Young & Invested: The one ETF portfolio

Welcome to my column, Young & Invested, where I discuss personal finance and investing for Gen Z and Millennials.

This column aims to be a resource for young investors navigating an ever changing financial, political and social landscape as they try to build wealth. Tune in every Thursday for the latest edition.

Edition 21

I used to be an avid investor in sexy stocks. Beyond the NVIDIAs or Teslas of the world, nothing enthused me like a speculative lithium mine in pre-development. Unsurprisingly, attempting to pluck out the winners is rarely a successful investment strategy for most 20 year olds.

Younger investors are encouraged to take risks and speculate, after all, a longer time horizon should theoretically allow plenty of time to recoup lost money. But I’m not sure I agree with this. As someone who used to be an eager proponent of this belief, a few years of brain development later I concluded that individual stocks are simply not my preference.

Industry consensus is that a well-diversified portfolio typically consists of between 15 and 25 companies. As someone who used to do the grunt work myself, the process to build and constantly maintain a portfolio became tedious, eroding my free time as well as increasing anxiety about the performance of each holding.

There are currently more ‘new generation’ investors than ever, however not everyone has the time or interest to build a traditional equity portfolio. In fact, I think the rise of ETFs has been partially bolstered by the emergence of a type of ‘lazy investor’, who isn’t particularly interested in financial markets but understands they must invest to reach their goals.

A few weeks ago, I discussed the merits of robo advisers. In the spirit of exploring products that make investing easier, this edition of my column will look at an ‘all-in-one’ ETF – a retail offering designed to provide investors with a diversified portfolio in one trade.

How many ETFs should you own?

Whether in life or investing, we’ve all heard of the phrase “don’t put all your eggs into one basket”. In both contexts, the logic of this advice serves as a risk mitigation strategy, rather than a method to derive the maximum returns. But how far does that phrase reach before it begins to lengthen your proximity to your goals?

Experts conclude that a portfolio of five to ten ETFs is an appropriate amount for optimal diversification. However, many like to think there is no one-size-fits-all answer and ultimately your choice will be guided by your investment strategy. Fewer funds typically suit those who prefer a hands-off approach or ‘set and forget’ strategy, whereas those on the more enthusiastic side may prefer a larger portfolio that allows for greater diversity and non-core exposure.

Whilst I’m not a beginner investor in the conventional sense, I am a proponent of simplicity. Therefore, I choose only to invest in two to three broadly diversified ETFs for domestic and international equity exposure. In many ways, I follow an all-growth allocation through 100% exposure to equities, disregarding alternative asset classes like gold or fixed interest.

In investing we use the endearing term – ‘forever investments’ – to define stocks that meet the specific criteria of a potentially indefinite holding. But is there an ETF equivalent? What if I wanted just one to hold forever?

Enter the one-fund portfolio

All-in-one ETFs are designed to provide a singular investment product that can diversify across multiple asset classes with one trade. Such products were introduced to appeal to investors who are new to investing or wish to simplify the investing process. Such funds generally come at a marginally higher fee than its underlying holdings. However, along with a higher fee you get automated rebalancing.

The largest drawback

Static asset allocation

A Vanguard study that examined long term market returns across different asset allocations, found that 100% exposure to stocks resulted in the greatest average returns. It’s easy to look at the below results and conclude that 100% exposure to equities is the optimal allocation for returns maximisation. However, your short and long-term goals are incredibly important in determining your investment strategy.

Logically, there will come a time in an investor’s life when a ‘set and forget’ strategy no longer suffices, and a one ETF strategy introduces certain limitations. As market conditions and personal circumstances evolve, holding one ETF with a fixed allocation becomes impractical. A portfolio that contains multiple funds allows for easier gradual rebalancing, switching entirely from one ETF to another requires selling and incurring capital gains.

For example, an ‘all-growth’ approach typically lends itself to accumulators with a longer time horizon. If at 26 years old, I hold an ETF with a 100% equity allocation, this will naturally no longer align with my need for capital preservation upon retirement 40 years later. A one-ETF portfolio makes it more difficult to facilitate this portfolio shift and introduces significant tax implications.

Benefits

Conversely, the static asset allocation may also serve as a benefit for some.

I often reference our Mind the Gap study as I believe the results inform the way we should think about investing. This study refers to a 1.1% gap in average fund returns vs average investor returns for every dollar invested. What this implies is that we are imperfect investors who make poor decisions, whether that be panic selling in a downturn or trying to time investments.

Asset allocation has long been championed as the primary driver of portfolio performance, with a widely held study suggesting it accounts for almost 94% of returns. Maintaining a fixed allocation through one-ETF means that the investor is unable to make impulsive decisions and contribute to the 1.1% gap referenced above.

Furthermore, traditional DIY portfolios typically require manual rebalancing as certain asset classes outperform others. In an all-in-one ETF handles this process automatically to maintain its investment strategy without requiring investor intervention.

