VDHG - Cash Distribution vs Attribution

I bought some VDHG back in June this year and received a dividend in July.

When I check the tax statement, there are two columns:
- Cash Distribution
- Attribution

For the "Total current year capital gains" element, the Cash Distribution is around $10K but the Attribution is $15K. My question is that what is the cause of the additional 5K of capital gain? Is it caused by the fund's internal rebalancing?

 

Another possibility is capital gains due to the sale of assets to cover other investors activities. Internally VDHG is made up of wholesale funds which are less tax efficient than ETFs

 

Thanks, but if it's caused by other investors' activities, shouldn't the capital gain belongs to other investors and not the fund? Otherwise the remaining investors will need to pay higher tax?

 

That is the downside with wholesale funds

Some further reading The problem with pooled funds - Passive Investing Australia

 

Thanks for the article. Since the fund pay tax at the fund level, does this mean I will pay less CGT when I sell my units in the future?

 

Yes as these internal capital gains should adjust your cost base via an end of financial year tax statement

What you miss out on is the compounding effect of these deferrable gains if the underlying funds were ETFs

Lots of folks are reconsidering VDHG with DHHF coming out which avoids this issue and also is 100% equities. I’m not saying sell your current VDHG holdings as that will realize further capital gains, but DHHF might be an option for future investment if you want to avoid this issue

DHHF and other VDHG alternatives - Passive Investing Australia