Author: therawinformant

Commonwealth Bank of Australia (ASX: CBA) has been fined $150,000 for breaching responsible lending laws.

The Federal Court this month found the bank violated the National Consumer Credit Protection Act 2009 in a case involving a customer that self-reported as a problem gambler.

An Australian Securities and Investments Commission (ASIC) investigation revealed that the customer regularly took cash advances out of his three CBA credit cards to feed his gambling habits.

Once the habit was identified as a problem, the three cards were consolidated into one.

But in a later phone call, a CBA staff member told him the bank had conditionally granted a credit limit increase.

“I do not really understand why they’ve offered me that considering they know, clearly see that I use it for gambling and stuff like that,” the customer said during that October 2016 call.

“I think that it’s pretty bad of them to offer me that when I clearly have a gambling problem.”

The court took that conversation as notification from the customer to CBA that he had a problem that needed to be fixed before any credit limits should be allowed.

However, the bank failed to formally record the notification and the information did not flow to its credit analysis systems. 

Customer breaks down with depression and anxiety

Two further credit limit increase offers came to the customer within a few weeks of that conversation with pre-filled forms. 

The customer succumbed to the increases in January 2017 and continued to “max out” the card for gambling purposes.

The customer, who worked as a roofer, started working 6 to 7 days a week to try to pay off his debts. He became physically and mentally exhausted, being prescribed sleeping tablets and suffering from depression and anxiety.

Even at this point, Justice Bernard Murphy said CBA was still unresponsive to the customer’s issues.

“In approximately August 2017 a CBA staff member called Mr Harris to ask why he was not making repayments. In that telephone call Mr Harris raised a complaint with CBA including by referring to the Problem Gambler Notification,” read the judgment.

“He pointed out that even after that notification CBA had continued to offer him credit limit increases. After about three weeks Mr Harris had still not heard anything from CBA in relation to this complaint. That led him to lodge a second complaint with CBA by telephone.”

CBA admits fault

CBA admitted in court that the breaches were caused by “inadequate systems and processes in respect of problem gambler notification”.

The bank has since negotiated hardship arrangements with the customer. CBA has also set up measures to address problem gambling and help customers manage their credit card expenses.

The $150,000 fine was calculated with the bank’s cooperation with ASIC and its admissions in court in mind.

The Motley Fool has contacted CBA for comment.

More reading

• Takeover talks puts AMP (ASX:AMP) share price in focus
• Down 4% in 10 days: Is it time to buy ASX 200 shares?
• Tesla (NASDAQ:TSLA), Fastly (NYSE:FSLY) among most popular US shares last week
• Hayne Commission continues to haunt the Big Four banks
• AMP (ASX:AMP) asset sales part of wealth sector transformation

Motley Fool contributor Tony Yoo 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.

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The Bigtincan Holdings Ltd (ASX: BTH) share price is sinking lower on Friday following the release of its first quarter update.

At the time of writing, the AI-powered sales enablement automation platform provider’s shares are down 1% to $1.23.

How did Bigtincan perform in the first quarter?

Bigtincan had a soft first quarter but delivered a result in line with its own expectations.

For the three months ended 30 September, the company recorded customer cash receipts of $4.5 million. This was down 15% on the prior corresponding period. It also included government grants of $0.5 million, up from $0.1 million a year earlier.

No explanation was given for the decline in cash receipts compared to the prior corresponding period. Furthermore, management advised that it saw no impact on payment terms from enterprise customers, nor did it have extended potential bad debt exposure.

Also rising compared to the prior corresponding period was Bigtincan’s cash costs. They came in at $11.5 million for the quarter, which was up over 35% from the first quarter of FY 2020.

Nevertheless, the company finished the period with a very strong balance sheet. Its cash and cash equivalents stood at $63 million at the end of September. Management believes this leaves it well-placed to execute its growth plans.

Outlook.

Bigtincan remains on track to meet the market guidance it provided with its FY 2020 full year results.

