Franking Credits & ETFs

Hi Pietro,

Firstly, sorry about the login issue, we don’t believe it’s wider issue, however, please advise if others have had login issues on the site that sound similar.

RE GEAR: Our view was that the franking amount would be the level of franking on the underlying holdings (ASX 200 generally ~74%) amplified by the leverage i.e. thus between 150-210% on average, however, we were not sure, so we queried it with BetaShares, here is the response.

For GEAR it’s basically a product of the increased cost of funding.

With ETFs (and basically any unit trust), fees and related expenses are deducted from the NAV daily and are often covered by the dividends generated by the underlying companies in the fund. This avoids selling assets to pay expenses. For GEAR specifically, as the fund is internally geared the primary expense is the cost of funding through the wholesale lending arrangement. Over the past couple of years, this funding cost has risen meaningfully and currently sits just below 5% per annum. This effectively lowers the cash distribution, while all the franking credits received by the fund still need to get distributed through to unit holders. Hence you can have greater than 100% franking.

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BeatShares Geared Australian Fund (GEAR)

LAST UPDATED 28/03/2025 12:20

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BeatShares Geared Australian Fund (GEAR)

LAST UPDATED 28/03/2025 12:20