At the time of writing, there are roughly 380 ASX ETFs for investors to choose from.
However, in recent years, there has been more and more with more specific themes like AI, tech, or sustainability.
Other times, new ETFs come into the market as providers try to compete with existing funds.
On Tuesday, Betashares announced the opening of its newest fund – The Wealth Builder Global Shares Geared (30-40% LVR) Complex ETF. It will trade under the ticker ASX:GGBL.
It has a management fee of 0.35% p.a.
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Objective and strategy
According to Betashares, GGBL seeks to help investors build long-term wealth by providing moderately geared exposure to a diversified portfolio of global equities (ex-Australia).
GGBL combines investors' money with borrowed funds and invests the proceeds in the fund, which aims to track the performance of an index (before fees and expenses) comprising approximately 1,300 developed markets companies (ex-Australia). Gearing is managed internally within the Fund.
The Fund's gearing ratio (being the total amount borrowed expressed as a percentage of the total assets of the Fund) will generally vary between 30% and 40% on a given day.
GGBL does not aim to track an index.
You might be wondering, what is gearing?
Gearing is the use of borrowed funds, in addition to your own, to increase the size of your investment. Gearing aims to generate magnified returns, but also increases risk, as losses are magnified too.
In effect, for each A$1 of investor capital, the target exposure to global equities would be in the range ~ A$1.43 to A$1.67.
What holdings are in the ASX ETF?
GGBL provides exposure to approximately 1,300 companies from over 20 developed countries, excluding Australia, offering a diverse range of sectors, many of which are underrepresented in the Australian share market.
By sector, its largest allocation is to:
- Information Technology (27.8%)
- Financials (16.3%)
- Industrials (11.1%)
- Consumer discretionary (10.4%)
- Communication services (9.2%)
By geography:
- United States (73.8%)
- Japan (6.4%)
- Canada (3.3%)
- Britain (3.1%)
- Germany (2.3%)
Largest exposure by company:
- Nvidia (5.4%)
- Apple (4.9%)
- Microsoft (4.9%)
- Amazon (2.7%)
- Meta Platforms (2.1%)
Foolish Takeaway
Geared funds like this can amplify gains and losses depending on the performance of the market.
Betashares has deployed a similar gearing strategy for its Betashares Diversified High Growth ETF (ASX: DHHF).
However, the key difference is that DHHF is also exposed to Australian holdings.
These more complex strategies also often come with higher management costs. This is reflected in the 0.35% management fee p.a.
For example, the BetaShares Australia 200 ETF (ASX: A200), one of Betashare's most popular funds, comes with a management fee of 0.04% p.a.
While this isn't a dealbreaker, it's something to be aware of before investing.
Ultimately, if you have confidence in the performance of large US companies, this fund will aim to amplify these returns.
