Key Highlights

  • The fund borrows money to invest in a broad portfolio of about 200 Australian shares, so its share exposure sits well above its net assets.
  • The management fee is 2.23%, the highest among the funds in this series, and the listed annual Yield is 1.73%.
  • The fund is about $587.20 million in size.
  • BHP and Commonwealth Bank are the two largest holdings, at 24.82% and 20.30%.

Betashares Geared Australian Equities Complex ETF (ASX:GEAR) combines investor money with borrowed funds and invests the total in a broad share portfolio of roughly 200 of the largest ASX-listed companies, weighted by market capitalisation. The units were listed at $38.57, the fund is about $587.20 million in size, and the management fee is 2.23%. Gearing is the defining feature of the product, and it changes the way the fund responds to market moves.

Ticker

ASX:GEAR

Listed price

$38.57

Fund size

$587.20 million

Management fee

2.23%

Listed annual yield

1.73%

Benchmark

S&P/ASX 200 TR AUD

Holdings

201 companies

How the gearing works

The listing shows shares at 213.67% of the fund's assets, with cash at negative 113.76%. Put simply, the fund holds shares worth more than its own capital, financed by borrowing. The underlying stock mix follows the S&P/ASX 200 closely, with financial services at 33.27%, basic materials at 26.10% and healthcare at 6.92%.

The largest holdings are BHP at 24.82%, Commonwealth Bank at 20.30%, National Australia Bank at 9.80%, Westpac at 9.63% and ANZ at 9.28%. Because the holdings are weighted by size, the fund's largest positions are relatively heavy.

Income and costs

The management fee of 2.23% is substantially higher than standard index funds, and it is charged on the fund's total exposure. The listed annual yield of 1.73% is modest because the fund's income is partly consumed by the cost of borrowing and fees, which are not itemised in the listing information.

Investors should compare the fee with the expected additional return from gearing before deciding whether the structure suits them.

Risks to weigh

Gearing magnifies both gains and losses. When shares rise, the fund's unit price can outpace the index, but when shares fall, losses are magnified by the same amount. The borrowing also introduces the risk that the fund must manage its gearing if markets move sharply. Heavy weightings to banks and resources add concentration risk on top of the gearing effect. The product is designed for investors who understand Leverage and accept larger swings in value.

Final Word

The Betashares Geared Australian Equities Complex ETF offers a leveraged route into the Australian share market, with a high fee and a modest yield. Its unit price will move by more than the index in both directions, and that magnified exposure is the central feature investors should weigh.