This is for annualised recurring revenue of $49 million to $53 million and revenue of $41 million to $44 million with stable retention.

In addition, management notes that the International Data Corporation (IDC) Worldwide Digital Transformation Spending Guide shows that the digital transformation of business practices, products, and organisations is predicted to continue at a solid pace. This is despite challenges presented by the COVID-19 pandemic.

It commented: “This focus on digitization and Bigtincan’s unique strength in mobility, provides the Company with opportunities for tailwinds going into FY21. Bigtincan’s ability to address counter-cyclical market sectors (life sciences, technology, telecommunications), was demonstrated over the past quarters, with new customers and expansions in Technology, Financial Services and Life Sciences.”

More reading

• 5 ASX tech shares that could be the next WAAAX stocks
• Looking for the next big thing? Check out these exciting ASX tech shares
• Bigtincan (ASX:BTH) share price edges higher following acquisition
• Why ARB, Accent, Bigtincan, & Transurban shares are dropping lower today
• Why all eyes will be on the Bigtincan (ASX:BTH) share price on Thursday

James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. recommends BIGTINCAN FPO. The Motley Fool Australia owns shares of and has recommended BIGTINCAN FPO. 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.

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It isn’t just Sezzle Inc (ASX: SZL) releasing its third quarter update this morning.

The Splitit Ltd (ASX: SPT) share price is on the move today following the release of its own third quarter update.

At the time of writing, the buy now pay later provider’s shares are up 1% to $1.47.

How did Splitit perform in the third quarter?

Like Sezzle, Splitit delivered strong growth in the third quarter of FY 2020.

According to the release, its Merchant Sales Volume (MSV) grew 214% year on year to US$70.9 million. This led to gross revenue of US$2.4 million, which was up 318% on the prior corresponding period.

Splitit’s CEO, Brad Paterson, commented: “Our high-growth trajectory continued strongly in Q3, with MSV and Revenue growing at particularly impressive rates. This growth was driven by our focus on innovation and a frictionless customer experience, which is helping us stand out from other solutions that offer new finance. This, along with our world class instalment product, overcomes the single largest challenge for e-commerce merchants of reducing shopping cart abandonment rates.”

Outlook.

Management notes that its self-onboarding is now live in the US, enabling merchant acquisition at scale. It also added over US$3 billion in addressable online merchant sales during the third quarter via new major brands. Both should be a boost to its growth in the fourth quarter.

As should its expansion into the professional services vertical in the US and Australia via its QuickFee Ltd (ASX: QFE) partnership and its new pilot with payments giant Visa.

The latter sees Splitit launching the first phase of its integration with the Visa Instalment API in time for the US holiday shopping season. Through the pilot, the Splitit platform will enable card issuers enrolled in the Visa Instalment Program to provide instalments for their cardholders.

Mr Paterson said: “With the continued support of shareholders via our recent financing, we are investing in our go-to-market strategies and expect these and our global partnerships with Visa and Mastercard to drive further growth in our business.”

“We recently launched Flex Fields, a new innovation from our team, to further tackle the cart abandonment challenge. We are also seeing the results of self onboarding beginning to drive up merchant numbers, which have already doubled compared to this time last year. Q4 is off to a fast start, and we’re excited to see the momentum continue as we close out the year,” he added.

More reading

• Sezzle (ASX:SZL) share price charges higher on Q3 update
• How did ASX buy now, pay later shares perform in the latest quarter? 
• PayPal to offer bitcoin, cryptocurrency payments
• The best ASX shares to buy during a market crash
• The Zip (ASX:Z1P) share price soars as Citigroup says 1Q update to surprise

James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. recommends Sezzle Inc. The Motley Fool Australia owns shares of AFTERPAY T FPO. The Motley Fool Australia has recommended Sezzle Inc. 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.

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The Sezzle Inc (ASX: SZL) share price is on course to end the week with a bang.

In morning trade the buy now pay later provider’s shares are up 3% to $7.12.

Why is the Sezzle share price shooting higher today?

