Is VCF a good ETF?
VCF is the Vanguard International Credit Securities Index (Hedged) ETF from Vanguard. It tracks the Bloomberg Global Aggregate Credit Float Adjusted Index (AUD Hedged). We classify it under Intl and Market-Cap. With about $173 million in assets it is a solidly established fund. Listed on the ASX since 2017-11-07 (about 9 years ago).
On a total-return basis, VCF has delivered 1.22% a year over 10 years (ranked 102nd of 110 ETFs we track), -0.78% a year over 5 years (ranked 170th of 189 ETFs we track), 4.21% a year over 3 years (ranked 199th of 236 ETFs we track), and -0.89% a year over 1 year (ranked 230th of 318 ETFs we track). It has trailed most comparable ETFs over the periods we measure, so look closely at whether its strategy fits what you're after.
The management fee of 0.3% is reasonable. That's cheaper than the typical 0.49% for similar ETFs. If cost is your priority, IAF (0.1%), OZBD (0.19%), and VIF (0.2%) cover similar ground for less. It pays a high 10.08% yield — generous income, but check it isn't a sign of a narrow or higher-risk portfolio. Bear in mind distributions are taxed each year at your marginal rate, so a high yield is less tax-efficient for higher earners and during the accumulation phase.
Over the past 10 years its volatility has been low (annualised standard deviation around 5.26%), meaning a relatively smooth ride. Its 3-year Sharpe ratio of 0.1 is weak — that's the return it has earned per unit of risk taken (higher is better).
Portfolio turnover is modest at about 20% a year — it reshuffles a meaningful but still limited part of the portfolio annually, which keeps the tax and trading drag manageable.
Strengths
- Low-cost: a 0.3% management fee keeps more of the return in your pocket.
- High 10.08% income yield — good for investors who want regular cash flow.
- Low volatility (5.26% over 10 years) for a smoother ride.
Things to watch
- Has lagged most peers over 10 years (102nd of 110).
- Cheaper alternatives exist: IAF, OZBD, and VIF.
- That income is taxed yearly at your marginal rate, so it's less efficient for higher earners.
- Weak risk-adjusted returns (3-year Sharpe ratio 0.1).
What VCF's categories mean for you
How each category this ETF belongs to tends to behave across market cycles.
Global and international shares from outside Australia — broadening you into thousands of companies and the sectors (tech, healthcare) the local market lacks.
- Market regime
- Essential diversification away from the bank-and-resources-heavy ASX. Unhedged versions carry currency risk; hedged versions remove it at a small cost.
- In a portfolio
- A core holding for almost every long-term Australian portfolio.
Holdings are weighted by company size, so the largest companies carry the most weight. These funds are cheap, tax-efficient and self-rebalancing.
- Market regime
- Works in almost any regime as a low-maintenance core. The trade-off is concentration — you automatically own more of whatever has already become expensive at the top of a bull market.
- In a portfolio
- The classic buy-and-hold core of most portfolios. Well suited to long-term, hands-off investing.
General information only, generated from the fund's published data — not personal financial advice. Past performance is not a reliable indicator of future returns. Consider your own circumstances or seek licensed advice before investing.