Global X unveils Australian-first ‘GARP’ ETF

Exchange traded funds (ETFs) specialist Global X has launched Australia’s first factor-based ETF guided by the ‘Growth at a Reasonable Price’ (GARP) investment strategy.

The GARP strategy seeks to strike a balance between growth and value investing, “providing international exposure to market-leading companies without sacrificing quality,” said Global X product and investment strategist Marc Jocum.

The GARP fund tracks the S&P World ex-Australia GARP Index, which holds 250 global companies.

Global X boasts that the GARP is the only broad global share index ETF on the Australian market that combines growth, value and quality metrics into one solution.

With share markets currently trading above their historical long-term average valuation, Jocum noted, investors will likely be seeking out value stocks with “robust earnings growth and solid financial strength.”

Citing Bloomberg data, Global X notes that there currently around 65 ‘factor-based’ ETFs with $28 billion in assets under management listed locally, comprising 13% of the total market, with majority of the 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.

The GARP ETF adds to the Global X’s suite of 40 ETF across core, thematics, commodities, income and cryptocurrency.

GARP’s management fee is 0.30% per annum.