Investors have been buying Sezzle’s shares following the release of its third quarter update this morning.

Like rivals Afterpay Limited (ASX: APT) and Zip Co Limited (ASX: Z1P), Sezzle has continued its strong growth during the recent quarter.

For the three months ended 30 September, the company reported a 231.5% increase in underlying merchant sales (UMS) to US$228.2 million. This was also up 21.4% quarter on quarter.

And based on its UMS for the month of September, the company achieved an annualised UMS run-rate of US$986 million. This means Sezzle almost achieved its annualised run-rate goal of US$1 billion a quarter earlier than planned.

Also growing strongly was its merchant fees, which rose 260.6% year on year to US$13 million. This represents 5.7% of UMS, an improvement of 46 basis points since this time last year.

Pleasingly, the trend of lower year on year net transaction losses as a percentage of UMS continued in the third quarter.

What were the drivers of its growth?

Sezzle’s growth was driven by a combination of merchant growth, customer growth, and increasing repeat usage.

The company added 4,778 active merchants to its platform, bringing its total to 20,890. This was an increase of 178% over the prior corresponding period.

Sezzle’s active consumers hit 1,792,681 at the end of September. This was an increase of 21.5% since 30 June and 178.1% year on year.

Finally, active consumer repeat usage increased to 89%, which was the 21st consecutive month of improvement in this metric.

Sezzle’s CFO, Karen Hartje, commented: “Our strong balance sheet position at 30 September allows us to pursue our growth strategies and weather the protracted effects of COVID-19. We also continue to see COVID-19 hardship requests decline to negligible levels. The combination of lower hardship requests and the continued improvement in our Active Consumer Repeat Usage rate have played key roles in keeping our loss rates at relatively low levels.”

Outlook.

Pleasingly, the company’s Executive Chairman and CEO, Charlie Youakim, revealed that the fourth quarter has started strongly.

He commented: “We are extremely proud of our team and what they have accomplished in 2020, but we are not done. Our product initiatives and merchant pipeline have never been better and the current quarter has gotten off to a solid start.”

“We believe we are well-positioned, as we head into our strongest seasonal months of November and December,” he concluded.

More reading

• 5 things to watch on the ASX 200 on Friday
• Are ASX retail investors ‘dumb money’?
• Down 4% in 10 days: Is it time to buy ASX 200 shares?
• Here’s what this broker thought of the Afterpay (ASX:APT) Q1 update
• Today was mixed for the ASX 200, ending 0.1% higher

James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. recommends Sezzle Inc. The Motley Fool Australia owns shares of AFTERPAY T FPO. The Motley Fool Australia has recommended Sezzle Inc. 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.

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The AMP Limited (ASX: AMP) share price could be set to rocket higher this morning on takeover reports.

Management confirmed that Ares Management Corp Class A (NYSE: ARES) lobbed a bid to the entire embattled wealth manager.

But shareholders (including myself) will need to pinch ourselves to stop from getting too excited. The takeover proposal is indicative and non-binding.

Further, AMP didn’t disclose how much Ares may be willing to pay.

AMP share price in M&A spotlight

However, I know it’s a decent offer as management is engaging with the suitor, even though AMP said these negotiations are “very preliminary”.

Is AMP trying to set expectations low? The Australian Financial Review reported that things may not be so preliminary as AMP is allowing the bidder to look under the hood as part of the due diligence process.

The article even described both parties to be in “advanced talks” and highlighted the interconnections between senior management at AMP and Ares. It seems that many were ex-colleagues from Swiss investment house Credit Suisse.

Better to be sold than fixed?

This doesn’t mean a deal is guaranteed, of course. But it certainly would be seen to improve the probability of a deal being consummated.

Even so, AMP is quick to point out that it’s received “significant interest” from other parties for all or parts of its business.

The scandal-plagued AMP is undertaking a portfolio review as it tries to restructure the business. It recently sold its life insurance arm and experts believe it will need to shrink to greatness if it has any hope of restoring its former glory someday.

