Month: October 2022

The Pilbara Minerals Ltd (ASX: PLS) share price has continued its strong run on Tuesday.

In morning trade, the lithium miner’s shares rose 5% to a new record high of $5.66.

Investors have been bidding the Pilbara Minerals share price higher today in response to the release of the company’s quarterly update.

Pilbara Minerals share price higher on quarterly update

For the three months ended 30 September, Pilbara Minerals reported a 16% quarter on quarter increase in spodumene concentrate production to 147,105 dry metric tonnes (dmt).

Management advised that this strong production performance reflects the company’s operating strategy and represents an annualised production rate of 588,000 dmt of spodumene concentrate.

It also highlights that it decided to lower the grade of its spodumene to optimise the product yield, allowing the company to maximise sales volumes and take advantage of current market pricing conditions. The average grade of product sold during the quarter was ~5.3%, down from 5.4% three months earlier.

This strong production allowed the company to ship 138,249 dmt of spodumene concentrate, which was up 4.4% on the previous quarter.

These shipments were undertaken at an average realised sales price of US$4,266/dmt SC5.3 basis (CIF China). This equates to a reference price of US$4,813/dmt on an SC6.01 basis (CIF China) when adjusted pro-rata for lithia content.

In addition, the company achieved strong pricing from three Battery Material Exchange (BMX) sale auctions during the quarter, with one auction commanding a price of US$7,708/dmt on an SC6.0 equivalent basis (CIF China).

Cost inflation doesn’t stop strong cash generation

Pilbara Minerals’ costs remained higher during the quarter due to “to elevated strip ratios to support a substantial investment in mining activities, the impact of labour shortages in the WA mining sector (including the impact of COVID-19), supply chain disruptions and general inflationary cost pressures.”

Positively, though, its Pilgangoora Project costs eased slightly quarter on quarter to US$434/dmt (US$462/dmt in the June quarter). This is at the lower end of its guidance range.

And while no details were provided in relation to its earnings, the company revealed a huge increase in its cash balance. At the end of the quarter, the company’s cash balance stood at $1.375 billion. This is up by $783.7 million over the three months.

And this doesn’t even include $132.2 million of irrevocable letters of credit for shipments that were completed before the end of the quarter. If you include this, its cash balance was $1.508 billion.

No wonder investors have been scrambling to buy its shares this year!

The post Pilbara Minerals share price hits record high following Q1 update appeared first on The Motley Fool Australia.

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More reading

• 5 things to watch on the ASX 200 on Tuesday
• Here are the top 10 ASX 200 shares today
• Why Life360, Novonix, Pilbara Minerals, and Vulcan shares are storming higher today
• Here are the 3 most heavily traded ASX 200 shares on Monday
• Here’s why the Pilbara Minerals share price is charging higher on Monday

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 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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The A2 Milk Company Ltd (ASX: A2M) share price is falling on Tuesday.

In morning trade, the infant formula company’s shares are down 1% to $5.37.

What’s going on with the A2 Milk share price today?

The A2 Milk share price is falling today after the company announced the exit of a senior executive.

According to the release, Shareef Khan has resigned from his position of chief operations officer and will be finishing up in his role at the end of December.

The release notes that Khan has been in discussions with the company for some time about his desire to spend more time with his family and explore other pursuits.

A2 Milk’s managing director and CEO, David Bortolussi, commented:

Shareef joined the Company in 2012 primarily to develop our supply chain operations with Synlait Milk to support the growth of our infant formula business. Shareef has navigated the Operations function through some extraordinary times and has played an important role in a2MC’s growth. I would like to personally thank Shareef for his passion and commitment to a2MC over many years, and we wish him all the best in his future endeavours.

Organisational changes

A2 Milk will now be introducing a new chief supply chain officer role to lead its end-to-end supply chain in all categories and markets.

It notes that the role will bring together its operations and manufacturing teams under a combined leadership role to transform its supply chain as a key aspect of its refreshed growth strategy.

The chief supply chain officer role will be a member of the Executive Leadership Team (ELT) reporting directly to the CEO. In light of this change, Bernard May, who will report to the new chief supply chain officer, will step down from the ELT. However, May will continue as the CEO of the Mataura Valley Milk (MVM) business.

The company has not yet appointed a chief supply chain officer but expects to do so in the coming weeks.

The post Why is the A2 Milk share price falling today? appeared first on The Motley Fool Australia.

