Bearish on Tesla shares after its result? Check out this ASX ETF

ETF investors rarely get the chance to opt out of a specific holding.

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Last week, Tesla shares delivered an underwhelming earnings result.

It's been a challenging year for Tesla Inc. (NASDAQ: TSLA), with its share price down the most of the Magnificent 7 companies. 

Tesla's share price is down 32% for the year. The next sharpest decline within the Magnificent 7 is Nvidia Corp (NASDAQ: NVDA), which has fallen 23% since the start of the year. Microsoft Corp (NASDAQ: MSFT) is down the least, after dropping just 8% for the year to date.

The electric vehicle (EV) maker has been one of the most controversial stocks in 2025. CEO Elon Musk's association with US President Donald Trump and government appointment were initially seen as positive. However, lately, an increasing number of investors have considered it a liability, with EV sales declining in several major markets.

Last week, Tesla released an underwhelming quarterly result. The company reported a staggering 71% decline in net profit, driven by a 20% decline in automotive revenue. Management attributed this to the need to update lines at its four vehicle factories to start making a refreshed version of its popular Model Y SUV. Lower average selling prices were also to blame.

While the stock lifted on CEO Elon Musk's pledge to spend less time in his government role, many investors remain concerned about the company's outlook.

A person holding an animated diagram regarding the tech sector in his hand.

Image source: Getty Images

Worried about Tesla's impact on your US ETF returns?

With a market capitalisation of $813 billion, Tesla shares make up a large portion of most US-focused ASX exchange-traded funds (ETFs). For example, they comprise 2.4% of Betashares Nasdaq 100 ETF (ASX: NDQ) and 1.5% of iShares S&P 500 AUD ETF (ASX: IVV). Accordingly, any dramatic drop in Tesla's share price acts as a drag on the performance of these ETFs.

While most US-focused ETFs contain Tesla as a holding, Global X Fang ETF (ASX: FANG) excludes it. Instead, Global X Fang ETF contains 10 holdings within the technology sector, each accounting for between 9% and 11% of the ETF. 

Over the past five years, FANG has climbed 91%. Its management fee is also modest, at 0.35%. This gives investors exposure to America's largest technology stocks while excluding Tesla.

Foolish Takeaway

Given the number of holdings in most ETFs, investors can rarely selectively exclude a particular holding from the basket of stocks. However, Global X Fang ETF investors can invest in ten US technology stocks while opting out of Tesla. Those bullish on the US technology sector with reservations about Tesla might find this ASX ETF especially appealing.

Motley Fool contributor Laura Stewart has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has positions in and has recommended BetaShares Nasdaq 100 ETF, Microsoft, Nvidia, Tesla, and iShares S&P 500 ETF. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has recommended the following options: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. The Motley Fool Australia has positions in and has recommended BetaShares Nasdaq 100 ETF. The Motley Fool Australia has recommended Microsoft, Nvidia, and iShares S&P 500 ETF. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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