Vanguard controversy: Does VDHG lead to higher taxes?

The fund’s structure can lead to higher distributions and taxes for investors

An article from Morningstar this morning

https://www.morningstar.com.au/funds/article/vanguard-controversy-does-vdhg-lead-to-higher/216840

The controversy centres around a quirk in VDHG’s design: it’s an ETF made up of seven unlisted index funds. While similar on paper, ETFs and unlisted funds operate differently in practice. ETFs are bought and sold on a stock exchange via market makers, while investors trade unlisted fund shares directly with the fund manager

Think of VDHG as an ETF wrapped around seven unlisted managed funds—a fund of funds

This is not the only approach. For example, the BetaShares Diversified All Growth ETF (ASX: DHHF) is made up of four other ETFs, including one from Vanguard—an ETF wrapped in ETFs

This ETF is a diversified ETF which has holdings in various sectors and asset classes with a higher focus on growth assets.  There are other versions of this fund with more conservative strategies but this is what feel is appropriate for my current situation.  

VDHG is my baseline for my SMSF.  If I cant beat this I figure I might as well just sit back relax and chuck the lot into this.  I also use this in sharesight as my index to compare returns against which is a nice feature of Sharesight.

From the Vanguard website:

The ETF provides low-cost access to a range of sector funds, offering broad diversification across multiple asset classes. The High Growth ETF invests mainly into growth assets, and is designed for investors with a high tolerance for risk who are seeking long-term capital growth. The ETF targets a 10% allocation to income asset classes and a 90% allocation to growth asset classes.

Management fee is 0.27% which is pretty low for a diversified fund.  Returns have been around 11% since inception (3 years).