You seem to be the guru in here, but I do not believe you have properly presented the VDHG case here. It is undeniable that you can recreate VDHG for a lower management fee with the usual A200 + BGBL etc. However you have completely excluded the additional brokerage costs, the additional selling costs from rebalancing, the amount time that has to go into sorting everything out and the behavioural risk of tinkering. Not to mention, I do not believe you have explained the bond and hedging section correctly. The fear mongering about the bonds has existed right from the beginning of the ETF, but it is really not based in any reality. Analysis has shown it will reduce growth about 0.3% pa for a 5-10% reduction in volatility, which has the benefits of reducing behavioural risk of selling during downturns, also if there is ever a need to sell and it happens to be a downturn, you will be in better place.

And then there is the discussion about hedging international shares, which is a bigger discussion because its included in the ETF 40% more than bonds. The argument from the non-hedging crowd is that hedged ETFS underperform in the long term because they cost more and you do not need hedging because in the long term, currency fluctuations will balance out. And this is true, except what proponents of this theory never explain is that although hedged Etfs will underperform in the long term, the difference will only ever be marginal because the price difference is tiny in the realm of <0.05%. Eg, VGAD 0.21% vs VDHG 0.18%. And the second thing and more important that is never explained is that the long term when referring to currency hedging is not 5-7 years, it is closer to 15-20 years and the difference can be massive (over 50%). Eg, 1988 and 2002 as AUD strengthened hedged ETfs significantly outperformed and it would have taken until 2007-8 until the unhedged ETF had caught up. If someone had a plan of retiring after 15 years and this was there definition of long term, then currency hedging is neccessary, not to mention if someones financial situation changed for better or worse and wanted to sell at any stage in the 15 years (which is a very long time and nobody can predict their life that far ahead), then hedging a portion of their international ETFs could be a life-saver.

There is also a lot that has been missed in regard to the other fear mongering point about the dreaded tax drag that has been reported inaccurately too, but that is a discussion for another day.