Under the Hood: All-in-one diversified exposure with DHHF | Betashares

Bryce: [00:00:29] Welcome back to another episode of Get Started Investing, a podcast where we attempt to answer the most common money and investing questions from the community. Now, if you're joining us for the very first time, a huge welcome. We do recommend that you scroll up and started episode one. Now, my name is Bryce, and as always, I'm joined by my equity buddy, Ren. 

Alec: [00:00:46] How are you? I'm very good, Bryce. Very excited for this episode. This is the final part in our four part series with Betashares. We're going under the hood of their core ETF range. We've looked at the Australian 200 shares at 200, the Betashares Global shares, BGP. I'll be global, the Nasdaq 100 index here and now we're closing it out with the fourth ETF in the Core funds range, the Betashares Diversified All Growth ETF, ASX Ticker DHHF. 

Bryce: [00:01:18] Love it. Love it. Now, while we are licensed, we are not aware of your personal circumstances. All information on this show is for education and entertainment purposes. Any advice is general advice and a massive thank you to Betashares for sponsoring this series. They are a leading Australian ETF manager with more than $27 billion under management and the broadest range of ETFs on the market. They've been helping Australians build their wealth for over a decade. And to close it out, we're welcoming back investment strategist at Betashares, Tom Wickenden. Tom, welcome. 

Tom: [00:01:50] Thanks, Bryce. Good day, Ren. How you doin? 

Alec: [00:01:52] Good. Now, Tom, this series Under the Hood is all aimed at answering the biggest investing question. How do I analyse ETFs and understand the range that's out there? And in each of these episodes we've taken one of the Betashares ETFs from the Core funds range, and we've gone under the hood. We've looked at what it's trying to do, how it tries to do that and the key bits of information we need to analyse and where we can get that information. 

Bryce: [00:02:22] So before we kick in, if you'd like to follow along and get more information, head to the Betashares website betashares.com.au/equitymates. On that page you'll find all of the info on their core funds range, as well as the opportunity to pick up some of the core essentials. Merch packs. You've got towels, you've got drink bottles, you've got good quality umbrellas. I have good info that there are some of the best you can get, Tom. 

Tom: [00:02:49] Out there, best. 

Bryce: [00:02:49] Yet to experience them.

Tom: [00:02:51] So next episode makes sense.

Bryce: [00:02:54] How convenient it is now for the first 20 listeners who sign up today. That's Betashares dotcom use slash equity mates keep an eye on our socials will try and squeeze a few more packs for you. 

Alec: [00:03:05] Yes. So Tom Betashares diversified all growth ETF. We always like to start by asking what's in an ETF name? What can we learn from that name? So what can we learn from this one?

Tom: [00:03:15] Yeah, there's a few things we can take from this one. When you diversified in an ETF name, it typically actually refers to a style of ETF like this one is. So it's an ETF that is holding ETFs as it's underlying. It's like ETF Inception, it's an. 

Alec: [00:03:32] ETF of ETF in.

Tom: [00:03:33] ETF of ETFs and we'll get to why it later. But yes, that's the diversified part. And the all growth part just refers to the asset allocation space. So with all growth, yeah, corporate leverage, as we've talked about before, that definitely not all crypto, it's all equities or equities. So just means no, no bonds, no fixed income. So just yet, just the good stuff, growth. 

Bryce: [00:03:55] Assets. 

Tom: [00:03:55] Great assets. 

Alec: [00:03:56] Because you do say some diversified ETFs that do have maybe a bit of property exposure or some bonds in there. Yeah, there are still ETFs, have ETFs, but they've got different asset classes, not this one. All growth, all equities. 

Tom: [00:04:12] And interestingly, DHHF, HHS itself used to have bonds in it. We had a suite of diversified ETFs and with DHHF, Jeff, just a number of years ago now, we we changed them up a bit and now I've got the old growth, which is DHHF, and then a suite of actually ethical diversified funds now alongside it. 

Alec: [00:04:31] So when we go under the hood, the best resource for information is an ETF issuer's website. The transparency there is really great and we can really get everything we need to understand what is happening with this ETF and who it's for. So the five key questions that we always ask when we go under the hood, what is this ETF trying to do? What's its purpose? How is it trying to do that? What index is it tracking or how is it constructed? How much does it cost to access the fees of charges? How is its performance paid? And then finally, what are its top holdings? So let's start with the purpose. What is DHHF for trying to do? 

Tom: [00:05:11] Yeah, DHHF it's a really good tool for investors is a few different ways it can be used for younger investors. It can really be a all of portfolio solution. You've got diversified exposure across Australia in equities, global equities, emerging market equities. So for a young investor whose who's not looking or not feeling the need to invest in bonds anyway, it's a very long term time horizon. You can actually just buy data. Jeff And that's your entire portfolio. 

