Every few months it seems, the ASX share market welcomes a new exchange-traded fund (ETF) to its boards. ETFs are a wildly popular investment vehicle, and investors seem open to all kinds of permutations and combinations when choosing an ETF that works for them.
The ASX is home to many of the most popular ETFs – index funds. There are index funds tracking the S&P/ASX 200 Index (ASX: XJO), the S&P/ASX 300 Index (ASX: XKO), as well as international indexes like the US S&P 500.
But there are also a bevvy of thematic and actively managed funds on the ASX as well.
For example, the Global X Physical Gold ETF (ASX: GOLD) allows investors to invest in gold bullion. The BetaShares Global Cybersecurity ETF (ASX: HACK) allows for exposure to only cybersecurity companies. And the BetaShares Crude Oil Index ETF (ASX: OOO) grants unitholders access to the gains or losses of the global oil price.
Well, today has seen the launch of yet another new ASX exchange-traded fund. It's the Global X Australia ex Financials & Resources ETF (ASX: OZXX).
The ASX welcomes its latest ETF
This ETF is one that is difficult to classify. It functions in a similar manner to an index fund, holding the 100 largest companies on the ASX by market capitalisation. However, it also actively excludes a huge chunk of our share market – bank and mining shares.
A normal ASX index fund is dominated by banks and miners. Just take the iShares Core S&P/ASX 200 ETF (ASX: IOZ). This ASX 200 index fund tracks the largest 200 companies on the ASX share market without further qualification.
This means that Commonwealth Bank of Australia (ASX: CBA), National Australia Bank Ltd (ASX: NAB), Westpac Banking Corp (ASX: WBC), and ANZ Group Holdings Ltd (ASX: ANZ) are the second, fourth, fifth, and sixth largest positions in this ETF, accounting for just over 18.5% of the entire ETF's weighting.
Mining and energy giants BHP Group Ltd (ASX: BHP), Woodside Energy Group Ltd (ASX: WDS), and Rio Tinto Limited (ASX: RIO) add another 15.6%.
So that's a lot of concentration in just two sectors.
The Global X Australia ex Financials & Resources ETF takes these sectors out of the equation. Instead, this ETF's current largest holdings (in order) consist of CSL Limited (ASX: CSL), Wesfarmers Ltd (ASX: WES), Telstra Group Ltd (ASX: TLS), Woolworths Group Ltd (ASX: WOW), and Transurban Group (ASX: TCL).
Because this is a new ETF, we don't yet have any kinds of performance metrics to analyse it. But it would certainly make for a closer look for any investor worried about overexposure to banks or miners in an ordinary ASX index fund.
The Global X Australia ex Financials & Resources ETF charges a management fee of 0.25% per annum, or $25 a year for every $10,000 invested.