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More reading

• Which ASX All Ords shares avoided a sell-off during the last recession?
• Looking to buy A2 Milk shares? Here’s what to watch at next month’s AGM
• Is the A2 Milk share price a buy ahead of next month’s AGM?
• Top brokers name 3 ASX shares to buy today
• Broker tips A2 Milk share price to jump 20%

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 no position in any of the stocks mentioned. The Motley Fool Australia has recommended A2 Milk. 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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It’s likely no surprise that S&P/ASX 200 Index (ASX: XJO) materials share-turned-lithium favourite Mineral Resources Limited (ASX: MIN) has been on a good run lately.

The stock has surged 77% over the last 12 months and a whopping 320% over the last five years. As of Monday’s close, the Mineral Resources share price was $76.08.

But its recent gains have nothing on those the mining share has posted over its listed life.

Here’s what $15,000 invested in Mineral Resources shares at the time of the company’s ASX float would have returned by 2022.

The ASX 200 lithium share that turned $15,000 into $1.4m

Long before the establishment of Mineral Resources’ lithium leg – which could be spun out in the future – the mining giant listed on the ASX, offering new shares for just 90 cents under its initial public offering (IPO).

That’s right, a $15,000 investment in the company’s 2006 IPO would see a shareholder boasting a parcel of 16,666 shares in the ASX 200 lithium icon.

Today, that parcel would be worth a jaw-dropping $1.27 million – representing a mammoth 8,353% gain. And that’s before considering the company’s dividends.

Mineral Resources has been handing out a portion of its profits in the form of dividends since November 2006.

Back then, it handed shareholders just 1.2 cents per share. For comparison, the stock’s latest dividend was worth $1 per share.

Over the years, Mineral Resources has paid out a total of $9.562 per share of fully franked dividends.

That means an investor who held 16,666 Mineral Resources shares since 2006 would have received around $159,360.29 in dividends over that time.

And that’s before considering potential benefits brought by franking credits or compounding from participating in the company’s dividend reinvestment plan – active since 2011.

All in all, an initial $15,000 investment at the ASX 200 lithium share’s IPO would have returned a total of $1.43 million as of Monday’s close. That’s certainly nothing to scoff at!

The post This ASX 200 lithium share turned a $15,000 investment into $1.4 million appeared first on The Motley Fool Australia.

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More reading

• Here are the top 10 ASX 200 shares today
• Brokers name 5 ASX lithium shares to buy now
• Here are the top 10 ASX 200 shares today
• 3 ASX 200 companies among the top 10 lithium producers in the world
• 3 ASX 200 lithium shares that turned a $10,000 investment into $500,000

Motley Fool contributor Brooke Cooper 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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The ASX share market is offering investors, of all ages, plenty of opportunities to buy businesses. If someone is reading this aged 35 but with no investments, I don’t think that’s worth worrying about.

A number of ASX shares are a lot cheaper right now than they have been over most of the last two and a half years. Certainly, inflation and higher interest rates have hurt business valuations. But I think it’s a great time to start investing because it’s better to buy an investment when the sticker price is lower.

Compounding can really help grow wealth

Long-term compounding can make a big difference to an investor’s portfolio over time.

At 35, investors still have three decades before reaching retirement age. I’ll show how that can play out when investors put money to work for a long time, using the Moneysmart compound calculator.

Historically, the share market has returned an average of around 10% per annum. That’s just an average, sometimes it’s a big rise in a year; other times it can fall.

If a 35-year-old can invest $500 a month and earn 10% per year then they’d have $987,000 after three decades.

Investing $1,000 a month would turn into $1.97 million.

Which ASX shares are cheap?

Investors don’t need to go for the cheapest ASX shares or the ones that fall hard. We just need to find investments that have compelling plans and are growing over time.

I think the following three businesses look like solid contenders for at least the rest of this decade.

Nick Scali Limited (ASX: NCK)

Nick Scali may be best known as a business that sells furniture, but I think it has a number of attributes that are attractive.

For starters, it’s currently run by managing director Anthony Scali. I think he’s a talented operator and he’s very aligned with regular shareholders because he owns millions of Nick Scali shares.

The ASX share recently bought the business Plush, which adds to its scale. Not only does it create compelling synergies, but the combined business has a strong store rollout plan with an eye on growing online sales as well.

