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Question asked 07/08/2026

ASX 200 ETF bar Financials

Hi team, thank you for the recent reports—great job . I’d like to explore a specific strategy with you. I am looking to invest in an ETF that tracks the ASX but completely excludes the financials sector. There appears to be no such EFT, I want to get your thoughts on a Synthetic Replication: Buying a broad Australian shares ETF (like VAS) while simultaneously shorting the Financials Sector ETF (like QFN)? Is this a viable approach, or is there a simpler way to achieve this exposure? Or should I just buy ASX- MVW as solution for reducing financial sector concentration? I would appreciate your analysis of these ideas. Regards Michael

Answer

Hi Michael,

An interesting question that can be considered from a few different perspectives.

Buying the VAS ETF, which carries over 30% weighting to the financials, and shorting the QFN ETF must equal roughly one-third of the VAS position. This ratio drifts as weights change, requiring ongoing rebalancing, i.e. it’s not a perfect science.

Higher costs: Combining VAS with a short QFN position increases the total cost of ownership through management fees, stock borrow costs and ongoing trading/rebalancing expenses, making it more expensive than a single ETF.
More complex to manage: The strategy requires margin management, daily mark-to-market on the short position and periodic rebalancing, making it an active structure rather than a simple buy-and-hold investment.

For sophisticated investors, we prefer the idea of buying the VAS ETF and selling bank calls over the top – but again not a perfect science.

Lastly, we are not keen on the VanEck Australian Equal Weight ETF (ASX: MVW) which unlike a traditional ASX index fund, gives approximately the same weight to each stock rather than being weighted by market capitalisation, i.e. BHP is as influential as say 4DMedical (4DX).

Lastly, the MVW has underperformed the ASX200 through 2026 and we see no reason for this to improve, especially if the miners remain strong.

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VanEck Australian Equal Weight ETF (MVW)

LAST UPDATED 07/08/2026 10:32

Latest Reports

Afternoon report 07/08/2026

The Match Out: ASX wraps up a strong week with Tech & Materials leading the line

The ASX 200 finished essentially flat, though it did recover from early weakness, having pulled back and tested this week’s breakout level (~9200), before pushing higher – a positive technical sign. After resetting record highs twice this week, the market moved into more of a holding pattern ahead of next week’s heavier reporting calendar, with strength across materials and technology offset by weakness in the banks and selected healthcare names.