GEAR - BetaShares Geared Australian Equity Fund (hedge fund)

[PZ99]

Fund Objective
GEAR provides investors with cost-effective geared exposure to the returns of the broad Australian sharemarket.

Fund Strategy
The Fund is ‘internally geared’, meaning all gearing obligations are met by the Fund. The Fund combines funds received from investors with borrowed funds and invests the proceeds in a broadly diversified share portfolio consisting of the largest 200 equity securities on the ASX by market capitalisation (as measured by the S&P/ASX 200 Index). The Fund’s gearing ratio (being the total amount borrowed expressed as a percentage of the total assets of the Fund) is managed between 50-65%.

https://www.betashares.com.au/fund/geared-australian-equity-fund

 

[qldfrog]

The brother/sister of BBOZ
Use with care.i did mistakes with these but it IS a useful tool used wisely

 

[Beaches]

At the time of writing, the market (XJO) is up 0.9%. However, GEAR is up only 0.48% today.

While its good to have access to a leveraged product (I use them from time to time) I would much prefer if other issuers were in the market providing leveraged EFT's. Some days BEAR and its inverse cousin BBOZ perform as they are designed. Other days, not so much. For me, I just don't like the performance of Beta EFT's in general. I think they handled the issues for OOO poorly when the futures tumbled.

 

[qldfrog]

At the time of writing, the market (XJO) is up 0.9%. However, GEAR is up only 0.48% today.

While its good to have access to a leveraged product (I use them from time to time) I would much prefer if other issuers were in the market providing leveraged EFT's. Some days BEAR and its inverse cousin BBOZ perform as they are designed. Other days, not so much. For me, I just don't like the performance of Beta EFT's in general. I think they handled the issues for OOO poorly when the futures tumbled.

Not happy either , was looking at 1.5/2 pc gain if asx goes up by1.1pc

 

[InsvestoBoy]

At the time of writing, the market (XJO) is up 0.9%. However, GEAR is up only 0.48% today.

While its good to have access to a leveraged product (I use them from time to time) I would much prefer if other issuers were in the market providing leveraged EFT's. Some days BEAR and its inverse cousin BBOZ perform as they are designed. Other days, not so much. For me, I just don't like the performance of Beta EFT's in general. I think they handled the issues for OOO poorly when the futures tumbled.

The problem isn't GEAR it's that you don't understand the mechanics of leverage and its impact on geometric returns/compounding.

STW in bars, GEAR in red, from 10AM open today:

STW in bars, GEAR in red, from 23rd March closing price

working fine, exactly as designed.

I always thought that AU brokers claims that they don't give easy access to futures and other leveraged markets because most ASX investors aren't sophisticated enough was a bollocks excuse, but seeing the posts people make in OOO thread and this (and I am sure any other ETF based on derivative underlyings) the brokers are being far too kind.

You aren't supposed to give advice on this forum but I would suggest that if you don't understand simple mathematics then you should avoid leveraged products.

 

[Beaches]

I don't disagree it usually ends up around where it should be. My issue is the swings and lag throughout the day. Some days it just tracks better than others through the day

Chart of GEAR over XJO

 

[PZ99]

I don't disagree it usually ends up around where it should be. My issue is the swings and lag throughout the day. Some days it just tracks better than others through the day

Chart of GEAR over XJO


View attachment 104171

I suspect the early morning dip played a role in that result.
It falls 3.4% so you need to go up 4% to get back to where you started.

If you split the day at 10:15 it tracks correctly as stated.

 

[qldfrog]

Looking at the details and to provide a less condescending response and some actual explanation.
Yesterday's market saw an initial strong fall.
From the start price, gear got a double hit.then the xjo went up and gear leveraged it up again
But in the same way a 50% fall followed by a 50% rise does not bring you even, gear could not reach the equivalent of the whole daily geared rise.
Intra day volatility can damage results
This is similar as well to the way we can not expect a smooth match long term to the index with either bboz or gear.
A grinding effect day in day out..
That is the explanation for dummies like us

 

[qldfrog]

I suspect the early morning dip played a role in that result.
It falls 3.4% so you need to go up 4% to get back to where you started.

If you split the day at 10:15 it tracks correctly as stated.

Sorry @PZ99 was typing while you already answered.thanks for giving a proper explanation too

 

[Smurf1976]

I always thought that AU brokers claims that they don't give easy access to futures and other leveraged markets because most ASX investors aren't sophisticated enough was a bollocks excuse, but seeing the posts people make in OOO thread and this (and I am sure any other ETF based on derivative underlyings) the brokers are being far too kind.

I think the issue is with how these ETF's are described and sold to the public.

OOO is described as tracking the price of crude oil. In the absence of it being specifically stated otherwise, most are going to expect that means it tracks the spot price.