Nick Scali typically pays investors a sizeable dividend. The Nick Scali share price has dropped almost 40% in 2022. According to estimates on CMC Markets, it could pay a grossed-up dividend yield of 9.7% in FY24 and 10.8% in FY23 (the current financial year).

Wesfarmers Ltd (ASX: WES)

Wesfarmers is the parent company behind many iconic Australian businesses such as Bunnings, Kmart, and Officeworks. Other businesses in its portfolio of names include Priceline, Target, Catch, and Clear Skincare Clinics.

Despite having this quality collection of names, the Wesfarmers share price has dropped around 25% since the start of the year. I think this is a good time to get some exposure to this ASX share.

I like how the management can, and do, alter the names in the portfolio so that it’s more future-focused. For example, it has recently started a healthcare division. I think this has an attractive future because of the ageing demographics of Australia. Plus, it’s working on a lithium mining project which could diversify and grow the company’s earnings.

Brickworks Limited (ASX: BKW)

I also think that the Brickworks share price is looking cheap at the moment.

While it has only declined 12% in 2022 at the time of writing, I think the underlying assets look undervalued.

It owns a large chunk of Washington H. Soul Pattinson and Co. Ltd (ASX: SOL) shares, which is an investment business that is growing its portfolio of investments and steadily increasing its dividend to Brickworks (and other shareholders).

Brickworks is the biggest brickmaker in Australia, which includes the business Austral Bricks. It also gives exposure to other building products through names like Austral Masonry and Bristle Roofing.

After making some acquisitions a few years ago, it’s also the largest brickmaker in the northeast of the US, which is a promising, large market for the company.

Finally, Brickworks has a joint venture with Goodman Group (ASX: GMG). The two businesses are building a growing portfolio of industrial properties within a property trust. Completing the buildings is growing the underlying value of Brickworks, generating profits, and also leading to stronger rental income.

I think the Brickworks share price looks attractively cheaper than the combined value of all of the above assets I mentioned. At 31 July 2022, the inferred asset backing was over $33 per share, according to Brickworks.

At the time of writing, Brickworks shares are going for $21.80 apiece.

The post No savings at 35? I’d buy cheap ASX shares to try and retire rich appeared first on The Motley Fool Australia.

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More reading

• Looking to buy Wesfarmers shares? Here’s what to watch at this week’s AGM
• 5 ways to be carefree during the next ASX share market downturn
• Don’t miss out on these buy-rated ASX dividend shares: analysts
• Is the Wesfarmers share price due to make a comeback in FY23?
• Wesfarmers shares could be one of the best options on the ASX 200: Morgans

Motley Fool contributor Tristan Harrison has positions in Brickworks and Washington H. Soul Pattinson and Company Limited. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Brickworks and Washington H. Soul Pattinson and Company Limited. The Motley Fool Australia has positions in and has recommended Brickworks, Washington H. Soul Pattinson and Company Limited, and Wesfarmers Limited. 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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Fund manager Wilson Asset Management (WAM) has identified two top small-cap ASX shares in one of the portfolios it manages that could be investment ideas.

WAM operates several listed investment companies (LICs). Some, like WAM Leaders Ltd (ASX: WLE) and WAM Capital Limited (ASX: WAM), focus on larger companies.

There’s also one called WAM Microcap Ltd (ASX: WMI), which focuses on small-cap ASX shares with a market capitalisation under $300 million at the time of acquisition.

WAM says WAM Microcap targets “the most exciting undervalued growth opportunities in the Australian microcap market”.

These are the two small-cap ASX shares the fund manager outlines in its recent monthly update.

iCollege Ltd (ASX: ICT)

WAM described this business as a provider of accredited and non-accredited courses and services across Australia. It also operates an international recruitment agency. The iCollege share price is up 60% since 24 August 2022.

It was noted that the COVID-19 period has been challenging, but the reopening of Australian borders and a range of government initiatives aimed at encouraging international students to return has led to iCollege seeing a “surge” in demand from overseas students.

The fund manager also said the small-cap ASX share is strongly positioned to benefit from this trend with the company revealing in its FY22 result that the number of English language students has exceeded pre-COVID levels. New student offers and enrolments at Go Study are increasing on a month-over-month basis.

The intake of international bachelor degree students is rising steeply and will “contribute to strong revenue growth into FY24 and onwards”.

