Key Highlights

• Fund size of $542.13 million; internally leveraged exposure to approximately 200 of the largest ASX equities

• Management fee of 2.23% per annum; Beta of 2.10 and Standard Deviation of 21.11, reflecting amplified Equity market risk

• Asset allocation shows 225.76% in stocks and -125.76% in cash, reflecting the internal borrowing structure

The BetaShares Geared Australian Equities Complex ETF (ASX:GEAR) is an internally leveraged equity product that combines investor Capital with borrowed funds to build a portfolio of approximately 200 of the largest ASX-listed equities weighted by market capitalisation. Admitted on 2 May 2014, the fund has grown to $542.13 million in Assets with 15.40 million units outstanding. GEAR is classified as a complex ETF on the ASX due to its use of Leverage and the amplified risk profile that results from borrowing. For investors who hold a directional view on the Australian large-cap equity market and wish to access magnified participation in its movements — with correspondingly magnified downside in adverse conditions — GEAR provides an exchange-traded structure to express that view.

Internal Leverage Mechanism

GEAR achieves its geared exposure by combining investor application money with funds borrowed directly from financial institutions. The proceeds are then deployed into a broad portfolio of ASX-listed large-cap equities. This internal leverage structure differs from daily reset leveraged ETFs that use Derivatives to achieve a fixed Leverage Ratio each day: GEAR's leverage ratio fluctuates with market movements and the level of outstanding borrowings, which means the effective gearing can vary over time. The asset allocation data confirms this structure: 225.76% in stocks and -125.76% in cash, reflecting a gross equity exposure of approximately 2.26 times the fund's net asset value funded by internal borrowings equivalent to approximately 1.26 times NAV.

Portfolio Composition and Sector Exposure

GEAR holds 201 companies, with the top 10 positions accounting for 109.66% of the fund — a figure above 100% that reflects the leverage structure, where total equity holdings exceed the fund's net asset value. The ten largest positions are: BHP Group at 25.53%, Commonwealth Bank of Australia at 23.30%, Westpac Banking Corporation at 10.18%, National Australia Bank at 9.82%, ANZ Group Holdings at 9.01%, Wesfarmers at 8.67%, Macquarie Group at 7.50%, Rio Tinto at 5.42%, Goodman Group at 5.38%, and Telstra at 4.80%. Sector allocation is dominated by Financial Services at 33.75% and Basic Materials at 25.23%, together accounting for approximately 59% of equity exposure. Other notable allocations include Consumer Cyclical at 7.61%, Industrials at 6.52%, Real Estate at 5.94%, Healthcare at 5.54%, Energy at 4.25%, Consumer Defensive at 3.85%, Communication Services at 3.43%, and Technology at 2.49%. Geographic exposure is 96.01% Australian, with the United States at 2.51%, New Zealand at 0.59%, the United Kingdom at 0.53%, China at 0.20%, and Canada at 0.16%.

Fee Structure and Borrowing Costs

GEAR carries a management fee of 2.23% per annum, the highest of any ETF in this analysis. This substantial fee reflects not only the management expense but also the cost of borrowing — the interest paid on the internally borrowed funds that create the leverage. As interest rates change, the borrowing cost embedded within the fund's expense structure will change, which affects the net return investors receive. In a higher Interest Rate environment, the borrowing cost component of the total expense is elevated, creating a meaningful drag on the leveraged return above what the management fee alone implies.

Risk Metrics and Total Returns

GEAR's risk metrics reflect its leveraged nature. The beta of 2.10 indicates that the fund moves approximately twice as much as the broader Australian equities market in response to market movements. The standard deviation of 21.11 is the highest in the equity ETF group examined. The 52-week trading range of $31.38 to $39.55 — a spread of approximately 26% — illustrates the magnitude of price movement investors must be prepared to accept.