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BetaShares launches Aussie Ex-20 ETF


Australian ETF manager BetaShares has launched the BetaShares Australian Ex-20 Portfolio Diversifier ETF, which tracks an index providing exposure to approximately 180 stocks listed on the Australian Securities Exchange, ranked from number 21 to number 200, based on market capitalisation. 

For additional portfolio diversification the index rules also cap sector weight at 25 per cent and single stock weight at 6 per cent.
BetaShares writes that by excluding the top 20 largest stocks listed on the ASX, an investment in the ETF gives investors a core portfolio holding providing broad market exposure but excluding stocks which a significant proportion of Australian investors already hold in their portfolios.
BetaShares Managing Director, Alex Vynokur, says: “Australian investor portfolios tend to have a heavy bias toward the largest 20 companies on the ASX, with a particularly heavy exposure to the ‘Big 4’ Banks.
“This bias can expose many Australians’ share portfolios to excessive stock and sector specific risk, and also leave investors’ portfolios under exposed to the relatively strong growth potential available from mid to smaller-cap Australian shares.
“The growth potential of these shares is well illustrated by the historical performance of the Index which EX20 aims to track, which has outperformed the largest 20 shares (S&P/ASX 20 Index) as well as the largest 200 shares (S&P/ASX 200 Index) over 1, 3, 5 and 10 year periods to September 2016.
“Our new EX20 ETF is a simple, low-cost way to diversify and complete an Australian equities portfolio, thus reducing portfolio concentration to individual securities and market sectors,” concludes Vynokur.

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