AMP share price is far from heyday

The AMP share price collapsed by nearly 80% over the past five years when the S&P/ASX 200 Index (Index:^AXJO) jumped close to 16%.

Others in the sector are also faring better. The Perpetual Limited (ASX: PPT) share price “only” shed 38% while the Magellan Financial Group Ltd (ASX: MFG) share price surged 155% over the period.

Foolish takeaway

The AMP share price takeover approach shouldn’t surprise readers on this site. It was only two-days ago that I wrote about potential suitors running the ruler over the group.

I suspect we will be seeing more takeovers and asset sales over the coming months too. Other possible candidates include the struggling Boral Limited (ASX: BLD) share price and Suncorp Group Ltd (ASX: SUN) share price.

More reading

• Takeover talks puts AMP (ASX:AMP) share price in focus
• 5 things to watch on the ASX 200 on Friday
• Buy these 3 ASX stocks that hit a 52-week low during this market meltdown
• Why the Mesoblast (ASX:MSB) share price gained today as the ASX 200 fell
• Down 4% in 10 days: Is it time to buy ASX 200 shares?

Brendon Lau owns shares of AMP Limited. Connect with me on Twitter @brenlau.

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After being circled by funds for 6 weeks since it put up the “for sale” sign, a private equity firm is confirmed to be in talks to buy AMP Ltd (ASX: AMP). US private equity firm, Ares Management, appears to have access to a data room for due diligence. This is a very strong signal that the board is willing to sell, after a 77.6% slide in the AMP share price over the past 5 years. 

AMP consists of a bank, the financial planning business, and the AMP Capital funds management division. According to its website it has approximately $189.8 billion in assets under management (AUM). Its current market cap is $4.4 billion.

Could AMP see a bidding war?

The Australian Financial Review believes the US fund is preparing an offer north of $5 billion. Nonetheless, AMP appears to have many other suitors. 

This comes amidst a tumultuous time for the wealth industry in Australia. The Hayne Royal Commission set this in motion after it brutally dissected the “fee for no service” scandal, ultimately leaving all four big banks determined to retreat from wealth management. 

For instance, last week US equity firm Kohlberg Kravis Roberts (KKR) was believed to be working on a buyout proposal. This was after earlier abandoning an approach for AMP Capital. In addition, KKR is currently completing a 55% buyout of First Colonial, the wealth arm of the Commonwealth Bank of Australia (ASX: CBA). 

Others mentioned in relation to the real estate portfolio include Vicinity Centres (ASX: VCX) and Lendlease Group (ASX: LLC). There may still be others in the background yet to declare an interest.

Of all the banks, Commissioner Hayne was particularly scathing of AMP and its workplace culture, contributing to the decline of the AMP share price, until a sexual harassment scandal finally forced a reckoning.

About a month later, it had a new chair and launched a review of its business through two investment banks.

Foolish takeaway

The AMP share price will be in focus once trading starts to see what investors make of this. To date, the wealth manager has been silent on news of the talks.

Nonetheless, AMP has over $149 billion in assets under management. The quality of the AMP assets, either individually or together, has generated a lot of interest. So too has the low AMP share price, and the willingness to sell all or part of the business. What happens next is anyone’s guess.

More reading

• Down 4% in 10 days: Is it time to buy ASX 200 shares?
• Tesla (NASDAQ:TSLA), Fastly (NYSE:FSLY) among most popular US shares last week
• Hayne Commission continues to haunt the Big Four banks
• These beaten-up shares are about to pick up: Moody’s
• These could be the next ASX stocks to unlock value by selling assets

Motley Fool contributor Daryl Mather 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.

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The ResMed Inc (ASX: RMD) share price could be a positive performer on Friday after it released a first quarter update which beat expectations.

How did ResMed perform in the first quarter?

During the first quarter of FY 2021, ResMed reported a 10% increase in revenue to US$751.9 million. This compares to the market consensus estimate of US$709.47 million.