Alec: [00:05:38] It's funny you say that. We just wrote a book on that exact point and we actually used DHHF as one of the examples will send a marketing invoice to sponsored sponsored. And yeah, there are these ETFs that have come to market where it's like a portfolio in one transaction, and you can these days with different platforms, you can automate your investments into them and get on with your life. And so if you want to read 50,000 words on that exact topic that I summed up in a sentence. The book is called Don't Stress, Just Invest, and it is available for pre-order now. 

Bryce: [00:06:14] Yeah, love it. So it's the one stop shop. Yeah. Yeah. Don't need any.

Tom: [00:06:18] More. I'd say so. I mean, that's that's one of the applications are the ways we say it use or another way is as you can imagine for investors who want to do more on the side using as they call the portfolio wait and see Advisors doing this as well uses the call up of five for four really low cost option and then, you know, direct stock picking up looking at schematics around the edges too to keep it interesting, keep engaged. 

Alec: [00:06:41] So that is the purpose of DHHF. The next question is how does it achieve that purpose? And normally what we see here is an index. Every ETF we've looked at so far in this series has tracked an index. DHHF doesn't have an index. Know what's going on here and what are we How do we know what's in the ETF?

Tom: [00:07:02] Yeah, that's right. So for DHHF, since it's got multiple ETFs underlying it, it's not tracking one individual index, it's leveraging those other ETFs and their indices to build this huge global portfolio of, you know, 8000, 8000 stocks. So what's actually underlying it? What are the ETFs? We've got our own A200, which is our Australia 200 ETF. Now we've also got VAITAI, which is a Vanguard ETF in the US. So it's listed in the US, which is just an all of US stock market exposure. We've got ESP de W, which is a stage three ETF which is developed world X US and finally ESP AM another US asset ETF by State Street and that's emerging markets. 

Alec: [00:07:49] I mean the obvious question there is you got Vanguard and State Street ETFs in your ETF.

Tom: [00:07:55] Correct yet we're not completely biased in this fund. I mean ultimately we're looking to put together this ETF. We wanted to have the best outcome for investors and at the time we didn't have a developed world X US ETF, for instance, or we don't have a, you know, total stock market ETF in the US. So what we did was we leveraged ETFs that were also extremely low cost so we could bring this ETF to market in an efficient manner for the end an investor. 

Bryce: [00:08:26] So for ETFs that cover the globe emerging developed ex America America Australia. 

Tom: [00:08:35] Love exactly right.

Bryce: [00:08:36] Thousand start. 

Tom: [00:08:37] 8000 stocks which are.

Bryce: [00:08:38] More diversified. 

Tom: [00:08:39] And not crazy to think about right. 

Bryce: [00:08:41] Like the 70% of the holdings are like Apple. 

Tom: [00:08:47] The 8000 lines and yet you CommSec or. 

Bryce: [00:08:49] Ren does. 

Alec: [00:08:53] I can name them all. 

Bryce: [00:08:56] So I guess if there's more underlying ETFs that make up this, does that mean the fees on this are higher? Talk us through how the fees for this work. 

Tom: [00:09:06] Yes the fees on this one you're looking at 0.19% per annum. So using the NRG we have across the podcast, you're looking at $19 for every 10,000 invested. So if you think about that's 8000, 8000 equities across pretty much every country in the world. It's pretty, pretty remarkable. We've done that so that those ETFs we mentioned that we're using, they're all ultra low cost. So you know, four bips upside 0.04% for the Australian ETF, VTI is 0.03%. In the US, SPDW is 0.04% and PM 0.11%. So they're all, you know, some of the lowest cost ETFs around the world you can get for those different markets. And we've package those up and put them in one package. 

Alec: [00:09:51] It's important to stress when it's not as an investor, it's not like we pay the fee on DHHF and then we also pay all of those fees. The fee on DHHF accounts for the fees for the underlying ETFs. 

Tom: [00:10:07] Yes, Thanks for bringing that up, Ren. I probably get in trouble if I forgot to mention that. Yeah, exactly right. So those underlying ETFs, you know, still take out the fees from their ETFs, but that's reimbursed by Betashares back to the fund. So you're just looking at that one fee of 0.19% per annum. 

Bryce: [00:10:24] Now let's look at the the fourth element that we always. Look for on the resources page of the website, and that is performance. Now, you know, you're not getting the concentration that you would on the Nasdaq 100. You're getting exposure to 8000 different stocks. So talk us through what the performance has been. So this fund. 

Tom: [00:10:44] If you look at it over the past year or so, you're looking around 8%, which is what you'd probably expect from a globally bigger cap diversified portfolio. You've had a lot of growth out of the US tech. But this is also, you know, it got exposure to Australia, which has been a bit bit more muted in terms of performance this past year as well. I guess what's important to mention too is the actual asset allocation of the fund. So with those underlying ETFs we use 37% of the weighting is in the Australia 200 ETF, which is not what you'd get if you had an all world or cap exposure. Australia would be closer to 2% white. But since this is, you know, tailored for Australian investors, we've applied the Australia portion there and yet tells a bit of story about the performance too. 

