Is VDBA a good ETF?
VDBA is the Vanguard Diversified Balanced Index ETF from Vanguard. We classify it under AU, Intl, and Market-Cap. With about $927 million in assets it is a solidly established fund. Listed on the ASX since 2017-11-20 (almost 9 years ago).
On a total-return basis, VDBA has delivered 4.45% a year over 5 years (ranked 124th of 188 ETFs we track), 8.62% a year over 3 years (ranked 138th of 226 ETFs we track), and 6.54% a year over 1 year (ranked 161st of 308 ETFs we track).
The management fee of 0.27% is reasonable. That's cheaper than the typical 0.4% for similar ETFs. If cost is your priority, IBAL (0.22%) cover similar ground for less. It pays a healthy 5.17% yield, attractive if you want regular income. 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, though 35% franking softens the blow for Australian residents.
Over the past 5 years its volatility has been low (annualised standard deviation around 7.38%), meaning a relatively smooth ride. Its 5-year Sharpe ratio of 0.2 is weak — that's the return it has earned per unit of risk taken (higher is better).
Portfolio turnover is very low at about 8% a year — the portfolio barely changes from year to year, much like a classic buy-and-hold index fund. Very little of its return is lost to trading or to capital gains being realised early, making it highly tax-efficient.
Strengths
- Low-cost: a 0.27% management fee keeps more of the return in your pocket.
- Pays a useful 5.17% income yield.
- Low volatility (7.38% over 5 years) for a smoother ride.
Things to watch
- Cheaper alternatives exist: IBAL.
- Weak risk-adjusted returns (5-year Sharpe ratio 0.2).
Good to know
- Distributions are 35% franked, a tax bonus for Australian residents.
- Australian focus means franked dividends and no currency risk, but heavy concentration in banks and miners.
What VDBA's categories mean for you
How each category this ETF belongs to tends to behave across market cycles.
Australian shares. Home-market familiarity, fully franked dividends and no currency risk for local investors — but very concentrated in banks and miners, which dominate the index.
- Market regime
- Sensitive to commodity prices, Chinese demand and domestic interest rates. Generous income, but narrow sector diversification.
- In a portfolio
- A natural core for Australian investors thanks to franking, but should be paired with global exposure so you aren't over-reliant on a handful of banks and resource giants.
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.