Is VDCO a good ETF?
VDCO is the Vanguard Diversified Conservative Index ETF from Vanguard. We classify it under AU, Intl, and Market-Cap. With about $297 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, VDCO has delivered 2.72% a year over 5 years (ranked 141st of 188 ETFs we track), 6.54% a year over 3 years (ranked 160th of 226 ETFs we track), and 4.8% a year over 1 year (ranked 188th of 308 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 0.27% is reasonable. That's cheaper than the typical 0.4% for similar ETFs. It pays a healthy 5.35% 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 30% franking softens the blow for Australian residents.
Over the past 5 years its volatility has been low (annualised standard deviation around 5.84%), meaning a relatively smooth ride. Its 3-year Sharpe ratio of 0.5 is reasonable — that's the return it has earned per unit of risk taken (higher is better).
Portfolio turnover is low at about 15% a year — it trades only a small slice of its holdings each year, so trading costs and tax on realised gains stay modest — typical of a passive index strategy.
Strengths
- Low-cost: a 0.27% management fee keeps more of the return in your pocket.
- Pays a useful 5.35% income yield.
- Low volatility (5.84% over 5 years) for a smoother ride.
Things to watch
- Has lagged most peers over 5 years (141st of 188).
Good to know
- Distributions are 30% franked, a tax bonus for Australian residents.
- Australian focus means franked dividends and no currency risk, but heavy concentration in banks and miners.
What VDCO'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.