Concluding its positive thoughts, WAM explained:

We believe the market is underestimating the company’s operating leverage associated with filling incremental classroom capacity, underpinning earnings upgrades. The strong balance sheet also provides opportunity to deploy capital into earnings accretive acquisitions over the medium-term.

CogState Limited (ASX: CGS)

The other small-cap ASX share mentioned, CogState, was described as a leading technology company optimising brain health assessments to advance medicine development and enable earlier clinical insights in healthcare. The CogState share price is up 30% since 27 September 2022.

Last month, its global commercial partner Eisai reported a successful phase three trial result for its new Alzheimer’s disease drug, which met both its primary and secondary endpoints.

WAM noted that the drug reduced clinical cognitive decline by 27% compared to a placebo in a study involving 1,795 participants with early Alzheimer’s disease.

Eisai will continue to seek approval for the drug in the US, Japan, and Europe.

The fund manager said the adoption of Cogstate’s technologies at scale has been predicated on a commercialised drug in the market to screen for potential patients suitable for treatment.

Assuming the drug is approved, WAM said:

We anticipate this to materialise in the 2023 calendar year, driving upgrades to revenue and earnings. Additional opportunities exist with highly-anticipated read-outs from two other pivotal phase three Alzheimer’s drugs, providing near-term catalysts for the company.

The post These 2 small-cap ASX shares have soared, but a fund manager still tips them as buys appeared first on The Motley Fool Australia.

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More reading

• These 3 ASX shares hold top spot as my favourite dividend deliverers
• 2 ASX healthcare shares to buy that you’ve not heard of: expert
• Here’s how ASX tech shares fared in September
• These were the 5 best-performing ASX All Ords shares in September
• Why Cogstate, Global Lithium, Premier, and Woodside shares are charging higher

Motley Fool contributor Tristan Harrison has positions in WAM MICRO FPO. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended CogState Limited. The Motley Fool Australia has positions in and has recommended CogState Limited. 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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The Wesfarmers Ltd (ASX: WES) share price will be in the spotlight this week as the ASX 200 conglomerate gears up to hold its 2022 annual general meeting (AGM).

On Thursday, Wesfarmers will hold its 41st AGM at the Perth Convention and Exhibition Centre. 

Shareholders will be able to participate in the AGM and ask questions either in person or online.

As usual, the formalities of the meeting will see shareholders vote on items such as the re-election of board members, the FY22 remuneration report, and the grant of performance shares to managing director Rob Scott.

But the real meat of the AGM will come through management’s addresses at the start of the meeting.

Chair Michael Chaney will be up first to introduce the proceedings and provide some commentary. 

Then, all eyes will be on Rob Scott’s address, which is what the market will be paying particular attention to.

Here’s what to watch for when Wesfarmers holds its AGM on Thursday.

Recent trading conditions

Unlike Woolworths Group Ltd (ASX: WOW) and Coles Group Ltd (ASX: COL), Wesfarmers doesn’t usually provide quarterly updates.

So, Thursday’s AGM is unlikely to get into the nitty gritty of Wesfarmers’ recent financial performance in FY23.

However, the managing director’s address usually pulls back the curtain and provides comments on recent trading.

This should include comments at a segment level, providing insight into performances across the likes of Bunnings, Officeworks, Kmart, Catch, chemicals, and industrials.

When Wesfarmers released its FY22 results, it noted that retail trading conditions had remained “robust” through the first seven weeks of FY23. 

Singling out its retail brands, the conglomerate said that sales growth had been particularly strong in Kmart Group. Bunnings was also ticking along, notching up positive sales growth. However, sales at Officeworks were flat compared to the prior year.

Wesfarmers also noted that its industrial businesses remain subject to international commodity prices, foreign exchange, competitive factors, and seasonal outcomes.

Inflation and cost of living pressures

Inflation is the topic on everyone’s lips at the moment. And as the nation’s largest retail conglomerate, there’ll be a lot of interest in what Wesfarmers has to say (or perhaps not say) on the matter.

Commenting on these conditions back in August, Wesfarmers said:

The Australian economy is starting from a strong base with low unemployment and high levels of household savings, but the effects of inflation and higher living costs are placing pressure on parts of the economy, including household budgets.

At the time, the conglomerate believed that it was well-placed to navigate through this environment, noting:

The Group’s retail businesses are well positioned as cost of living pressures impact household budgets and value once again becomes increasingly important to customers. The retail businesses will maintain their focus on meeting the changing needs of customers and delivering even greater value, quality and convenience.

