Global X S&P World ex Australia GARP ETF (ASX: GARP)

The Global X S&P World ex Australia GARP ETF (GARP) offers a sophisticated global equity strategy by targeting companies that balance strong earnings growth with sustainable valuations. By tracking the S&P World Ex-Australia GARP Index, the fund invests in 250 high-quality businesses across international markets that exhibit robust financial strength and reasonable price-to-earnings ratios. This approach, popularised by legendary investors like Peter Lynch, seeks to capture the long-term wealth creation driven by corporate earnings while avoiding the risks of overpaying for speculative growth.

The fund employs a multi-factor selection process, filtering for sales growth, return on equity, and low financial leverage to ensure portfolio quality. As a core global allocation, GARP provides a disciplined alternative to actively managed funds, offering a systematic way to participate in global expansion while maintaining valuation sensitivity. Its balanced methodology allows for potential outperformance across various market cycles by mitigating the volatility often associated with pure growth or value styles.

The Global X S&P World ex Australia GARP ETF (GARP) provides investors with exposure to global companies with strong earnings growth, solid financial strength, and trading at reasonable valuations. These characteristics are common when describing stocks that meet the definition of an investing strategy known as Growth at a Reasonable Price (GARP).

The Global X S&P World ex Australia GARP ETF seeks to provide investors with a return that (before fees and expenses) tracks the performance of the S&P World Ex-Australia GARP Index.

• The origins of GARP can be traced back to legendary investors like Peter Lynch, who popularised the strategy in the 1980s. Lynch’s success with the GARP approach led his fund returning on average 29% p.a. making it the best-performing mutual fund in the world during his tenure.¹
• A company’s earnings growth is the engine that drives long-term wealth creation, as earnings have accounted for the majority of total shareholder return over the long-term, compared to the smaller portion derived from dividends and multiple expansion.²
• A GARP investing strategy has outperformed the broader global share market over 90% of the time, with an average excess return of 3-4% p.a.³

¹ Nasdaq (March 2014): How Peter Lynch Earned 29% a Year for 13 years
² Morgan Stanley (May 2024): The importance of discipline in the long game
³ S&P as of 30 June 2024. Based on Winning Periods which refers to the excess return outperformance of the S&P World Ex-Australia GARP vs the S&P World Ex-Australia Index during respective rolling periods since index inception

• GARP can serve as a core global equity strategy in portfolios, effectively balancing growth and value across different market cycles.
• To access exposure to 250 quality companies from a broad range of sectors and countries that have grown their earnings and aren’t too expensive relative to their growth.
• A lower-cost alternative to traditional actively managed growth equity funds.

The Global X S&P World ex Australia GARP ETF (GARP) tracks the S&P World Ex-Australia GARP Index, which invests in 250 global companies that exhibit GARP characteristics. This includes filtering the broader investment universe based on multiple factors, such as:

• Growth – Sales and Earnings Growth
• Value – Price to Earnings (PE) ratio
• Quality – Financial Leverage (i.e. debt) and Return on Equity (ROE)

Each company’s weight is calculated by multiplying its Float Market Capitalisation by its Growth score, with a maximum security weight of 5% and sector cap of 40%. The index is rebalanced semi-annually, and distributions are paid semi-annually.

GARP investing may pose some risk, as the market cycle can impact the performance of GARP stocks. During periods of extreme market optimism, high-growth stocks may outperform, potentially leaving GARP investors with relatively modest gains. Expensive stocks may keep getting more expensive if multiple expansion continues. Conversely, in a downturn, the value component of GARP can provide some downside protection, but it may not be as defensive as pure value stocks or defensive assets.

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Issued by Global X Management (AUS) Limited (‘Global X’) (AFSL 466778, ACN 150 433 828). This is general information only and not personal advice. This communication doesn’t consider your personal circumstances or needs. Investors should consider whether Global X products are appropriate for them, obtain financial advice and read the disclosure statement (PDS) and target market determination (TMD) before making investment decisions. All PDSs and TMDs are available on our website: www.globalxetfs.com.au. Investment in any products issued by Global X is subject to risks, including possible delays in repayment and loss of income and principal invested. Past performance is not a reliable indicator of future performance. This content may not be reproduced, distributed or published by any recipient for any purpose. Global X nor any of its affiliates make any warranty as to the accuracy of any data used or displayed in this communication or to the performance of any product.