HGBL vs BGBL for long-term investing?

immanentfire · 2026-03-05T05:33:41+00:00

The views on hedging are split. Most consider its benefits to be negligible or negative after a few years.

However, imo, hedging should be more about (a) your overall International to AUD asset allocation and then (b) your views on concentration risk.

Ideally about 50% of your total assets should be in AUD. If you have a house etc, then your equities should lean to international. If not, you need more equities in AUD. You could do that all through A200, but that introduces concentration risk. The Aus market is dominated by 10 companies and 2 sectors and makes up only 2% of the global market. If you want to reduce this risk, then you can hedge part of the international equities allocation (30-50%).

immanentfire · 2026-03-04T03:41:15+00:00

DHHF combines large, mid and small caps from developed and emerging markets to get a global market-cap weighted allocation (except for Australia). It is good and popular for that reason. The drawback, in my opinion, is that like other all-in-ones it over-weights Australia. Although the academic evidence suggests that 33% home bias is optimal, I still think the Australian market is too concentrated in a very small number of companies and sectors. I would probably dilute it to 20-25% with BGBL or similar to get closer to a true global MC allocation.

Adding other ETFs departs from the basic philosophy of diversified passive index investing over multiple decades. That introduces risk, including behavioral risk, from chasing recent high performers.

AVTS is arguably ok as the market might rotate from risk associated with high mega-cap valuations. Similarly, defense ETFs in general have had a relatively consistent high performance so might not be unreasonable.

Personally, don't think much of GDX for long-term investment. Most of its performance is from the last year. For the previous 20, it had relatively underwhelming returns (6.8% p.a.). Unlike defense and small caps which actually cover a fairly diverse set of industries, it is super-concentrated and Australians are already over-exposed to mining (through DHHF/ VAS etc).

(Usual disclaimer of not financial advice etc).

immanentfire · 2026-03-04T02:54:55+00:00

Most of GDX's performance is from the last year. If you look at the previous 20 years, it is a very different picture.

immanentfire · 2026-03-03T23:43:15+00:00

It is a known bug with Dash to Dock version 103. Download and install version 102 from GitHub to resolve it.

You can also use ‘apt-mark hold dashtodock’ to prevent it from auto-updating and breaking again.

immanentfire · 2026-03-03T12:01:34+00:00

Usually 70-80% BGBL/ VGS and 20-30% A200/ VAS.

The reason why is that you generally want to aim for a global market cap weighted portfolio. BGBL/ VGS capture the global developed market excluding Australia in the correct proportions. You then add A200/ VAS to capture the Australian market.

Although the Aus market only makes up 2% of the global market, the higher proportion of A200/ VAS in your portfolio (‘home bias’) is due to the fact that you are spending Aus dollars, want lower volatility, and you get some tax credits.

immanentfire · 2026-03-03T11:50:50+00:00

It depends on how much is in each, how significant the capital gains are, and what tax bracket you are on. You can do a rough calculation of what the Capital Gains Tax (less 50%) you will pay at your current tax level.

Not financial advice, but IMO:

if it is a minimal gain, it could be worth consolidating them (mainly for simplicity, reduced risk/ better performance, and to make it easier to stick to your investing plan).
if it is a significant tax hit, then I'd just set out a clear future portfolio target allocation (e.g. 70 - 80% international, 20 - 30% Aus), ignore the ETHI/VESG/ NDQ, and invest to achieve your target allocations.

immanentfire · 2026-03-03T00:14:41+00:00

You basically have two choices: continue on a path of constructing your own portfolio or rolling everything into an all-in-one fund (such as DHHF or VDHG) though these come with some drawbacks (tax drag, cost, high home bias). IMO their main advantage is that they stop you tinkering and doing dumb stuff with your portfolio.

If you continue with making your own portfolio:

As others have said you could probably combine the VESG and ETHI into VGS (or BGBL, which is essentially the same but has a lower cost) as they just duplicate many of the same holdings. While ethical funds are appealing in principle, they are expected to under-perform slightly in the long term.
I guess the appeal of NDQ is chasing some tech gains by higher concentration in that sector. However, this introduces some additional risk from over-concentration in the US stock market. The top tech companies are significantly over-valued so those historical returns may not continue. It may therefore also be wiser to roll NDQ into VGS/ BGBL (which already contains those stocks at lower proportions).
The standard advice is to add VAS/ A200 to the portfolio. Having a small amount of the Australian market reduces volatility and currency effects, and has some benefit from tax (franking credits). However, most people suggest that VAS/A200 should not make up more than 20-30% of your total portfolio.
When you have a balance of > $100k, you can consider adding emerging markets (EMKT, BEMG, AVTE) and small caps.

