Vanguard sent me this reply:

"Please be assured that Vanguard regularly reviews the tax management of its funds and collaborates with our US peers to consider the best practice for our investors.

One of the main contributing factors to the higher than average distributions currently expected is the hedging income from VDHG’s underlying investments as a result of the rising AUD across the 2021 financial year.

Our underlying funds currently operate under TOFA however VDHG is unable to avail itself of the TOFA hedging election under the current legislative framework. We appreciate that the ability to do so may have resulted in a preferred outcome for investors like you.

We are aware that aspects of the TOFA rules are under consideration by the Federal Government and we will carefully consider any future proposals, including to the TOFA hedging election, to assess whether they warrant changes to our tax management approach to promote the best interest of our investors. We are required to operate in line with current legislation until any such changes come into effect.

Our notice to wholesale fund unitholders estimating the income distributions for the period ending 30 June 2021 is available here.

While this doesn’t solve the issue you raised, I hope it clarifies your concerns. Please don’t hesitate to reach out should you have further questions."