Vanguard Diversified Balanced Index ETF (ASX:VDBA)

The Vanguard VDBA ETF provides investors with exposure to a portfolio of other Vanguard funds, with 50% in growth assets and 50% in defensive assets. This ETF gives investors exposure to multiple asset classes with a single purchase, and is designed to be a diversified portfolio in itself.

VDBA ETF review

VDBA share price and fees


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$25.00
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$25.00
$27.50
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$32.50
$35.00
$37.50
$40.00
$42.50
Range: 1 mth | 3 mths | 6 mths | 1 yr | 2 yrs | 5 yrs | 10 yrs

ETF share prices are updated using end of day data from the ASX. FUM, fee and spread data is updated monthly, with a delay. Refer to the ETF’s PDS and the ASX website for up-to-date information.

VDBA fees

ASX ticker code: VDBA
Yearly fee (MER): 0.27%
FUM: $621.19 million
Monthly spread: 0.14%
Data Last Updated: July 2022

Analyst report

The Vanguard Diversified Growth Index ETF (ASX: VDBA) is a diversified ETF offered by Vanguard. VDBA is the so-called “balanced option” amongst Vanguard’s diversified ETFs, investing 50% in growth assets (like Aussie and global shares) and 50% in defensive assets (like bonds and cash). Vanguard’s VDHG ETF is the most popular diversified ETF and invests in 90% growth assets. 

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VDBA is called a ‘diversified’ ETF because inside the ETF you will find that it holds a range of managed funds that invest across shares, bonds, and fixed-income securities. VDBA is what is sometimes referred to as a ‘fund of funds’, or an ETF that holds other ETFs or funds rather than individual securities like shares. 

VDBA is currently invested across Australian shares, international shares, emerging markets, small-cap shares, bonds, and fixed-interest securities through seven Vanguard wholesale and retail managed funds. These funds are:

  • Vanguard Australian Shares Index Fund (Wholesale)
  • Vanguard International Shares Index Fund (Wholesale)
  • Vanguard International Shares Index Fund (Hedged) – AUD Class (Wholesale)
  • Vanguard Global Aggregate Bond Index Fund (Hedged)
  • Vanguard International Small Companies Index Fund (Wholesale)
  • Vanguard Emerging Markets Shares Index Fund (Wholesale)
  • Vanguard Australian Fixed Interest Index Fund (Wholesale)

It is packaged as the simplest way to gain instant exposure to a diversified portfolio. 

VDBA is the growth version of the Vanguard diversified ETFs, targeting an allocation of 50% growth and 50% defensive assets. Vanguard offers three more diversified ETFs, with the most growth-focused offering a 90% growth and 10% defensive allocation. 

Alternatives

The competing ETFs in this relatively new diversified space are the BetaShares diversified ETFs, such as BetaShares Diversified All Growth ETF (ASX: DHHF) (100% growth assets), BetaShares Diversified Ethical High Growth ETF (ASX: DZZF) (90% growth assets), Betashares Diversified Growth ETF (ASX: DGGF), and BetaShares Diversified Balanced ETF (ASX: DBBF). 

The BetaShares diversified range of ETFs has the advantage of owning other ETFs inside of them, whereas, as you read above, the Vanguard diversified range own managed funds. ETFs are more efficient from a tax perspective because the ETFs are separately held whereas a managed fund structure pools capital gains and creates “tax drag”.

That said, while BetaShares ETFs’ are worthwhile contenders and should be considered alongside Vanguard, we prefer the Vanguard ETF for a few reasons (fees, convenience and track record, to name a few).

My personal preference, and what I advocate for inside Rask Core 🌏 is that the Vanguard (and BetaShares) diversified ETFs are a fantastic way to start and build a portfolio. They’re especially useful for those just starting out or those who can’t be bothered creating their own portfolio of ETFs. However, if you have been investing for quite some time, are paying tax at a higher rate or feel that the allocations Vanguard uses aren’t ideal, it’s possible to build a diversified ETF portfolio for less than the cost of a diversified ETF from Vanguard.

VDBA: designed for income seekers and retirement

As it currently stands, we believe Vanguard diversified ETFs are the quickest and easiest way to gain access to a diversified portfolio covering shares, bonds, and fixed interest securities. This ETF was one of the first diversified ETFs to launch in Australia in November 2017, and has quickly grown to become a large ETF. 

Vanguard’s track record as an issuer and its depth of experience speaks for itself and VDBA is an opportunity to get access to a selection of its wholesale funds normally reserved for institutional investors. While it may be possible to build an ETF portfolio with similar allocations for a slightly lower management fee, we believe the convenience of this ETF is well worth the modest management fee. 