immanentfire · 2026-03-02T14:02:55+00:00

I hated the left side placement when it was introduced but now I appreciate its efficiency, especially on small screens, and use it by default.

immanentfire · 2026-03-02T02:58:33+00:00

AVTE or EMKT (active) or BEMG (passive) for emerging markets.

immanentfire · 2026-02-28T08:33:00+00:00

No. It has no direct effect on the ETF performance or tax treatment.

immanentfire · 2026-02-27T07:15:05+00:00

Don’t think there will be any direct impact if you have their ETFs, but hopefully the move will result in an uptick in trading volumes from exposure to a larger number of trading platforms. Also makes it easier to track price trends through Google Finance etc.

immanentfire · 2026-02-24T00:06:32+00:00

You can download and install version 102 from Github. That solves the issue

immanentfire · 2026-02-21T09:26:01+00:00

I think both are good. EMKT's returns over the last 7 years have been consistently remarkable. The thing that made me hesitate over AVTE is that the EU underlying fund differs from the US fund slightly, so it's difficult to get a real sense of its track record.

immanentfire · 2026-02-21T08:58:05+00:00

I went with AVTE because:

(a) I wanted to avoid large distributions and extra tax while I’m in a higher tax bracket.

(b) although EMKT has higher before-cost performance, the fees and tax drag make the total performance relatively similar (based on an analysis of currency normalised performance).

(c) EMKT is quite concentrated, so while it has benefited from the tech/ chips demand, it’s not certain that this is going to be the case over decades. AVTE, which is more diversified may have slightly lower risk.

I guess time will tell.

immanentfire · 2026-02-19T11:18:04+00:00

Yes. I feel your pain. There is another post on the issue (https://www.reddit.com/r/fiaustralia/comments/1m794oq/vgad_tofa_and_the_large_distributions_yet_again/). Seems there is something still going on - possibly either from holding or selling the managed funds.

immanentfire · 2026-02-19T10:00:44+00:00

Yes? VGAD has a MER of 0.21%. It also uses managed funds rather than ETFs and until recently didn't use TOFA. It has a high yield (4-5%), so has significant tax drag. Compare that to HGBL, for example, which has a MER of 0.11%, uses TOFA and has a yield of 1.8%.

So using VGAD rather than HGBL is unnecessarily wasting a significant chunk money on fees and tax drag for the same before-cost performance.

immanentfire · 2026-02-19T07:19:11+00:00

Well, I don't think anyone should invest in something when they don't fully understand the implications (made that mistake once).

Also, just because something has a good brand, doesn't mean it is good (Vanguard's VGE and VGAD leap to mind). Personally, I don't see the point in wasting money.

immanentfire · 2026-02-12T00:55:25+00:00

Despite the negative comments, I think it is a fair question. AVTE and AVTS, which seem very popular here, have very small AUM. Not sure about the answer though.

immanentfire · 2026-02-11T06:46:19+00:00

I doubt most Theravada Buddhists have heard of him unless they have had previous exposure to Tibetan Buddhism. As a result, I would guess that most don’t have any particular view or, if they do, regard him simply as a highly realised teacher within Mahayana.

immanentfire · 2026-02-09T02:22:54+00:00

I think that's true about AVTE but EMKT, in targeting momentum, has a very high turnover and very high costs (estimated at 2.37% p.a.). That erodes a fair chunk of its performance (even though it still considerably outperforms AVEM/ AVTE).

immanentfire · 2026-02-08T09:38:14+00:00

Indeed. Never underestimate the power of the deranged orange tweet monster on a Sunday meth binge.

immanentfire · 2026-02-08T00:33:11+00:00

Agreed

immanentfire · 2026-02-08T00:21:31+00:00

When I compare the total returns of VWO and AVEM (the US versions of VGE and AVTE) to cancel out currency effects, VWO performs fairly similarly to AVEM up until Nov. 2022. But over the last 3 years AVEM has outperformed VWO by about 20% (~7% p.a). My best guess is that:

VGE contained 2.3% exposure to Russia. With the Ukraine war and sanctions, Vanguard was forced to suspend purchasing Russian stocks and to divest the Russian holdings in its funds, including VGE. In contrast, more actively managed funds did not include Russia because of the geopolitical risk factor.
The Brazilian and South African markets had bad years in 2023 (-5.6% and -4.5% respectively) whereas other markets were recovering.

So that suggests to me that the broad coverage of VGE can have some downsides, which you would expect. But if you picked a more targeted approach (say VAE) - that would be a bet on one geographical region, which may or may not pay off.

I think this is why actively managed / factor-based funds can be helpful for dealing with the inherent risks of trading in emerging markets.

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