Investors can now access BetaShares' new Ex-20 Portfolio Diversifier exchange traded fund (ETF), in an effort to restrain the biases of investors who are favouring blue-chip stocks.
BetaShares managing director, Alex Vynokur, said that by excluding the top 20 largest stocks listed, investment in the ETF would provide broader market exposure, excluding commonly-invested stocks.
The fund was designed to track exposure to 180 stocks to allow for diversification in Australian share portfolios, without increasing exposure to the largest 20 shares.
Vynokur said: "Australian investors tend to have a heavy bias toward the largest 20 companies".
"This bias can expose many Australians' share portfolios to excessive stock and sector specific risk".
By focusing on top 20 companies, Vynokur said that investors' portfolios would remain underexposed to the 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 ex-20 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 one, three, five, and 10 year periods," he said.
"[The] EX20 ETF is a simple, low-cost way to diversify and complete an Australian equities portfolio, reducing portfolio concentration to individual securities and market sectors."