And thanks to widening margins due to a favourable product mix changes and foreign exchange rates, ResMed’s operating profit grew even quicker at 27% to US$216.9 million. During the first quarter, ResMed’s product mix comprised 50% device revenue, 38% masks revenue, and 12% SaaS revenue.

On the bottom line, ResMed’s net income grew by 48% to US$178.4 million. Though, this was largely attributable to the impact of legal settlement expenses in the prior year.

On a non-GAAP basis, net income grew by 37% to US$185.4 million and earnings per share also grew 37% to US$1.27. The latter was ahead of expectations, with the market consensus at US$1.03 per share.

What were the drivers of its growth?

ResMed’s CEO, Mick Farrell, revealed that the company has been benefiting from increased demand for ventilators due to the pandemic.

He commented: “Our first quarter results reflect solid performance and positive trends across our business. During the quarter, we continued to support the global COVID-19 pandemic response, providing ventilators, masks, and circuits to countries in need around the world.”

But the company’s core sleep treatment business was also performing well, despite the challenges it faces from the COVID crisis.

Mr Farrell explained: “In our core markets of sleep apnea, COPD and asthma, we are encouraged by the sequential improvement in new patient volume, as well as the ongoing strong adoption of our mask and accessories resupply programs.”

“We have accelerated the launch of digital health solutions to help clinicians remotely diagnose, treat, and manage patients during the pandemic and beyond. Our global team is effectively managing SG&A expenses, while investing in broad-based R&D programs to help accelerate our ResMed 2025 growth strategy: improving 250 million lives in out-of-hospital healthcare in 2025,” he added.

How did ResMed perform in different regions?

ResMed’s revenue in the U.S., Canada, and Latin America, excluding Software as a Service, increased by 9% over the prior corresponding period. This was driven by strong sales across its mask product portfolio and increased demand for ventilators due to COVID-19. It was partially offset by a decrease in demand for sleep devices.

Revenue from Europe, Asia, and other markets grew by 10% on a constant currency basis. Management advised that this was primarily driven by sales across its device and mask product portfolio. This includes increased demand for ventilators due to COVID-19.

Finally, its Software as a Service revenue increased by 6% due to continued growth in resupply service offerings and stabilising patient flow in out-of-hospital care settings.

More reading

• 5 things to watch on the ASX 200 on Friday
• Why Resmed, Coles, Afterpay and one other have made early share price gains
• Why these 7 ASX 200 shares received broker upgrades this week
• The ASX healthcare shares I would buy and hold until at least 2030
• Leading brokers name 3 ASX shares to sell today

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia has recommended ResMed Inc. 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.

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For me, building products business Brickworks Limited (ASX: BKW) is a high-conviction buy right now.

The Brickworks share price has drifted lower by 13.5% since 9 October 2020. I don’t think investors need to be negative about the business though. If anything, the outlook has been improving for the company in recent weeks.

The improving construction outlook

In terms of COVID-19, Australia is in one of the best positions in the world. There is hardly any community spread in the whole country. That helps the economy run much closer to normal.

Don’t get me wrong, the country isn’t totally back to normal. Many Aussies are still doing it tough. There are still hard borders between states. No international tourism is happening right now. But Victoria’s economy is finally opening up.

Australian house prices are rising again. I think this is likely to help the construction sector considerably. Ultra-low interest rates and easier lending make it more likely that the entire property market bounces back.

Brickworks is seeing growth for its order book and this will help drive profits higher in FY21. It has a number of quality brands that could see improving profits over the coming months.

Brickworks’ exciting industrial property trust plans

One of the key reasons why I think the Brickworks share price is a buy today is due to its industrial property trust that it owns 50% of, along with Goodman Group (ASX: GMG).

At the end of FY20, the Brickworks share of the trust was valued at $727 million, which was a 15% increase from the $633 million value from FY19.

The existing portfolio of properties is good industrial real estate, like warehouses. There are two warehouse projects that I’m particularly excited about.

