Alpha Recommendation: Sell – GEAR BetaShares Geared Australian Equity (Hedge Fund) ETF

Macroeconomic Context

On April 9, 2025, U.S. President Donald Trump announced a 90-day pause on the recently implemented “reciprocal” tariffs, reducing them to a uniform 10% for most countries. However, tariffs on Chinese goods were increased to 125% due to China’s “lack of respect” for world markets.

Market Reaction

Following the announcement, global financial markets experienced significant volatility. The S&P 500 surged 9.5%, marking one of its largest single-day gains since World War II, while the Nasdaq Composite jumped 12.2%. Despite this rebound, concerns about a potential global recession persist, especially given the escalating trade tensions between the U.S. and China.​

GEAR ETF Performance

The BetaShares Geared Australian Equity ETF (GEAR) offers leveraged exposure to the S&P/ASX 200 Index, with a gearing ratio managed between 50–65%. As of April 3, 2025, the gearing ratio stood at 59.6%. The ETF’s performance is highly sensitive to market movements due to its leveraged nature.​

Recommendation

Given the current market volatility and the speculative nature of GEAR, it is advisable for investors with a high-risk tolerance to consider selling GEAR at a target price of $28. This recommendation is based on the potential for continued market instability stemming from ongoing trade disputes and the ETF’s amplified exposure to market fluctuations.