The Global X US 100 ETF Fund (ASX: U100), an exchange-traded fund listed on the Australian Securities Exchange, has experienced a remarkable surge of approximately 41% since it revamped its investment methodology. This significant rise, reported by the ETF provider this week, highlights the fund’s focus on innovation and its strategic shift to capture a more comprehensive view of American technological advancement.
Since September 2024, the fund’s performance has been notably strong. The U100’s methodology was overhauled to include both NASDAQ and NYSE-listed companies, introducing an innovation filter based on measurable research and development (R&D) activity and intangible asset productivity. This change was designed to reward genuine innovation rather than inherited scale, shifting focus from legacy companies with slower product cycles to those driving the next phase of industrial and digital transformation.
Understanding the Methodology Change
The decision to alter the ETF’s methodology came as part of Global X’s strategy to better reflect the dynamic nature of American innovation. According to the provider, the updated index now includes a refined weighting structure that emphasizes companies demonstrating substantial reinvestment through a positive R&D-to-sales ratio or productivity from intangible assets.
This approach effectively distinguishes firms that are actively building and innovating from those that merely maintain existing assets. By doing so, the U100 ETF aims to provide investors with exposure to companies funding the next wave of technological and industrial advancements.
The U100’s Index has outperformed key US large-cap innovation benchmarks such as the NASDAQ-100 Index (NASDAQ: NDX) by around 5% since the September 2024 methodology upgrade.
Key Contributors to the Fund’s Success
The ETF’s impressive performance can be attributed to the inclusion of several high-performing companies. Notable among these are Oracle, Taiwan Semiconductor, IBM, and Snowflake, which have seen gains driven by renewed capital investment and increased demand for artificial intelligence-related technologies.
Furthermore, the fund’s strategic focus on sectors with high growth potential, such as technology and consumer goods, has allowed it to capitalize on emerging trends. At present, the ASX ETF comprises 100 holdings, with major exposure to individual companies like Nvidia, Apple, and Microsoft.
Current largest exposures by weight: Nvidia (10.18%), Apple (9.15%), Microsoft (8.73%).
Sector and Geographic Breakdown
Delving deeper into the fund’s composition, it is evident that the ETF is heavily weighted towards sectors that are at the forefront of innovation. Packaged software, semiconductors, and internet software/services represent significant portions of the portfolio, with respective weights of 30.99%, 27.30%, and 15.67%.
Geographically, the ETF maintains a strong focus on US companies, with 92.39% of its holdings based in the United States. This is complemented by a minor exposure to Taiwan at 2.02%, with all other countries accounting for less than 1% of the portfolio.
Implications and Future Outlook
The success of the Global X US 100 ETF following its methodology change underscores the importance of aligning investment strategies with evolving market dynamics. By prioritizing companies that are at the cutting edge of innovation, the fund not only enhances its growth potential but also positions itself as a key player in the investment landscape.
Looking ahead, the ETF’s focus on high-growth sectors and innovative companies suggests that it is well-positioned to continue its upward trajectory. As industries such as technology and consumer goods evolve, the fund’s strategic approach may serve as a model for other ETFs seeking to capture similar opportunities.
In conclusion, the Global X US 100 ETF’s performance since its methodology overhaul highlights the potential rewards of embracing innovation-driven investment strategies. As the fund continues to adapt to market trends, it remains a compelling option for investors seeking exposure to the forefront of American innovation.