Wesfarmers share price snapshot

As I covered recently, brokers have a mixed view on Wesfarmers shares. Morgans and UBS are camped among the bulls while Goldman Sachs and Citi remain sceptical. 

With Wesfarmers shares last closing at $44.18, they’ve slumped 26% in the year to date. This has largely been due to the conglomerate’s vulnerability to the impacts of rising inflation and interest rates, which could see consumer spending dry up across its portfolio of retail brands.

Wesfarmers reported net profit after tax (NPAT) of $2.4 billion in FY22, marginally lower than the prior year. So, Wesfarmers shares are trading on a trailing price-to-earnings (P/E) ratio of 21 times.

As for dividends, an annual payout of $1.80 puts Wesfarmers shares on a trailing dividend yield of 4.1%. With the benefit of franking credits, this yield bumps up to 5.8%.

The post Looking to buy Wesfarmers shares? Here’s what to watch at this week’s AGM appeared first on The Motley Fool Australia.

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More reading

• 5 ways to be carefree during the next ASX share market downturn
• Don’t miss out on these buy-rated ASX dividend shares: analysts
• Is the Wesfarmers share price due to make a comeback in FY23?
• Wesfarmers shares could be one of the best options on the ASX 200: Morgans
• These ASX 200 dividend shares have been named as buys by analysts

Motley Fool contributor Cathryn Goh 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 positions in and has recommended COLESGROUP DEF SET and Wesfarmers Limited. 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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This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

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

What happened 

Chinese stocks were tumbling this morning after China’s President Xi Jinping broke precedent over the weekend and secured a third term as the country’s leader.

Xi’s past government policies have been generally unfriendly toward technology companies, and investors are worried that policies enacted by the newly emboldened Xi could hamper tech stocks even further. 

As a result, the share prices of Tencent Music Entertainment (NYSE: TME) dropped 8.3%, the commercial freight platform company Full Truck Alliance (NYSE: YMM) plunged 9.5%, and online education company New Oriental Education and Technology (NYSE: EDU) plummeted 20.5% as of 11:17 a.m. ET. 

So what 

The strong reaction from investors today comes amid the Chinese government’s stricter stance toward technology companies over the past few years. The most recent crackdown came just over the summer, when a large group of Chinese tech companies was fined for disclosure violations.

While many countries use governmental oversight of companies, China is particularly strict and enacted significant fines over the past couple of years for violations, including for data protection and antitrust rules. One particularly large fine was levied against Chinese e-commerce giant Alibaba last year for $2.8 billion.

The result of the Chinese tech crackdown has been billions of dollars worth of market value being wiped from tech companies based there. 

Tencent Music, Full Truck, and New Oriental investors are worried that with Xi having secured another term in power, the Chinese government will continue strict policies against companies, which will curb their growth. 

Those worries aren’t unfounded, either. New Oriental cut 60,000 jobs at the beginning of this year as sales plunged in response to new rules about online tutoring. Last year the Chinese government put tight restrictions on online tutoring companies, essentially erasing most of the for-profit tutoring market, causing New Oriental’s share price to fall 74% in just one month. 

Full Truck Alliance and Tencent Music have faced their own hurdles with the Chinese government. Last year, the government opened up a cybersecurity probe into Full Truck. When that happens, companies aren’t allowed to add new users. Also, last year, Tencent Music was ordered by the Chinese government to give up its exclusive music licensing rights, a huge blow to the largest music streaming service in China. 

Now what 

While there’s been some recent hope that China will back away from some of its strict policies toward tech companies, the general sentiment among investors right now is worry. 

China is still implementing its zero-COVID policy, which continues to bring companies and parts of the country to a standstill. That will likely continue to cause parts of the Chinese economy to slow down. Additionally, reports show that the current crop of political leaders in China, led by Xi, is not exactly pro-business. 

Tencent Music, Full Truck, and New Oriental investors may want to proceed with caution with these stocks and likely prepare for more volatility as investors anticipate China’s strict approach toward technology companies to continue.     

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

The post Here’s why these Chinese stocks fell hard today appeared first on The Motley Fool Australia.