For leveraged ETF's, a specific issue from a purely mathematical perspective is if the amount of leverage isn't fixed. If it's variable then depending on how that variation occurs, it's not impossible for the ETF to move in the opposite direction to whatever it's supposed to be tracking. Unlikely, but mathematically it's possible for that to occur if the required scenario were to unfold.

 

[PZ99]

Sorry @PZ99 was typing while you already answered.thanks for giving a proper explanation too

All good - I've seen the mirror of this with BBOZ as well and that's the excuse I used when I finished last in the tipping comp for that month. lol

 

[PZ99]

Why investors choose the GEAR ETF

BetaShares GEAR Fund is an internally geared fund, investing in the largest 200 companies on the ASX, by market capitalisation.

As at the end of last month, the GEAR ETF had $174.24 million of money invested. Given GEAR’s total funds under management (FUM) figure is over $100 million, the ETF has met our minimum criteria for the total amount of money invested, otherwise known as FUM. We draw the line at $100 million for ETFs in the Australian shares sector because we believe that relative to smaller ETFs, achieving this amount of FUM derisks the ETF.

Fees & costs
The yearly management fee on the GEAR ETF is 0.8%. The issuer, Betashares, takes this out automatically.

What this fee means is, if you invested, say, $2,000 in the GEAR ETF for a full year you could expect to pay management fees of around $16.00. This fee is different from the fee you pay to your brokerage provider (e.g. CommSec, NabTrade, SelfWealth, etc.) to buy or sell the ETF. Importantly, you should also be mindful of the ‘spread‘ for the ETF.

Is the ETF too expensive?
The easiest way to know if the ETF is too costly is to compare it with other ETFs in the same sector, and against the industry average. The average management fee (MER) across all of the ETFs covered by
Best ETFs Australia
is 0.5%, which is around $10.00 per $2,000 invested. Small changes in fees can make a big difference after 10 or 20 years. To understand all of the fees, you should read the GEAR Product Disclosure Statement (PDS), available on the ETF issuer’s website, because it has the complete and up-to-date information.

https://www.bestetfs.com.au/2020/06...ear-and-ooo-etfs-on-your-long-term-watchlist/

 

[Dona Ferentes]

why would you bother? to my untutored and unsophisticated eye, a comparison of GEAR (purple) and XJO (blue) the ASX200 index, over the last 12 months seems to indicate no incremental upside both prior to and following the Covid conniptions, but enhanced downside during the initial panic. As an exercise in risk management, this isn't beneficial.

 

[qldfrog]

that's very interesting as I use Gear for XJO index....Are you aware of other ETF and do they behave similarly?? I should check, I was expecting a higher move hup..but I understand volatility is killing these types of leveraged ETF.
You input very welcome .Thanks

 

[Dona Ferentes]

@qldfrog it's only a snapshot. I just thought seeing the fund has 201 companies in it, there's a fair chance it might echo another index. Weight of money/ capitalisation and all that. And, the move up may be proportionally greater. Always depends how x and y are defined

Some people might use GEAR well, and I think the volume shows that; over the short term Mar-May punters bought in and rode the recovery, but as a buy and hold strategy, I'm finding it hard to find any benefit.

 

[qldfrog]

@qldfrog it's only a snapshot. I just thought seeing the fund has 201 companies in it, there's a fair chance it might echo another index. Weight of money/ capitalisation and all that. And, the move up may be proportionally greater. Always depends how x and y are defined

Some people might use GEAR well, and I think the volume shows that; over the short term Mar-May punters bought in and rode the recovery, but as a buy and hold strategy, I'm finding it hard to find any benefit.

as any geared ETF, GEAR should not be kept for the long term so not as a buy and hold I agree...
Something I learnt and understood with this crash and high volatility period

 

[PZ99]

One expects this to be up and down like a bride's nightie during the visual vis-à-vis after 11am our time

ASX drops after chaotic debate between Trump and Biden

Australian shares drop despite good Chinese economic data as nervous global investors take money off the table after acrimonious US presidential debate

www.abc.net.au

 

[frugal.rock]

Probably a decent one to consider from charting perspective. I can't comment on the fund itself, but it obviously serves a purpose.

 

[divs4ever]

might be worth watching today ( for educational purposes , )

SO FAR the SPI futures are up 48 points , but i suspect the ASX will end lower ( but i have been wrong many times before )

 

[divs4ever]

why would you bother? to my untutored and unsophisticated eye, a comparison of GEAR (purple) and XJO (blue) the ASX200 index, over the last 12 months seems to indicate no incremental upside both prior to and following the Covid conniptions, but enhanced downside during the initial panic. As an exercise in risk management, this isn't beneficial.

View attachment 105320

the gotchya is the bars are TRADES and not the prices the market makers offered that day , a little hard to explain ( for me ) , but those anomalies ( at market open , and after market auction .. when most advise NOT to trade ETFs ) has given me some interesting bonuses , on 'hail Mary' buys/sells

please take care ESPECIALLY on leveraged ETFs