ASX 200 retail shares have had a pretty tough start to the year. Even before the coronavirus pandemic, things were looking pretty bleak.

We’ve seen a continuing trend of insolvency action, with brands like Jeanswest and Kikki.K falling into voluntary administration.

Then the pandemic hit and the situation deteriorated further. ASX 200 retail share prices were hammered as lockdown restrictions were introduced. This crushed bricks and mortar sales as businesses were forced to temporarily close.

But now restrictions are continuing to ease and the economy is emerging from hibernation. Could this mean Aussie retail shares are set to outperform in 2020?

Will ASX 200 retail shares outperform in 2020?

I think the JB Hi-Fi Limited (ASX: JBH) share price could outperform this year. The Aussie electronics retailer has already seen some strong sales as workers moved to a ‘work from home’ model and rushed to stock up on computers, monitors and accessories. This was good news for the ASX 200 retail share but there could be more on the way.

If businesses continue to operate at a reduced capacity, I think this could result in more sales for JB Hi-Fi. Aussie workers may move from temporary work-at-home setups to more permanent home offices. This could mean more spending on equipment and be very good news for retailers like JB.

I also think Harvey Norman Holdings Limited (ASX: HVN) is worth a look. Harvey Norman is a more diversified retailer which means there are more potential earnings streams.

The real question here is whether or not Aussies continue to spend. While many are keen to get back to shopping as soon as possible, the tough economic conditions could definitely impact discretionary spending.

However, if supply chains are maintained and we see government stimulus measures continue, I think the Aussie retail share could outperform this year.

Foolish takeaway

The S&P/ASX 200 Index (ASX: XJO) is down 12.70% this year. Meanwhile JB Hi-Fi shares are up 3% while Harvey Norman shares have fallen 15.72%.

If the economy continues to pick up then I think both of these ASX 200 retail shares could outperform by the end of the year.

More reading

• 1 ASX 200 tech share to buy and hold for a decade
• JobMaker is coming. These 3 ASX 200 shares could benefit
• Why the Vocus share price can race ahead later this month
• Is the BHP share price cheap right now?
• 5 things to watch on the ASX 200 on Wednesday

Motley Fool contributor Ken Hall has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

The post Can ASX 200 retail shares outperform this year? appeared first on Motley Fool Australia.

from Motley Fool Australia https://ift.tt/2XptwEh

If I were starting my investment journey again with my first $500 to invest into ASX shares, I’d pick Future Generation Investment Company Ltd (ASX: FGX).

The problem with investing just $500 is that brokerage can take up a material amount of your starting money. So I’d want to go for an ASX share that I could stay invested in for the long-term.

If you were to begin with a single ASX share like Commonwealth Bank of Australia (ASX: CBA) then your entire investment portfolio would be allocated to just one business. That’s not very good diversification. I’d also want to pick something that can do well if there’s another coronavirus market sell off. 

What if you could pick an investment that could give you good diversification right from the start? I think Future Generation is a good answer.

Why is Future Generation a good ASX share?

It’s a special listed investment company (LIC). The job of a LIC is to invest in other shares on your behalf. Most LICs will charge a management fee (and perhaps a performance fee).

But Future Generation doesn’t charge a management fee. It donates 1% of its net assets each year to youth charities.

What does Future Generation actually invest in? Well, it doesn’t invest in normal ASX shares. It invests in the funds of around 20 fund managers who also work for free. They don’t charge management fees or performance fees.

Each fund is a separate portfolio. So Future Generation’s underlying diversification is very strong. The investments that Future Generation’s managers usually go for are those smaller growth shares, so in normal times it may be able to offer better growth than the ASX index.

One of the fun things with LICs is that sometimes you can buy them for cheaper than their asset value. You can buy the ASX share’s $1 of assets for less than $1. That seems like good value to me. Future Generation has been trading at an attractive discount to its net tangible assets (NTA) in recent times. 

As a bonus, Future Generation currently has a grossed-up dividend yield of 7.3%. I think Future Generation is a good ASX share to start with $500.

More reading

• Got $50,000 to invest for income? Pick these 5 ASX dividend shares
• How to make $1,000 a month in dividends
• How to build good wealth with small investments
• Why high yield dividend shares can be detrimental to your wealth
• 2 ASX shares to build a diversified dividend portfolio

Motley Fool contributor Tristan Harrison owns shares of FUTURE GEN FPO. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

The post How I’d invest my first $500 into ASX shares appeared first on Motley Fool Australia.

from Motley Fool Australia https://ift.tt/2U3vpEI