The Global X S&P World Ex-Australia GARP ETF is now available on the ASX, providing investors with exposure to global companies with strong earnings growth, solid financial strength, and trading at reasonable valuations.
With a management fee of 0.30 per cent per annum, the fund tracks the S&P World ex Australia GARP Index, which holds 250 global companies.
“A strategy traditionally delivered by active managers or through DIY investing is now accessible in a low-cost ETF,” the firm said, noting that GARP is the only broad global share index ETF in the Australian market that combines growth, value and quality metrics in one solution.
The fund manager said that companies that fit this criteria meet the definition of an investing strategy called “growth at a reasonable price”, hence the ticker GARP.
In announcing the launch, Global X investment strategist Marc Jocum explained that growth and value investing can be likened to a pendulum.
“GARP is a uniquely positioned strategy that sits at the intersection of both,” Jocum said.
“Some global share markets are currently trading above their historical long-term average valuation, potentially prompting investors to seek out companies with robust earnings growth and solid financial strength that are more reasonably priced.”
Moreover, around 65 factor-based ETFs with $28 billion in assets under management listed locally, comprising 13 per cent of the total market, have a majority of assets invested in quality and yield factors.
“Growth ETFs have primarily been actively managed, and the evidence shows that the majority of actively managed funds underperform a low-cost index over the long term,” Jocum said.
“Our GARP strategy is particularly timely as it aligns with the growing trend of investors seeking diversified global portfolios amidst local market volatility. By integrating growth and value metrics, with a quality overlay, GARP addresses the need for a core portfolio holding to handle various market cycles and has the potential to outperform the broader market.”
Jason Ye, S&P Dow Jones Indices’ director of factors and thematics indices, added: “In recent years, an index-based growth-at-a-reasonable-price (GARP) approach has been gaining traction among investors seeking strategies that effectively balance growth opportunities with valuation and quality considerations.
“S&P Dow Jones Indices is delighted to license the S&P World Ex-Australia GARP Index to Global X ETFs Australia for its new fund launch.”