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More reading

• If I’d invested $5,000 in Vanguard’s VGS ETF at the start of 2022, here’s what I’d have now
• These are 3 best-performing ASX ETFs so far in 2022
• Why Tesla stock tanked today
• Westpac share price on watch following $1.3b earnings hit
• Medibank share price remains suspended amid worsening cyber incident

Chris Neiger has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has recommended New Oriental Education & Technology Group. 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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The Vanguard MSCI Index International Shares ETF (ASX: VGS) has seen plenty of volatility this year, along with the ASX share market.

For readers that don’t know, this exchange-traded fund (ETF) is an investment that tracks the MSCI World ex-Australia Index, in Australian dollars. This means it aims to track the combined return of almost 1,500 businesses that are listed around the world.

It gives exposure to names like Apple, Microsoft, Alphabet, Amazon.com, Tesla, Johnson & Johnson, Exxon Mobil, Berkshire Hathaway and Meta Platforms (Facebook).

Interest rates and inflation hit hard

The global share market has been through plenty of pain this year.

It has been a particularly painful time for names in the technology sector as interest rates hurt their valuation. The Vanguard MSCI Index International Shares ETF has a higher weighting towards tech than the overall ASX share market does.

Central banks have been increasing interest rates to try to put a lid on inflation and lower demand in the economy.

It has certainly impacted the global share market.

At the time of writing, the unit price of the ETF has fallen by 13.8% since the start of the year. That includes the impact of the Australian dollar weakening from being worth US 73 cents to currently being worth just US 63 cents.

This means $5,000 invested at the start of 2022 would have dropped to $4,310.

Currency reductions matter because the Vanguard MSCI Index International Shares ETF has around 70% of its portfolio invested in US shares. As the Australian dollar falls, it means the same US share is worth a higher amount in Australian dollar terms, assuming the share price stays the same.

Seeing as the Aussie dollar has been weakening, but the US share market has been falling in value, it has cushioned Aussie investors from some, but not all, of the decline.

We often see the share market go through volatile times, it’s just hard to say when the next rollercoaster will start. However, I believe it may be a good time to go hunting for cheaper shares.

Why do interest rates matter?

Legendary investor Warren Buffett once explained why interest rates are so important for shares (and all assets):

The value of every business, the value of a farm, the value of an apartment house, the value of any economic asset, is 100% sensitive to interest rates because all you are doing in investing is transferring some money to somebody now in exchange for what you expect the stream of money to be, to come in over a period of time, and the higher interest rates are the less that present value is going to be. So every business by its nature…its intrinsic valuation is 100% sensitive to interest rates.

Don’t forget about the income

The return I quoted above only refers to the change in the unit price.

ETFs also pass through dividends from the underlying businesses to investors in the form of distributions. This particular one pays it to investors every quarter.

If I owned Vanguard MSCI Index International Shares ETF units at the start of the year, I would have been entitled to four distributions in this calendar year, with the distribution for 31 December 2021 going ex-entitlement on 4 January 2022.

Those four distributions would amount to $1.74 in total. Some of this comes from crystallised capital gains within the ETF, so it’s not just dividend income received by the ETF.

The distributions add a 1.6% return to the picture. That would offset $80 of the decline.

Therefore, the ETF’s return has only been a fall of 12.2%, implying that an investor would have $4,390 left.

What’s next for the Vanguard MSCI Index International Shares ETF?

The performance of an ETF is dictated by the returns of its underlying holdings.

That means that whatever happens next will be decided by the global share market’s blue chips.

For many of the names involved, it will depend on how high interest rates have to go to tame inflation. But, it will also depend on how their earnings go through the upcoming period. Will this economic environment hurt their profit growth? Or can earnings keep rising at a good rate? Time will tell.

The post If I’d invested $5,000 in Vanguard’s VGS ETF at the start of 2022, here’s what I’d have now appeared first on The Motley Fool Australia.

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Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to Meta Platforms CEO Mark Zuckerberg, is a member of The Motley Fool’s board of directors. Motley Fool contributor Tristan Harrison 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 Alphabet (A shares), Alphabet (C shares), Amazon, Apple, Meta Platforms, Inc., Microsoft, Tesla, and Vanguard MSCI Index International Shares ETF. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has recommended Johnson & Johnson and has recommended the following options: long March 2023 $120 calls on Apple and short March 2023 $130 calls on Apple. The Motley Fool Australia has recommended Alphabet (A shares), Alphabet (C shares), Amazon, Apple, Meta Platforms, Inc., and Vanguard MSCI Index International Shares 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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With ASX investor interest in exchange-traded funds (ETFs) continuing to remain strong, it might be beneficial to take a look at some of the best-performing funds of 2022 thus far.

