Day: August 6, 2022

2 quality ETFs for ASX investors to buy next week

ETF written in yellow with a yellow underline and the full word spelt out in white underneath.

ETF written in yellow with a yellow underline and the full word spelt out in white underneath.

Are you interested in boosting your portfolio with some exchange traded funds (ETFs)?

If you are, then you may want to look at the highly rated ETFs listed below. Here’s what you need to know about them:

iShares S&P 500 ETF (ASX: IVV)

The first ETF for investors to look at is the iShares S&P 500 ETF. This ETF aims to provide investors with the performance of the famous S&P 500 Index before fees and expenses. This index is home to the top 500 U.S. stocks.

BlackRock, which runs iShares, believes this can be used by Australian investors to diversify internationally and seek long-term growth opportunities for a portfolio.

The companies included in the fund need no introduction. Among the ETF’s largest holdings are the likes of Amazon, Apple, Berkshire Hathaway, Facebook, JP Morgan, Johnson & Johnson, Microsoft, and Tesla.

Since this time in 2017, the iShares S&P 500 ETF would have turned a $10,000 investment into almost $19,000.

Vanguard MSCI Index International Shares ETF (ASX: VGS)

Another ETF for investors to look at is the Vanguard MSCI Index International Shares ETF. This ETF provides investors with exposure to even more shares than the iShares S&P 500 ETF.

The numbers change periodically as stocks are added and removed from the ETF. But generally speaking, there are approximately 1,500 of the largest listed companies from major developed countries.

Vanguard, which run the ETF, notes that the ETF offers low-cost access to a broadly diversified range of securities that allow investors to benefit from the long-term growth potential of the global economy. The fund manager appears to believe this makes it a good option for buy and hold investors seeking long-term capital growth, some income, and international diversification.

Among the companies included in the fund are giant such as Apple, Microsoft, Nestle, NVIDIA, Procter & Gamble, Tesla, and Visa.

Over the last five years, the Vanguard MSCI Index International Shares ETF would have turned a $10,000 investment into over $16,000.

The post 2 quality ETFs for ASX investors to buy next week appeared first on The Motley Fool Australia.

Wondering where you should invest $1,000 right now?

When investing expert Scott Phillips has a stock tip, it can pay to listen. After all, the flagship Motley Fool Share Advisor newsletter he has run for over ten years has provided thousands of paying members with stock picks that have doubled, tripled or even more.* Scott just revealed what he believes could be the “five best ASX stocks” for investors to buy right now. These stocks are trading at near dirt-cheap prices and Scott thinks they could be great buys right now

See The 5 Stocks
*Returns as of July 7 2022

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Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Vanguard MSCI Index International Shares ETF. The Motley Fool Australia has recommended Vanguard MSCI Index International Shares ETF and iShares Trust – iShares Core S&P 500 ETF. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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2 ASX dividend shares that experts rate as buys

A woman wearing glasses and a black top smiles broadly as she stares at a money yarn full of coins representing the rising JB Hi-Fi share price and rising dividends over the past five years

A woman wearing glasses and a black top smiles broadly as she stares at a money yarn full of coins representing the rising JB Hi-Fi share price and rising dividends over the past five years

If you’re an income investor searching for new dividend shares to buy, it could be worth checking out the two listed below.

Here’s why they are rated as buys right now:

Adairs Ltd (ASX: ADH)

The first ASX dividend share that could be a buy is Adairs. It is the leading furniture and homewares retailer behind the Focus on Furniture, Mocka, and eponymous Adairs brands.

The retailer is having a bit of a tough time this year and is expected to post a sharp decline in profits in FY 2022. This has been driven by significant COVID related disruptions across its operations.

However, management remains positive on the future. It highlights that “these [disruptions] should not be recurring in the medium term and the underlying business continues to perform well.”

This view is shared with the analysts at Wilson, which have an overweight rating and $4.50 price target on the company’s shares.

In addition, the broker is forecasting fully franked dividends per share of 19 cents per share in FY 2022 and 31 cents per share in FY 2023. Based on the current Adairs share price of $2.48, this will mean yields of 7.7% and 12.5%, respectively.

Westpac Banking Corp (ASX: WBC)

Another ASX dividend share that could be a quality option for income investors next week is banking giant Westpac.

It has recently been tipped as a buy by analysts at Goldman Sachs with a $26.12 price target.

The broker believes Westpac provides strong leverage to rising rates. It expects the bank to benefit from the relative lack of domestic deposit repricing that has been seen to date following recent rates cash rate rises.

As for dividends, the broker is forecasting fully franked dividends per share of 123 cents in FY 2022 and 135 in FY 2023. Based on the current Westpac share price of $21.96, this will mean yields of 5.6% and 6.15%, respectively, over the next two years.

The post 2 ASX dividend shares that experts rate as buys appeared first on The Motley Fool Australia.

Wondering where you should invest $1,000 right now?

