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Speaker 1: Welcome to Ask Fear and Greed, where we answer questions

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Speaker 1: about business, investing, economics, politics, and sometimes so much more.

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Speaker 1: I'm Adam Lang and hello Sean Almer.

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Speaker 2: Hello Adam.

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Speaker 1: Right, today's question. With the banks doing so well Sean

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Speaker 1: and minus not so well over the past couple of years,

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Speaker 1: what is the makeup of the ASEX two hundred by sector?

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Speaker 1: And does it matter that the banks are dominant? So

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Speaker 1: this is a very good question.

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Speaker 2: Yes, the certain of the banks have become more dominant.

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Speaker 2: So there's eleven sub indices of the ASEX two hundred,

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Speaker 2: and financial services makes up thirty two to thirty three

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Speaker 2: percent of it. Call it a third. A third, let's

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Speaker 2: call it a third. Third of the ASEX two hundred

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Speaker 2: is financials. And the problem is when you just have

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Speaker 2: an ETF or you invest passively, just flow the ASX

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Speaker 2: two hundred, your fortunes are overly tied to financials because

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Speaker 2: you end up having a third of your money in financials.

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Speaker 2: That's really the problem. The next bigger sector is basic materials,

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Speaker 2: and that includes a bunch of the big miners and

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Speaker 2: a lot of mining stocks, including the big miners healthcare.

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Speaker 2: That's nine percent of our market healthcare. We sort of

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Speaker 2: don't talk a lot about healthcare. We have some incredibly

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Speaker 2: successful healthcare companies. Now CSL, I suppose is the most

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Speaker 2: obvious one, but you know, I mean great name, great history,

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Speaker 2: great name, great history. I don't know that it hasn't

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Speaker 2: had such good share market returns unfortunately recently.

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Speaker 1: Cochlear.

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Speaker 2: Yeah, so Anthony Ibnezi yesterday was talking about Cochlear, and

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Speaker 2: that's an incredibly successful Australian company. But there's a huge

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Speaker 2: amount of sort of bio farmer stocks and pro Medicus

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Speaker 2: Promedicus is one of the big ones. Seema Healthcare is

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Speaker 2: another really big one nowadays since it's gone onto it Res.

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Speaker 2: They had Fisher and Pay called Sonic Healthcare Ramsey, So

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Speaker 2: you know a stack of those healthcare companies. They actually

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Speaker 2: haven't performed very well, but they're a big part of

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Speaker 2: the index. I'm going way off the question here, So

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Speaker 2: it is about banks. The next big sector is industrials,

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Speaker 2: consumers sick. I've got real estates. It's communication services, technology,

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Speaker 2: consumer defensive, which are the big retailers, energy and utilities.

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Speaker 2: I suppose the moral of it, if you're going to

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Speaker 2: invest in an ETF or you want to invest in

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Speaker 2: the market, and you're going to be heavy financials. If

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Speaker 2: you actually understand what you're investing in, though, then I

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Speaker 2: don't know that it's good all bad. I don't think

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Speaker 2: it's a right or wrong. So if I said the

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Speaker 2: financial sectors, the big four banks, it also includes the

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Speaker 2: mac quarry, Yeah, it also includes the insurers IAGQB.

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Speaker 1: Right.

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Speaker 2: The best performing stocks in the financials haven't been the

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Speaker 2: bank though, so Hub twenty four, the Wealth Platform, the

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Speaker 2: Fundamentager Generation Development Group. They're the two best performers in

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Speaker 2: the financial index. So I think it's just more a

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Speaker 2: matter of kind of understanding what's in the index and

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Speaker 2: using a financial advisor. We're not an investing podcast, and

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Speaker 2: that's how you think about it. Like the basic materials,

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Speaker 2: so you say, well, the big minus haven't done very well,

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Speaker 2: the basic materials have gone backwards, but that also includes

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Speaker 2: the gold companies, and the gold companies in the last

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Speaker 2: telve months have been the best performance stocks, but none.

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Speaker 2: So it's really if you're investing, it's worth looking behind

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Speaker 2: the indices. You know. I always think it's so Telco.

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Speaker 2: You think, well, what's Telco? It's Telstra, sure, but it's

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Speaker 2: also Aria, it's Car, it's Seek, it's the media companies.

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Speaker 2: So I think mostly I don't think it's right or wrong.

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Speaker 2: I mean, you don't get diversification if you're buying ASX

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Speaker 2: two hundred ETF that's overly reliant on financials. But if

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Speaker 2: you're just kind of looking beyond it, I don't think

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Speaker 2: you can say having financials.

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Speaker 1: Is necessarily a bad thing.

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Speaker 2: No. No, you kind of need to make decisions about

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Speaker 2: the stocks you want to buy or sell.

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Speaker 1: I'm just looking at this list as you've done, it

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Speaker 1: shown financial services roughly a third. I know it's a

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Speaker 1: bit over this, but if you then add up basic materials,

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Speaker 1: healthcare and industrials, that's a bit over a third thirty

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Speaker 1: six percent. So you've got roughly financial services a third,

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Speaker 1: basic materials, healthcare and industrials a bit over a third,

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Speaker 1: and the other third is the rest. And so they're

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Speaker 1: really concentrated the asex two hundred. So you make a

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Speaker 1: great point. It really depends on what you regard as

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Speaker 1: good use of your dollars and cents.

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Speaker 2: Yeah, you might not want a basic material You might

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Speaker 2: think basic materials did really poorly last year because BHP

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Speaker 2: RIO and Forskew Metals went backwards. Yeah, but it also

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Speaker 2: includes the gold stocks and they had a cracking year. Yeah,

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Speaker 2: So you really have to understand what you're investing in

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Speaker 2: usuppose the moral of the story.

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Speaker 1: Is great advice and then get a good financial advisor.

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Speaker 1: Absolutelyize on your investments.

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Speaker 2: Absolutely.

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Speaker 1: Thank you very much, Sean.

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Speaker 2: Thanks Adam.

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Speaker 1: If you have your own question for Fear and Greed,

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Speaker 1: please jump onto the website Fearangreed dot com dot au

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Speaker 1: or send it through on any of our social media

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Speaker 1: platforms and we'd love to answer it. I'm Adam Lange

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Speaker 1: and this is ask Fear and Greed