It recently secured a lease pre-commitment for 20 years with Amazon at the property trust’s Oakdale West Estate in Sydney. The other major commitment is with Coles Group Ltd (ASX: COL). These high-tech distribution warehouses give Brickworks good exposure to high-quality tenants that want the best logistics they can buy. These warehouses are expected to increase the value of the trust as well as deliver more rental income.

After those two facilities are completed, the gross assets held within the various joint venture trust assets across Sydney and Brisbane is expected to exceed $3 billion.

The long-term growth of its major investment

Brickworks owns around 40% of investment house Washington H. Soul Pattinson and Co. Ltd (ASX: SOL). Brickworks has been a shareholder for decades and this investment continues to deliver growing dividends for Brickworks.

As regular readers would know, Soul Patts is one of my preferred ASX share investments. The fact that Brickworks owns such a large amount of it is really attractive and makes Brickworks much more defensive in my opinion.

Soul Patts’ own portfolio continues to diversify over the years, which makes it even less risky for Brickworks.

The investment conglomerate has grown its dividend every year for the past 20 years.

Brickworks’ dividend

In this era of COVID-19, any business that can display reliable dividend qualities is attractive. Brickworks hasn’t cut its dividend for over 40 years. I think that’s a great record of reliability.

At the current Brickworks share price it offers a grossed-up dividend yield of 4.8%. That’s a solid starting yield in this era of ultra-low interest rates.

Foolish takeaway

At the current Brickworks share price it’s trading at under 17x FY21’s estimated earnings. I think that’s a very reasonable valuation, with the completion of the two new distribution centres not too far away. I’d be very happy to buy Brickworks shares today, whether the market falls further or rises from here.

More reading

• Why market crashes are useful for buying ASX dividend shares
• 2 Warren Buffett ASX dividend shares to buy in November
• Why it makes sense to invest in ASX shares
• 2 Warren Buffett ASX shares to buy right now
• 3 must-have ASX income shares for your portfolio

Motley Fool contributor Tristan Harrison owns shares of Washington H. Soul Pattinson and Company Limited. The Motley Fool Australia owns shares of and has recommended Brickworks and Washington H. Soul Pattinson and Company Limited. The Motley Fool Australia owns shares of COLESGROUP DEF SET. 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.

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I think that the current market dip is the perfect time to buy some forever shares for your portfolio.

The S&P/ASX 200 Index (ASX: XJO) fell by around 1.6% yesterday and that means lower prices for many of the ASX’s best businesses.

If I get the opportunity to buy a great investment at a cheaper price, I’ll take the market up on that. Not every business is a buy during a market selloff.

But I think these two forever ASX shares could be worth buying during this market volatility:

Washington H. Soul Pattinson and Co. Ltd (ASX: SOL)

Soul Patts is an investment conglomerate that has been listed since 1903. It’s one of the oldest businesses on the ASX. It has already proved to be a forever share because it has lasted more than a century.

I think it’s one the best businesses on the ASX. It may not have ultra-high profit margins like a tech share. It doesn’t seem to have the type of fast global growth aspirations that Afterpay Ltd (ASX: APT) has. But it’s consistently generating solid results.

When Soul Patts reported its FY20 result for the period to 31 July 2020, it was able to report that its average total shareholder return (TSR) was 5.1% per annum better over five years and 5.2% better per annum over the previous 20 years.

It has a diversified portfolio of listed and unlisted businesses that ranges from telco giant TPG Telecom Ltd (ASX: TPG) to swimming schools. It owns large stakes in other ASX businesses like Brickworks Limited (ASX: BKW) and Australian Pharmaceutical Industries Ltd (ASX: API).

I think Soul Patts is a forever ASX share because the investment house is regularly adding to its portfolio. For example, in FY20 it invested $127.7 million into the agricultural sector at a time of a difficult drought. I think that was the perfect example of how Soul Patts likes to invest with a contrarian style.

The Soul Patts share price has fallen around 5% since 19 October 2020.

Betashares Global Quality Leaders ETF (ASX: QLTY)

Quality businesses can perform well in both good times and bad, in my opinion. That means the share prices and returns of quality businesses can also give more downside protection.