Alec: [00:11:27] So let's get to those weightings and we look at top holdings. Normally when we go to top holdings, we're used to saying a list of companies Apple, Microsoft generally sitting at the top of the list if we're talking about a global ETF. Not the case here. We don't have top holdings, we have country allocation and we have asset allocation. And the asset allocation is listed as Australian equities, US equities, developed markets, ex-U.S. and emerging markets. Now earlier you explained that there are four ETFs that make that up little trick for players and I actually got stumped by this and Betashares let me know where to find it. If you go down to the resources tab of the website, it is an Excel document that you can download called Portfolio Holdings, where you can actually say the ETFs that make up those four asset allocations.

Tom: [00:12:23] Exactly right. And I'll show you the current weightings of those ETFs as well. We do in this portfolio, just like indices you guys would be used to, we also rebalance this ETF. So each quarter we make sure that each of the strategic asset allocation weightings we've set are true. If they move within 2% of their set weight they will rebalance back to those weights. And the weights aside for Aussie you looking at 37% and 200 on those rebalances, you're looking at 34.7% in the US Total stock market ETF, which is the 80 22% in the developed world ex-U.S.. And finally at 6.3% in your emerging market equities. 

Alec: [00:13:03] So I guess the question that comes out of those weightings that you just explained, for a lot of the other ETFs we've looked at, there's an index provider, we've mentioned selective. A couple of times they're making the decisions about the construction of the index or Nasdaq for the Nasdaq 100 for the asset allocation here. Who's making those decisions? 

Tom: [00:13:23] Yeah, so it's betashares. So we make the decisions. Obviously, the underlying ETFs, that's that's not those managers, but for DHHF itself, the way where the ones have chosen those strategic asset allocation weightings for Australian investors, we'll also the ones who choose the underlying ETFs and each of those are reviewed annually.

Alec: [00:13:40] So in theory, if a cheaper US total market ETF came to market, you guys could swap it and get cheaper exposure. 

Tom: [00:13:48] Exactly right. Or if we brought out a global shares ETF that was, you know, eight, eight basis points and from a tax perspective that was more efficient, we might be able to sort that in as well. 

Bryce: [00:13:57] Well, Tom, to close out, it's probably worth discussing how this fits into a portfolio. We've spoken that it could just be someone's entire core portfolio with access to 8000 stocks across the world. It's really one for an investor or, you know, you're starting your investing journey. You don't want to feel overwhelmed with having to allocate to ASX 200 and a little bit to America and a little bit to emerging markets. This Betashares do it all for you with the underlying ETFs. And then through one simple trade, you're going to get access to truly a global portfolio of stocks. 

Tom: [00:14:35] Yeah, it's great. And like a tip that's often given to new investors is just try and get some skin in the game. It can be so daunting, right? There's individual stock picks people are talking about. There's hundreds of ETFs now. So this is a really easy way just to make that first investment. Look how it goes in the platform, watch the performance and get used to that side of things. And then as you know, as you try your your funds or as you have more money to invest, you can then look at more thematic options or things around the edges to build around this core portfolio release. You're starting in the right place and you know, very well diversified, very low cost ETF. You really can't go too wrong. 

Alec: [00:15:11] Hmm. Well, that does bring us to the end of our four part series on the Betashares Core Fund range. As a reminder, the four ETFs we've spoken about are the Australia 200 ETF, the world's lowest cost Australian shares ETF. Then we looked at the BETASHARES Global Shares ETF, which gives you exposure to the world's share market excluding Australia. 

Tom: [00:15:37] Yep. Lowest cost in Australia as well. 

Alec: [00:15:38] As lowest cost. Don't forget that in the third episode we looked at the Nasdaq 100 ETF NDQ, which looks at the tech heavy NASDAQ 100 ETF over in the US. Some of the biggest tech names that everyone uses and everyone is familiar with are in that index. And then finally, in today's episode, we looked at the Betashares Diversified All growth ETF. The ticker there is DHHF. So if you want to learn more about these four core funds, range ETFs and have a crack at winning one of these prized merch packs that we're yet to see on the radio, you can head to Betashares.com.au/equitymates and we'll include the link in the show notes and across our socials as well. 

Bryce: [00:16:26] Absolutely. Well, thank you to Betashares for sponsoring the series. We'll continue to unpack the plethora of ETFs that are out there. 

Alec: [00:16:36] Four down. The ride that we released. These podcasts won't end with the right attention. So it's always something. 

Tom: [00:16:47] Keeping you guys in business. Really. We're doing it for you. 

Alec: [00:16:50] But you are keeping us in business. Thank you for sponsoring this. 

Bryce: [00:16:53] We speak about the importance of building a core, and I think we hope that over the course of these four episodes, we've helped you understand what some of the options available are to you to help you build out your core portfolio. But a big thank you to Tom, who's been with us to help us unpack it over the last four episodes. We do really appreciate it. Thank you very much. 

Tom: [00:17:12] Much. Thanks, Bryce. Cheers Ren.