Australian (ASX) Stock Market Forum

OZXX - Global X Australia ex Financials & Resources ETF

Dona Ferentes

A little bit OC⚡DC
11 January 2016
we have to thank Motley Fool for this blurb.

Announcing the launch of yet another ASX exchange-traded fund, the Global X Australia ex Financials & Resources ETF (ASX: OZXX).

This ETF is one that is difficult to classify. It functions in a similar manner to an index fund, holding the 100 largest companies on the ASX by market capitalisation. However, it also actively excludes a huge chunk of our share market – bank and mining shares.

A normal ASX index fund is dominated by banks and miners. Just take the iShares Core S&P/ASX 200 ETF (ASX: IOZ). This ASX 200 index fund tracks the largest 200 companies on the ASX share market without further qualification.

This means that Commonwealth Bank of Australia (ASX: CBA), National Australia Bank Ltd (ASX: NAB), Westpac Banking Corp (ASX: WBC), and ANZ Group Holdings Ltd (ASX: ANZ) are the second, fourth, fifth, and sixth largest positions in this ETF, accounting for just over 18.5% of the entire ETF’s weighting.

Mining and energy giants BHP Group Ltd (ASX: BHP), Woodside Energy Group Ltd (ASX: WDS), and Rio Tinto Limited (ASX: RIO) add another 15.6%.

So that’s a lot of concentration in just two sectors.

The Global X Australia ex Financials & Resources ETF takes these sectors out of the equation. Instead, this ETF’s current largest holdings (in order) consist of CSL Limited (ASX: CSL), Wesfarmers Ltd (ASX: WES), Telstra Group Ltd (ASX: TLS), Woolworths Group Ltd (ASX: WOW), and Transurban Group (ASX: TCL).

Because this is a new ETF, we don’t yet have any kinds of performance metrics to analyse it. But it would certainly make for a closer look for any investor worried about overexposure to banks or miners in an ordinary ASX index fund.

The Global X Australia ex Financials & Resources ETF charges a management fee of 0.25% per annum
i have been a bit of a glutton for ASX ex 20 LICS , so might be tempted to investigate this further

my main strategy of having lower exposure the our big 4 banks ( than usual ) , was based on my opinion the BIG 4 had few sensible paths to growth , that was 2011 and the last ten ( or so ) years it has been a good strategy , but what of the next ten years WES , WOW and CSL look like a defensive stance but at current valuations ??? for this ETF but 10 years back should have had one smiling very broadly , but what of the next ten years ??

but thanks for the heads up