The relatively small $41mn G200 ETF provides geared exposure to the largest 200 Australian shares, targeting a relatively moderate 30–40% gearing ratio, currently 1.55x leverage. This lets investors magnify gains when the ASX rises while taking less leverage and downside risk than the more aggressively geared GEAR ETF i.e. it’s a more conservative version of GEAR. For this reason, the G200 is cheaper than the GEAR ETF, attracting a more reasonable 0.35% premium and reducing the need for “trader-like” timing.
- In other words: GEAR carries more leverage and more volatility; G200 is lower leverage and a smoother ride.
The G200 and GEAR ETFs hold a similar basket and similar weights, but different gearing towards ASX 200 shares. We believe the G200 will also be trading higher by the end of October, but short-term another ~3-5% downside wouldn’t surprise.
- We like the risk/reward towards the G200 ETF after its -9.3% pullback.
