Vanguard Australian Shares High Yield ETF (VHY) — Review & Analysis

VHY is Australia's eighth-largest ETF, with $7.5 billion in assets as at May 2026 — about 2.1% of the entire $358 billion Australian ETF market. It's Australia's most popular dividend ETF by a huge margin — at $7.5B, VHY is more than 11x the size of SYI ($646M) and 19x the size of IHD ($386M) as at May 2026. Vanguard launched VHY in May 2011 and it has since become the default "Australian dividend" allocation in income-focused portfolios. The fund tracks the FTSE Australia High Dividend Yield Index, holding approximately 70 ASX-listed companies forecast to pay above-average dividends over the coming 12 months. The management fee is 0.25% per annum, or $25 per year per $10,000 invested. VHY gathered $200M+ in net inflows in May 2026, driven by retirees and SMSFs seeking franked income.

To compare VHY side-by-side with every other ETF on the ASX, see the full ETF directory.

VHY is structurally tilted to financials and materials — the two highest-yielding sectors of the Australian market. As at May 2026, the portfolio is approximately 40% financials and 25% materials — a combined 65% in just two sectors. The big-4 banks (CBA, Westpac, NAB, ANZ) plus BHP, Rio Tinto, Macquarie, Telstra, Woolworths and Wesfarmers are typically in the top 10. The fund caps individual stock weights at 10% to limit concentration risk, but the sector concentration is real. VHY's high yield comes from sector tilt, not stock-picking skill — and that means VHY will significantly underperform broad-market VAS when banks or miners sell off. Over the 5 years to May 2026, VHY returned +60.0% total return — well ahead of VAS (+39.9%) thanks to the strong 12 months for banks heading into May 2026.

VHY pays distributions quarterly (late September, December, March and June), with significant franking credits. As at May 2026, the trailing 12-month cash distribution yield runs around 5.5%, distributions are typically about 85-90% franked (higher than VAS), and the grossed-up yield comes in near 7.5-8.0% for an Australian resident taxpayer. VHY's grossed-up yield is one of the highest of any liquid investment vehicle available to Australian retirees — particularly relevant for SMSF members in pension phase, where franking credits are fully refundable as cash. The dividend yield does fluctuate: in bad years (2020), VHY's distributions dropped sharply as banks deferred dividends. The franking ratio is also higher than VAS because VHY skews to consistently-franked companies and excludes major non-franked stocks like CSL.

VHY is the simplest single-trade way for Australian investors — especially retirees — to build a franked, high-yielding Australian equity portfolio. A $10,000 investment in VHY at its May 2011 launch (with all distributions reinvested) would be worth roughly $24,000 as at May 2026 — an annualised return of about 5.9% per year over the 15-year period. Importantly, this trails VAS's since-inception return — VHY's higher cash yield has come at the cost of weaker capital growth. For a deeper analysis see The ultimate list of dividend-paying ETFs on the ASX, ranked by 5-year data.