We’ve previously covered the largest multi-asset ETF on the ASX, Vanguard’s Silver-Medalist rated Diversified High Growth VDHG which you can explore in our ETF deep dive. In this instance, I will be examining Betashares Diversified All Growth ETF DHHF.

Betashares Diversified All Growth ETF DHHF

• Inception date: December 2020
• Medalist rating*: Bronze
• Management fee and costs: 0.19% p.a.

Championed as an all-in-one investment option, Betashares Diversified All Growth ETF is constructed by using a passive blend of four cost-effective ETFs that cover large, mid and small cap equities from domestic, global developed and emerging markets. With approximately 8,000 holdings, DHHF claims to encompass an “all cap, all-world” approach.

Who is this suited to?

As the name implies, this ETF is designed to suit investors with a very high risk tolerance and those that are willing to accept higher volatility to achieve their objective. Debuting as the first pure equity diversified ETF on the ASX, DHHF invests 100% in growth assets with a strategic asset allocation of 37% to domestic equities and the remaining 63% to international equity. The ‘all growth’ lends itself to investors in the accumulation stage.

This is not a new approach by any means. A common strategy pursued by younger retail investors is to hold 2 – 3 ETFs that provide exposure to both global and domestic equities which is something I discuss in the beginner ETF portfolio. The key difference here is these allocations are packaged into a singular offering and suitable for someone who prefers to further simplify their investment process and doesn’t object to the static asset allocation.

Composition

The ETF is comprised of four underlying holdings: Betashares Australia 200 ETF, Vanguard Total Stock Market ETF, SPDR Portfolio Developed World ex-US ETF and SPDR Portfolio Emerging Markets ETF. These are all passive, lower cost funds that track a broadly diversified index.

We think DHHF’s equity sleeve is not meaningfully different to the typical peer’s size and value-growth exposure. The portfolio is not significantly overweight in any region compared to its Aggressive Target Allocation category peers. However, it has been notably underweight in the Australasia region by an average of 5%.

Source: Betashares. 2025.

Performance

DHHF demonstrates a strong, albeit short-term track record. Over the past three years, it beat the category index by an annualised 2.3% and furthermore, outperformed its average peer by 3%. When looking at the longest assessable period (5 years), it also beat the index by an annualised 1.3%.

Below we see the growth of $10,000 invested in DHHF since inception which comfortably outperforms its category.

We think the risk-adjusted performance continues to make a case for DHHF. A strategy pursuing higher returns is often associated with higher standard deviation (a common measure of risk). However, the 5-year standard deviation of 10.1% for DHHF came in below the 10.3% of its category average.

Fees

The fund’s 0.19% management fee is currently the lowest fee amongst all-in-one diversified ETFs currently available on the Aussie market. Furthermore, it is within the cheapest quintile of its Morningstar category.

It is important to note that DHHF’s fees are marginally higher than holding all the underlying entities separately at the same allocation. Additional value proposition that justifies the higher fees may be the automatic persevering of allocations, through quarterly rebalancing that occurs if the asset allocations deviate by more than 2%.

Overseas listed holdings

It is important to note that whilst DHHF is an ASX-domiciled ETF, three of the four underlying holdings are US domiciled that may come with additional administrative requirements, as well as additional tax obligations. Shani has previously explored some of the implications of investing in an ETF listed overseas.

What we think

Its competitive fee, together with the fund’s People, Process, and Parent Pillars, indicates that this share class should be able to deliver positive alpha versus its category benchmark, leading to its Medalist Rating of Bronze.

Alternatives

Comparatively, Vanguard debuted its all-growth investment option Vanguard Diversified All Growth Index ETF VDAL in March 2025. This sports a similar composition to DHHF however notably uses a mix of ETFs and unlisted managed funds in its holdings, as well as includes 18% hedging. Shani explores this new ETF here.

Conclusions

Holding a just single “all-in-one” ETF eliminates the decision fatigue investors often experience. This can be particularly beneficial for those who prefer a hands off approach. However, it’s hard to say if there is definitively one ETF you can buy and hold forever.

The reality is your goals and circumstances are constantly evolving which may demand some level of flexibility that such ETFs do not provide. The largest implication of a one-ETF portfolio is its static asset allocation, which will incur a significant tax event when attempting to rotate out of the holding to reflect a change in strategy.

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*The Morningstar Medalist Rating is a forward-looking analysis that aims to predict funds’ performance versus a relevant benchmark index or peer group. The three pillars of people, process and parent are used to evaluate ETFs.

Morningstar expresses the Medalist Rating on a five-tier scale running from Gold to Negative. Higher ratings denote our conviction in a fund’s ability to outperform and lower ratings indicating a lack of conviction.

The top three ratings of Gold, Silver, and Bronze all indicate that our analysts expect the investment vehicle to add value or “positive alpha” over the long term when compared with a relevant category index after accounting for fees and risk. Positive alpha simply means to outperform other ETFs in the category.