What is the GEAR ETF used for?
BetaShares GEAR Fund is an internally geared fund, investing in the largest 200 companies on the ASX, by market capitalisation.
The BetaShares GEAR ETF could be used by investors to gain leveraged exposure to the S&P/ASX 200 Index. The Fund’s gearing ratio is managed between 50-65%, and investors do not face the possibility of margin calls. Please note that gearing magnifies an investor’s gains and losses, and will not be a suitable strategy for all investors.
Keep an eye on FUM
The BetaShares GEAR ETF had $362.33 million of money invested when we last pulled the monthly numbers. Given GEAR’s total funds under management (FUM) figure is over $100 million, the ETF has met our minimum criteria for the total amount of money invested, otherwise known as FUM. We draw the line at $100 million for ETFs in the Australian shares sector because we believe that relative to smaller ETFs, achieving this amount of FUM de-risks the ETF.
Fees and costs for investors
BetaShares charges investors a yearly management fee of 0.80% for the GEAR ETF. This means that if you invested $2,000 in GEAR for a full year, you could expect to pay management fees of around $16.00.
For context, the average management fee (MER) of all ETFs covered by Best ETFs Australia on our complete list of ASX ETFs is 0.5% or around $10.00 per $2,000 invested. Keep in mind, small changes in fees can make a big difference after 10 or 20 years.
Summary
These are just some of the considerations or factors you would need to look at when weighing up the GEAR ETF. Before doing anything, take a look at our BetaShares GEAR report – it’s free. While you’re at it, don’t forget to search our complete list of ASX ETFs.
