ETFs, Investments

New ETF offers enhanced diversification

Global X ETF

A new ETF from Global X will offer exposure to top Australian companies while reducing duplicate holdings of popular blue-chip shares.

Global X has launched the Australia ex Financial & Resources ETF (exchange-traded fund) offering investors a more effective solution for diversifying their portfolios while gaining exposure to Australia’s largest companies.

The new product is trading under the OZXX ticker on the Australian Securities Exchange and aims to provide effective diversification by investing in Australia’s top 100 companies while excluding those in the financial, energy and mining sectors. The new offering will track the Solactive Australia Ex Financials Materials and Energy Capped Index and will charge investors an annual management fee of 0.25 per cent.

According to Global X head of investment strategy Blair Hannon, OZXX offers potential growth opportunities in mid and smaller capitalisation companies.

“The ETF can be used as a core Australian equities holding or as a sector diversification tool, which allows investors to complement existing blue-chip portfolio holdings in the big four banks, major mining and energy companies, avoiding a concentration in these sectors which would occur if investors instead opted for a broad-based Australian equities fund,” Hannon noted.

“This fund offers an effective solution, particularly for Australian retirees and pre-retirees who generally hold a higher concentration of direct shares as it allows them to either complete or diversify their portfolio in one simple trade.”

The new ETF provides exposure to a wide range of companies and sectors, including healthcare, with CSL as a top holding, the telecommunications sector through Telstra, consumer companies Wesfarmers and Woolworths, and infrastructure, such as toll road company Transurban.

It was developed in response to client demand, Hannon said.

“We are listening to investors to understand their needs and this launch further shows our commitment to the Australian ETF market,” he said.

The launch comes after the manager released a US corporate bond ETF into the Australian market earlier this month.

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