When investing expert Scott Phillips has a stock tip, it can pay to listen. After all, the flagship Motley Fool Share Advisor newsletter he has run for over ten years has provided thousands of paying members with stock picks that have doubled, tripled or even more.* Scott just revealed what he believes could be the “five best ASX stocks” for investors to buy right now. These stocks are trading at near dirt-cheap prices and Scott thinks they could be great buys right now

See The 5 Stocks
*Returns as of July 7 2022

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Motley Fool contributor James Mickleboro has positions in Westpac Banking Corporation. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended ADAIRS FPO. The Motley Fool Australia has positions in and has recommended ADAIRS FPO. The Motley Fool Australia has recommended Westpac Banking Corporation. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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What goes up when the share market crashes?

A woman sits on sofa pondering a question.

A woman sits on sofa pondering a question.

No one enjoys seeing the share market crash.

With the exception of those investors who’ve resorted to short selling, most of us stand to see our portfolios shrink when a bear market sinks in its teeth.

With a share market crash and bear market technically defined as a fall of more than 20%, the S&P/ASX 200 Index (ASX: XJO) hasn’t hit that rough patch yet during this year’s market sell-off.

From 13 August’s peak high through to the 20 June trough, ASX 200 shares fell 15.7%.

Since then, the ASX 200 has enjoyed a strong rebound, up 9%, which leaves the benchmark index down 8.1% from last August.

ASX tech shares have fared worse amid fast rising inflation and interest rates. Though they’ve also enjoyed some of the biggest rebounds since the June lows.

From mid-November 2021 through to mid-June the S&P/ASX All Technology Index (ASX: XTX) plunged 45%. Despite the big bounce since then, the All Tech Index remains down 24% since November.

So, as far as tech stock investors are concerned, a share market crash has eventuated.

What goes up when the share market crashes?

The current ructions hitting stocks around the world and raising fears of a share market crash largely stem from unexpectedly fast rising inflation and the resulting interest rate hikes from global central banks.

Rising geopolitical tensions and lingering supply issues from the pandemic haven’t helped either.

So where can ASX investors turn during a share market crash?

First, gold.

The classic safe haven metal has seen its value increase in six of the nine share market crashes between 1976 and 2020, according to GoldSilver.

During the ASX sell-off in 2022, gold hasn’t shot the lights out.

But the yellow metal hasn’t fared too badly. On 1 January an ounce of gold was trading for US$1,829. That same ounce is currently worth US$1,791, down 2%.

The same can’t be said for most ASX gold shares, as witnessed by the 17% year-to-date fall in the S&P/ASX All Ordinaries Gold Index (ASX: XGD).

One way to invest in physical gold via the ASX is through the Betashares Gold Bullion ETF (ASX: QAU).

The currency hedged exchange-traded fund (ETF) aims to track the performance of the price of gold. It employs a currency hedge against movements in the exchange rate between the US and Aussie dollars.

QAU is down 2% in 2022 compared to an 8% loss posted by the ASX 200.

Bonds and inflation protection

Another safe haven asset, if held to maturity, is a government bond.

If a share market crash is being driven by inflationary pressures, then you may want to consider exchange-traded Treasury Indexed Bonds (eTIBs).

What are these?

According to the ASX:

Exchange-traded Treasury Indexed Bonds (eTIBs) offer a convenient and readily accessible way to invest in Treasury Indexed Bonds. Treasury Indexed Bonds are capital-indexed bonds issued by the Australian Government. The capital value of the investment is adjusted by reference to movement in the Consumer Price Index (CPI)…

Treasury Indexed Bonds are not traded on an exchange and are typically traded in large parcels, putting them beyond the reach of many investors. eTIBs have the appeal and convenience of being electronically traded and settled through the Australian Securities Exchange (ASX) in small or large parcels.

In a share market crash, be sure you’re diversified

The ASX 200 has been marching higher over the past few weeks. So perhaps the worst is behind us.

But if we are looking at a share market crash, it pays to have a diversified portfolio.

In inflationary times with interest rates rising fast, look for companies with strong balance sheets, unlikely to be hit with large increases in debt repayments.

Companies with plenty of cash flow that can continue dividend payouts also tend to be less volatile than growth stocks.

These may still well fall during a share market crash. But at least you’ll be getting some regular income during the retrace.

And if you’ve got a long-term investment horizon, history shows that well run companies operating in growing markets tend to reward their shareholders over time. Even if few, or none, are immune to some medium-term downside during a market crash.

So, if you do see the value of some of your cherished stocks take a hit, remember that they’re only paper losses unless you sell them during the retrace.

Finally, in times like these, it’s more important than ever to keep some powder dry.

Aside from having some ready liquidity in case of unforeseen needs, you could scoop up some steals.

As my fellow Fool, Bruce Jackson writes, “If the market does indeed test its June 2022 lows, it gives you an opportunity to snap up some more bargains.”

The post What goes up when the share market crashes? appeared first on The Motley Fool Australia.

Wondering where you should invest $1,000 right now?