As most investors would know, this year has been an especially tough one.

Given the S&P/ASX 200 Index (ASX: XJO) has lost about 10.6% over the year to date, ASX 200 index funds would have suffered a similar fate. So let’s take a look at which ASX ETFs have been winners for investors this year.

The 3 best-performing ASX ETFs of 2022 (thus far)

BetaShares Strong U.S. Dollar Fund (ASX: YANK)

This is a rather unique ETF in that it doesn’t cover companies at all. Rather this fund has been designed to give exposure solely to the performance of the US dollar compared to the Aussie dollar. So if the US dollar rises against our own (and our dollar falls), the value of this fund is supposed to rise.

This fund also uses leverage to amplify these movements. So it’s perhaps no surprise that the Strong Dollar ETF has had a cracking year.

This fund has given investors a return of 25.1% year to date, thanks to the rampant greenback that has come to dominate the currency markets this year.

BetaShares Global Energy Companies ETF (ASX: FUEL)

This ETF, as its code so aptly implies, is a fund that tracks a basket of global energy companies. Its primary holdings are the US oil giants Chevron and Exxon Mobil, but also includes Royal Dutch Shell and BP.

As motorists everywhere would be painfully aware, 2022 has seen energy prices explode. This has been detrimental for energy users, but highly lucrative for energy shares like those above. So it’s perhaps no surprise that this ETF has given investors a 32% return over the year to date.

Global X Ultra Short NASDAQ 100 Hedge Fund (ASX: SNAS)

Here we have another rather special ETF. This NASDAQ Hedge Fund is another ETF that uses leverage. But it is also an inverse ETF. This means that it has been engineered to rise in value when the index it tracks falls (and vice versa). In this case, it is the US-based NASDAQ-100 (NASDAQ: NDX).

As it happens, the NASDAQ 100 has had a shocker, falling by a nasty 31.46% on yesterday’s pricing. But investors of this Ultra Short ETF will find that music to their ears. That’s because this fall has enabled an eye-popping 76.3% increase in the value of this fund over 2022 thus far.

The post These are 3 best-performing ASX ETFs so far in 2022 appeared first on The Motley Fool Australia.

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Motley Fool contributor Sebastian Bowen has positions in Chevron. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended BP. 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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This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

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

What happened

Tesla (NASDAQ: TSLA) shares plunged as much as 7.4% Monday morning, dropping to their lowest level in almost 18 months. The move stemmed from two related reasons. As of the market close, the stock had recovered some ground, but was still down 1.49%.

So what

The main cause of today’s pessimism likely came from a pricing move reported by The Wall Street Journal. Tesla is dropping the price of its Model 3 and Model Y vehicles for Chinese customers. That’s not the only news impacting Tesla shares today, but the other item is also about China. 

Investors are concerned the price cut could mean the company is seeing waning demand in the important Chinese market. It comes just as Chinese President Xi Jinping secured a third term and stacked his government with loyalists that are considered less friendly to private companies.

Now what

Chinese tech stocks also dropped sharply today because investors fear policies including lockdowns to control the spread of COVID-19 and tighter regulations on businesses could hurt economic growth in the country. But Tesla investors likely focused more on the pricing move, especially on the heels of comments made by CEO Elon Musk last week. 

Musk said during the EV maker’s third-quarter earnings conference call that China is experiencing “a recession of sorts” related mostly to the property markets. After the company just dropped prices there by 5% and 9% for the Model 3 and Model Y, respectively, investors are wondering if that critical market might actually be faring worse than Musk indicated. 

The new prices will have the Model Y selling for under the equivalent of $40,000 and the Model 3 for about $36,600 to Chinese consumers. It’s a real concern for investors if the company is lowering prices due to slowing demand. Tesla’s plant in Shanghai was recently upgraded and produced a record 83,135 EVs in September. Declining raw material costs could also be what spurred the price drop. Commodity prices have dipped from peak levels recently, and investors might have nothing to worry about if lower costs are the reason. But combined with the concerns about potential future government policies, Tesla stock took a dive.

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

The post Why Tesla stock tanked today appeared first on The Motley Fool Australia.

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Howard Smith has positions in Tesla. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Tesla. 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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