Another consideration is that, because all of the funds are held under one ETF, rebalancing is not an issue for the investor. For example, if you bought five ETFs covering Australian shares, international shares, emerging markets, bonds, and fixed interest, you would need to rebalance your ETF portfolio at least one or two times per year to maintain a target asset allocation. VDGR does this automatically for the investor, rebalancing as needed if any of its target allocations fall outside of the tolerance band, set at plus or minus 2%. 

Risks

As mentioned, VDBA’s 50% allocation to growth assets (e.g. shares) means it may have a moderate level of volatility compared to many other ETFs and comparable returns to, say, a balanced option inside a large Super fund (excluding taxes). VDBA should only be considered by investors with a moderate or medium risk tolerance and long-term outlook (e.g. 7+ years).

Remember, the more shares (as a % of a portfolio), the higher the level of risk you are taking. So be mindful of your risk tolerance before you invest in VDBA.

If this doesn’t sound like it is for you, Vanguard has designed three other diversified ETFs with different target allocations. The full range of Vanguard diversified ETFs may be better suited, depending on the investors risk tolerance, knowledge of investing and time horizon.

Other Vanguard Diversified ETFs (all links open in a new tab):

  • Vanguard Diversified Conservative ETFASX:VDCO – 30% growth assets
  • Vanguard Diversified Balanced ETFASX:VDBA  – 50% growth assets
  • Vanguard Diversified Growth ETFASX:VDGR – 70% growth assets
  • Vanguard Diversified High Growth ETFASX: VDHG – 90% growth assets

Summary

VDBA is one of the easiest ways to start investing in a growth portfolio right now. For a relatively low management fee, investors can get exposure to a range of wholesale and retail funds managed by one of the top investment funds in the world. The 50% growth allocation provides the potential for more volatile returns in a 5-year period, yet still pays quarterly dividends/distributions and provides some growth over the long run, given its allocations to local and overseas share markets. 

Final point: we think the VDBA ETF is a great jumping-off point. It can be used to help an investor build the ‘Core’ or long-term Strategic Asset Allocation (or “SAA”, in financial planner speak). However, you might consider adding other ETFs to your portfolio, or outside of your brokerage account, to ensure you are still diversified across providers. A financial planner can help you explore the best option for you.

To join me inside Rask Core 🌏 and get all of our premium ASX research and model portfolios, click here.

Cheers!

Owen Raszkiewicz

Founder of Best ETFs Australia, lead analyst of Rask Core

VDBA performance

This chart shows the yearly performance of the chosen ETF to key asset classes of Aussie shares (ASX: VAS) and US shares (ASX: IVV). You can use this chart to visualise how the ETF responds to different market environments. We recommend using a 5+ year time horizon for comparisons. The chart compares price return only.

Fee comparison

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What does the VDBA ASX ETF invest in?

The VDBA ETF invests in a range of other wholesale and retail Vanguard funds, giving investors exposure to equities and fixed interest securities with a single purchase. This balanced ETF has a target weighting of 50% growth assets and 50% income assets.

What do investors use the VDBA ETF for?

The VDBA ETF might be used by investors who are wanting a simple way to establish a diversified portfolio with balanced weightings. This ETF may suit investors who are looking for both capital growth and a regular income stream.

How to buy the VDBA ETF

Did you know: You can invest in any ASX-listed ETF for $6.50 (or less)?

To invest in any ASX ETF, you need to use a brokerage account. For Australian investors, Australian Pearler has partnered with Best ETFs to bring you easy, effective, long-term ETF investing. You can invest in ETFs on Pearler for just $6.50! And some ETFs can be purchased for $0 (conditions apply).

VDBA investor starter pack

VDBA PDS

The Product Disclosure Statement (PDS) explains the fees, tax status and some of the risks.

VDBA literature

We’ve asked the ETF provider to share their best whitepapers & research with you.

VDBA holdings

The Best ETFs team occasionally upload the ETF’s latest investments, so you see what’s inside the ETF.

ASX: VDBA’s dividend 2021

VDBA dividend yield

Last 12m yield: 3.09%

When does VDBA pay a dividend?

VDBA dividend reinvestment plan (DRP)

Warnings we apply to the VDBA ETF

VDBA tax domicile

VDBA ETF registry

Diversified ETF sector data

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How VDBA compares:

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Sector information is recorded based on the last 12-month returns to July 2022. Refer to the Issuer’s website, speak to your financial adviser and always the fund’s Product Disclosure Statement (PDS) before choosing an ETF for its dividend yield, past returns or fees. Past performance can be a poor indicator of future performance. 

Latest ETF News

ASX: VDBA technical analysis

The Best ETFs technical analysis chart pack shows the 12-month share price movements, Stochastic bands and traded volume (for both up and down days). This chart uses end-of-day data, so it’s for illustrative purposes only.

*The warnings on this page are applied by our ETF research team. Please know that these warnings are based on quantitative metrics and our internal methodology. These risks are not exhaustive and therefore they should not be relied upon. Always read the PDS of the function and speak to your financial adviser before acting on this information.

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