BetaShares changes its investment strategy for its wide range of ETFs

Summary

  • BetaShares has made some radical changes to its existing ETF offerings, namely DZZF, DHHF, DBBF, DGGF.

  • There have been some changes made to the asset allocation of the funds after the consultation with the existing and prospective investors.

  • The changes reflect significant demand from the investors for “all-in-one” diversified ethical exposure, tailored to risk-return profile.

  • The management fee has been increased from 0.26% p.a to 0.39% p.a for DBBF, DGGF, DZZF and reduced from 0.26% p.a to 0.19% p.a for DHHF.

On 4th November 2020, BetaShares Capital Ltd announced a major overhaul to its wide range of ETFs offering, which are exchange-traded funds on the AQUA market of the ASX.

BetaShares is one of the leading ETF managers in Australian financial markets which aims to provide intelligent investment solutions for the investors to meet their financial goals. The company has over 60 funds to offer which makes it the broadest range of offering in the Australian market.

The funds include a wide range of assets like Australian and global equities, currencies, commodities, fixed income assets etc. As of 30th September 2020, BetaShares manages over $13 billion in assets.

Change in the investment strategy and management fee

After a comprehensive review and taking investor’s feedback into consideration, BetaShares has decided to make some changes to its fee structure and the investment strategies for four of its ETF offerings.

  1. BetaShares Diversified High Growth ETF (ASX: DHHF)

The targeted asset allocation of the fund will change to 100% growth assets from the existing 90% in growth assets and, the remaining 10% in defensive assets. Out of the entire portfolio, Australian equities would represent 37%, and the remaining 63% would be constituted with international equities.

The management cost will be reduced from 0.26% p.a to 0.19% p.a, which would make it the lowest cost diversified ETF, and first, all growth diversified ETF in on the ASX. After the change, the fund would be renamed to BetaShares Diversified All Growth ETF.

  1. BetaShares Diversified Conservative income ETF (ASX: DZZF)

The fund will target the asset allocation of 90% growth assets and 10% defensive assets. Out of the entire portfolio, bonds will represent 10%, Australian equities 31.5% and the remaining 58.5% will be accounted for by international equities.

After the change, the fund would be renamed to BetaShares Ethical Diversified High Growth ETF.

  1. BetaShares Diversified Balanced ETF (ASX: DBBF)

The asset allocation will be unchanged to 50% of growth and defensive assets each. The bonds will represent 50% of the portfolio, and the remaining 50% growth assets will be constituted by 17.5% Australian equities and 32.5% international equities.

After the change, the fund would be renamed to BetaShares Ethical Diversified Balanced ETF.   

  1. BetaShares Diversified Growth ETF (ASX: DGGF)

The targeted allocation will remain unchanged to 70% growth and 30% defensive assets. Apart from the 30% bonds allocation as a part of the defensive asset, the remaining 70% will be constituted by 24.5% Australia equities and 45.5% international equities.

After the change, the fund would be renamed to BetaShares Ethical Diversified Growth ETF.

The last three ETFs listed above would become the first range of Ethical Diversified ETF on the ASX after the change, which would be effective after the close of the trading session on 15th December 2020. These funds will now provide true-to-label, ethically screened, multi-asset portfolio.

The management fee has been increased from 0.26% to 0.39% for DBBF, DGGF, DZZF.

The rationale behind these investment changes

The changes in the investment strategy for DZZF, DGGF and DBBF were considered after significant demand from the investors for “all-in-one” diversified ethical exposure, tailored to risk-return profile.

As for the DHHF, extensive consultation with the current and prospective investors revealed that they prefer full exposure to the growth assets for the long-term investment horizon.   


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