When investing expert Scott Phillips has a stock tip, it can pay to listen. After all, the flagship Motley Fool Share Advisor newsletter he has run for over ten years has provided thousands of paying members with stock picks that have doubled, tripled or even more.* Scott just revealed what he believes could be the “five best ASX stocks” for investors to buy right now. These stocks are trading at near dirt-cheap prices and Scott thinks they could be great buys right now

See The 5 Stocks
*Returns as of July 7 2022

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Motley Fool contributor Bernd Struben has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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5 proven investment strategies you can use to ride out a recession

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

A young male investor wearing a white business shirt screams in frustration with his hands grasping his hair after ASX 200 shares fell rapidly today and appear to be heading into a stock market crash

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

There’s no way for investors to avoid recessions. Economic cycles are natural, and they can move the market drastically. That doesn’t have to be a bad thing, though! Investors can use a few important strategies to limit losses and maximize long-term gains.

1. Stay invested

This is the most important strategy on the list, by far. It’s also probably the most simple one. The stock market is likely to drop during or immediately following a recession. Our human instinct is to take action to stop the pain. It’s not easy to do, but the best move is generally to fight this instinct.

The worst time to sell a stock is right after it’s dropped. All that does is lock in your losses. The best time to sell has already passed, and chasing that is an irrational fear reaction — it’s already too late. You might prevent further losses, but you could also lock yourself out of the gains from the inevitable market recovery. Some recoveries take years following prolonged, steep crashes. Other ones are immediate, but either way, it’s nearly impossible to know which one you’re dealing with in the moment.

Suppose that nothing has changed about a company’s expected future cash flows or financial health. For long-term investors, that means nothing has changed about the stock’s potential. A drop in price just means that it got even cheaper, and, perhaps, less risky. From a purely rational perspective, a recession is one of the worst times to sell.

Even investors who recognize this logic can still be tempted to time the market. There’s tons of data out there suggesting you probably can’t do that successfully over the long-term. Instead, it’s generally best to trust that the market will turn around as economic conditions inevitably return to growth.

2. Hold dividend stocks

Dividend stocks are great additions to investment portfolios, especially during market downturns. When investors’ risk appetite declines, capital usually flows toward value stocks and other stable businesses. Dividend stocks become more popular when market turmoil is on the horizon. That’s exactly what we saw in early 2022.

Dividend stocks also bring the major benefit of performing during market crashes. Your portfolio might get crushed and lose value on paper, but you can still enjoy cash returns, regardless of share prices. This is really important for retirees relying on investment income. It’s also a great way to calmly stay invested as you wait for the stock market to turn around. You’ll be less tempted to sell if some of your stocks are kicking off cash.

You can’t avoid volatility, but you can definitely manage it. Investors can measure their risk tolerance based on time horizon, financial needs, and personal tastes. If you don’t need to access your stock investments for a long time and you don’t mind short-term losses, then you can invest for aggressive growth. If you’ll need to sell your stocks for cash soon (or if you just can’t handle losses emotionally), then it’s important to balance your allocation in alignment with your risk tolerance. Bonds are a popular asset class for volatility reduction.

Recessions can threaten the profits and financial health of any business, which can cause them to slash dividends. Make sure your dividend investment strategy retains some exposure to defensive stocks, such as healthcare, consumer staples, and utilities. These are considered non-cyclical because their sales tend to remain more stable across economic conditions.

3. Manage volatility

This is an important investment strategy to consider before a recession hits. If you don’t take care of this, it might be too late. Volatility is an inevitable part of stock investing. The market moves in cycles, and crashes tend to coincide with recessions.

If you missed the boat on this step in 2022, make sure you’re prepared in the next market cycle. It will be relevant again in the future.

4. Stay liquid

If we’re truly entering a recession, then it could be wise to keep some “dry powder” on the sideline. You’ll be thankful if you have cash on hand when the market approaches its bottom. Don’t mistake this for a recommendation to sell off your stocks and violate the first section of this list. With the market down 13% year to date, it’s not exactly a good time to sell stocks anyway.

Instead, approach this as a form of volatility management. If you’re overexposed to stocks, then it might be smart to take some gains on stocks that have outperformed recently. That cash can be deployed into better opportunities, such as stocks that have recently become undervalued. Energy stocks could fit this description after their recent inflation-fueled run-up.

5. Buy cheap, promising growth stocks

If you have some cash on hand after the market takes a beating, then it’s time to consider undervalued growth stocks. Growth stocks take a beating during crashes, but they tend to outperform the market during bull periods.

Artificial intelligence, data analytics, cybersecurity, and fintech stocks are way below their 2021 highs. They might have more room to tumble, but the risk-reward balance has flipped. Valuations are much more rational, and these industries are among the most promising for the next few decades.

If you do some homework and have high conviction in a few of these names, it’s a great time to consider adding them to your portfolio for the long term.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

The post 5 proven investment strategies you can use to ride out a recession appeared first on The Motley Fool Australia.

Wondering where you should invest $1,000 right now?

When investing expert Scott Phillips has a stock tip, it can pay to listen. After all, the flagship Motley Fool Share Advisor newsletter he has run for over ten years has provided thousands of paying members with stock picks that have doubled, tripled or even more.* Scott just revealed what he believes could be the “five best ASX stocks” for investors to buy right now. These stocks are trading at near dirt-cheap prices and Scott thinks they could be great buys right now

See The 5 Stocks *Returns as of July 7 2022

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Ryan Downie has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.



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