETF (ASX:A200)
• Vanguard Total Stock Market ETF (NYSE:VTI)
• SPDR Portfolio developed world (NYSE:SPDW)
• SPDR Portfolio of Emerging markets (NYSE:SPEM)

DHHF is a high growth fund that is best suited to long term investors who can deal with the ‘ups and downs’ of the market. Basically that means its great in the long term, but it may be stressful in the short term if you keep logging in and checking your portfolio value (If you must, just track it once per month and be disciplined!). The fund has a low target dividend yield, with most of these coming from the underlying A200 holdings.

In terms of FIRE, my opinion is that during the accumulation phase of Financial Independence, capital growth is probably a more efficient structure than dividend yield. This is because if you are earning a lot of money and regularly investing, you will be likely paying a large marginal tax rate – when your dividend snowball starts to take off, you will then be charged this high rate of taxation on your dividends – whether you reinvest them or not. Whereas if you invest in growth assets, you are not charged capital gains tax until you realise that gain by selling shares. So in a nutshell, one may attempt to optimise their tax by investing in Capital growth assets in the accumulation phase.

However, reliable dividend yield is a fantastic strategy for producing a portfolio that you can live off – we all know that dividends are hit less hard than capital price valuations in a market downturn, and Aussie franking credits boost your dividend yield, making it a safer strategy in terms of producing an income in retirement. So, the ideal strategy might very well be capital growth in the accumulation phase, and then you magically convert to dividend yield or income investing in the retirement or draw down phase. How does one do that efficiently? I don’t know. Do the psychological benefits of dividend yield investing in the accumulation phase outweigh the tax penalty? Again I don’t know. I would love to hear your thoughts in the comments below though.

DHHF provides a compromise between the two, with approximately one quarter return as dividends, and three quarter returns as capital growth.

Capital growth of DHHF

The Betashares diversified all growth ETF is predominantly a growth ETF, and due to its underlying holdings it will track the combined performance of the Australian, US, Global (ex US) and Emerging markets. This means of course it got whacked in March, but it has also healthily recovered since.

It is a new fund so there is not established long term return results for the fund, but it is not that hard to actually check out the constituent funds historical performance which then might give you a bit more of an idea what DHHF would have been. I have chucked up screenshots below using the Sharesight share checker functionality.

As always, past performance is not indicator of future performance, but I personally would expect shares over the long term to continue the trend they have had over the past 100 years which is to grow at roughly 10% per annum.

Vanguard Total Stock Market ETF performance

SPDR portfolio developed world ex-US

SPDR portfolio emerging Markets

Dividend yield of DHHF

The Betashares diversified all growth ETF pays quarterly dividends, passing on the dividends from its constituent holdings. The main dividend producing underlying ETF holding is the Betashares A200 fund. Overall, the DHHF estimated dividend yield is 2.18%, or a grossed up distribution of 2.51% accounting for the franking credits associated with the A200 fund.

The Betashares diversified All growth ETF (ASX:DHHF) has a competitive Management fee of 0.19% MER, or $19 per year for every $10,000 you have invested in the fund. This makes it a very competitively priced all in one fund. The ETF itself is issued by Betashares, which is the company that manages the A200 ETF which is my core investment holding. The Administrator and Custodian of the fund is RBC investor services, and the shares registry is Link Market Services. DHHF is audited regularly by KPMG, who sign off on annual reporting.

To have everything neatly wrapped up in one Exchange Traded Fund is a massive plus from the point of convenience and behaviour, which I think is great because it makes investing easy and means there is a higher chance you will stick with it.

An ‘All-in-one’ style fund is significantly beneficial from a behavioural point of view – why – because investing and financial independence is all about behaviour – sometimes referred to as 80% behaviour and 20% knowledge. There is no stress about rebalancing, or trying to optimise which split to buy – which if you are anything like me, can sometimes feel overwhelming and create anxiety that you are not doing the 100% most optimal investing moves every time. An ‘All-in-one’ fund removes this anxiety, and allows you to benefit from experience fund managers setting optimum asset allocation between AUS, US and global markets based on historical data and risk.

“DHHF may suit investors with an investment timeframe of at least seven years, who have a very high tolerance for risk and who are therefore willing to accept a high degree of volatility in their portfolio in order to achieve their long term objective”

Betashares

If I could go back to the start of my investing journey, I would have to have a pretty convincing arguement to convince me not to just buy DHHF or VDHG. Currently, I have a core portfolio A200,VTSandVEUExchange traded funds, which have a MER of .07%, .03% and .08% respectively – or an average of .06% or 6 basis points – because I overthought the situation I found that the ‘roll your own’ three fund split had a much lower management fee than the all in one funds, which was attractive to me. I am also a tinkerer, and it felt great having the three fund split just in case any particular market either performed really well or tanked, I could focus my efforts on harvesting the really good markets, and reinvesting into the really bad markets to take advantage of the situation.

But you know what – these all in one funds do all the rebalancing for you (the only benefit I argue is that the three fund split is more efficient in the accumulation phase where you can buy the dip of each fund whilst trying to roughly stay in line with your predetermined portfolio splits)

Ultimately, the discussion of whether to buy an all in one fund comes down to the Betashares DHHF fund or the Vanguard VDHG Fund. And to put it closely, I think DHHF is shaping up to be a much better fund because it is 100% growth and thus does not contain the drag penalty of the cash and bonds that the Vanguard fund contains, and it is also over 30% cheaper in terms of management fees.

However, DHHF has one drawback – it is a much smaller fund. Betashares in general is also a much smaller company than Vanguard, and Betashares is a for-profit financial business wheras Vanguard is run purely to benefit members. In terms of market Cap and funds under management, the Vanguard VDHG fund is over $600M, wheras the Betashares DHHF fund is currently under $20M.

So, should you be an early adopter of the Betashares DHHF fund? Well, it is up to you – but I am not personally buying the fund. I am happy with my three fund split of A200,VTSandVEUExchange traded funds, which pretty much cover all of the same global exposures and when held in an equal weighting (1/3 each). I think the DHHF ETF it is one to closely watch, and I am suggesting to friends and family that it may be more efficient and easy way to invest long term and grow wealth with appropriate global exposure than the Vanguard VDHG all in one high growth fund. This is due to the ease of investing, asset allocation, global exposure and low management fee of the fund. As always, do your own research and make sure its appropriate to your personal circ*mstance.

Betashares diversified All growth ETF (ASX:DHHF) is conveniently listed on the Australian stock exchange, meaning that you can easily purchase it with a conventional stock broker. Personally, I have been using Pearler (and previously SelfWealth), although you can purchase this ETF (and all of the others) through other stockbrokers such as

• CommSec Share trading
• OpenTrader
• eToro
• CMC Markets
• IG MarketsGroup
• Superhero

Conclusion

Betashares diversified high growth ETF (ASX:DHHF) is an ‘all-in-one’ globally diversified, 100% high growth investment solution. It is efficiently constructed using four index tracking ETFs (ASX:A200, NYSE: VTI, SPDW, SPEM) which hold over 8000 companies across 60 global exchanges, for an extremely competitive 0.19% Management expense ratio. DHHF is referred to as an ‘All-cap’ fund containing large, mid and small capitalisation [size] companies. DHHF does not contain cash or bonds and should therefore have great potential for high growth over the long term, however is most suitable for long term investors with a very high tolerance for risk and volatility.

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