The BetaShares Diversified All Growth ETF (ASX: DHHF) could be an effective investment for people who don't want to worry about having a portfolio full of individual share investments. An all-in-one approach may suit some investors.
The DHHF ETF provides exposure to a diversified portfolio of large, medium, and small businesses from Australia, globally developed and emerging markets.
The ETF has a relatively low annual management cost of just 0.19%, which is quite cheap, considering several other BetaShares' ETFs have a higher yearly fee than that.
There are two key factors I like about the DHHF ETF. Let's take a look.
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Strong diversification
According to BetaShares, the DHHF ETF provides exposure to around 8,000 shares from around the world.
In terms of investment strategy, these are the four main allocations as of 31 May 2024:
- Australian shares – 36.1%
- US shares – 38.9%
- Developed markets excluding the US – 18.6%
- Emerging market shares – 6.4%
In terms of country allocation, the United States and Australia are obviously the two countries with the largest weighting. After that, Japan has a 4.2% allocation, China and Canada have a respective 1.9% and 1.8% allocation, and the United Kingdom has an allocated 1.7%. Meanwhile, India comes in with a 1.5% allocation, and France and Taiwan have 1.4% and 1.3% allocations, respectively.
The DHHF ETF is fairly evenly weighted between industries thanks to the mixture of US shares and ASX shares. At May 2024, there were six sectors with a weighting of at least 9%: financials (21.1%), IT (14.2%), materials (10.8%), healthcare (10.5%), industrials (10.3%) and consumer discretionary (9.5%).
The allocation to Australian shares has the pleasing effect of boosting the ASX ETF's underlying dividend yield. At 31 May 2024, the ETF's underlying yield was 2.6%. Grossed up with franking credits, it was 3%.
Growth potential
Some other all-in-one ASX ETFs, such as the Vanguard Diversified High Growth Index ETF (ASX: VDHG), have a certain weighting to bonds. I think bonds can be a decent investment, but their growth potential is limited.
Investors who want stronger long-term returns may be better served by owning DHHF ETF units.
According to BetaShares, since the ASX ETF's inception in December 2020, it has delivered an average annual return of 10.5%. Compare that to the VDHG ETF's net returns — in the last three years, it has returned 6.6% per annum and 9.1% per annum in the last five years.
While we can't rely on past returns to predict future returns, I believe the DHHF ETF is a useful pick for diversification and, hopefully, a good level of future returns.