This exchange-traded fund (ETF) is invested in global businesses which rank well on return on equity (ROE), debt to capital, cashflow generation and earnings stability. These are well run businesses that generate good annual profits for shareholders, they don’t have risky balance sheets and are consistently profitable.

What businesses count among the highest quality in the world? Here are the biggest 10 holdings in the portfolio (out of 150): Keyence, Nike, Texas Instruments, Nvidia, UnitedHealth, Novo Nordisk, Facebook, Intuit, Alphabet and L’Oreal.

The above list is certainly high-quality. And the holdings will keep changing as newer businesses build a reputation for quality. I think it’s a forever share because of that constantly-evolving portfolio.

It’s a pretty cheap ETF with a management fee of just 0.35% per annum. That helps keep the net returns stay strong. The returns have been strong in the short-term and since inception. Over the past year the Betashares Global Quality Leaders ETF has delivered a net return of 17.8% per annum. Since inception in November 2018, the ETF has delivered net returns per annum of 19.6%.

The global nature of this portfolio means that it can be invested anywhere in the world. It has investments from countries like Finland, Spain, France and Denmark. I think it’s the type of ETF you could hold for a very long time.

More reading

• Why market crashes are useful for buying ASX dividend shares
• 2 Warren Buffett ASX dividend shares to buy in November
• I’d buy these 2 ETFs for dividends and growth
• 3 important rules to help you build wealth
• Why you should pay attention when management buy (or sell) ASX shares

Motley Fool contributor Tristan Harrison owns shares of Washington H. Soul Pattinson and Company Limited. The Motley Fool Australia owns shares of and has recommended Brickworks and Washington H. Soul Pattinson and Company Limited. The Motley Fool Australia owns shares of AFTERPAY T FPO. 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.

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While the market volatility this week has been disappointing, every cloud has a silver lining.

The silver lining in this selloff is the pullback in the share prices of some quality growth shares.

Three ASX growth shares that I would buy after the selloff are listed below:

Altium Limited (ASX: ALU)

The Altium share price is now trading approximately 12% lower than its 52-week high. I think this could make it a good time to buy the electronic design software platform provider’s shares. Especially given its outstanding long term growth potential thanks to its exposure to the rapidly growing Internet of Things and AI markets. These are driving strong demand for its Altium Designer software and also its other businesses such as Octopart and NEXUS.

Appen Ltd (ASX: APX)

Another growth share to buy is this leading developer of high-quality, human-annotated training data for machine learning and artificial intelligence. The Appen share price is currently trading 23% lower than its 52-week high. And while this means it is still trading at a premium to the market average, I believe it is great value considering its growth potential. I’m confident Appen can grow its earnings at a strong rate over the 2020s thanks to its leadership position in a market growing very quickly.

Xero Limited (ASX: XRO)

A final growth share to buy is this cloud-based business and accounting software provider. The Xero share price hasn’t fallen back as much as the rest from its 52-week high. However, a 7% discount to what some investors were willing to pay less than a couple of weeks ago seems like a good deal to me. Especially if you’re planning to make a buy and hold investment. Due to the quality of its platform, its stickiness, and its successful evolution into a full-service small business solution, I believe Xero is well-placed for solid growth over the next decade.

More reading

• Down 4% in 10 days: Is it time to buy ASX 200 shares?
• Why market crashes are useful for buying ASX dividend shares
• These ASX growth shares could be long-term market beaters
• Where to invest $20,000 into ASX shares right now
• 3 quality ASX growth shares to buy in November

James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and recommends Altium. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of CSL Ltd., PUSHPAY FPO NZX, and Xero. The Motley Fool Australia owns shares of and has recommended A2 Milk and Bravura Solutions Ltd. The Motley Fool Australia owns shares of AFTERPAY T FPO and Appen Ltd. The Motley Fool Australia has recommended PUSHPAY FPO NZX and ResMed Inc. 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.

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