Category: Stock Market

It certainly has been a great year for Iperionx Ltd (ASX: IPX) shares.

Since the start of 2023, the ASX titanium stock has rocketed 44% higher.

What is Iperionx?

IperionX’s is aiming to be the leading developer of low carbon titanium for advanced industries including space, aerospace, electric vehicles and 3D printing.

The company holds an exclusive option to acquire breakthrough titanium technologies that can produce titanium products that are low carbon and fully circular.

This includes producing titanium metal powders from titanium scrap at its operational pilot facility in Utah, United States.

In addition, it intends to scale production at a Titanium Demonstration Facility in Virginia and holds a 100% interest in the critical minerals Titan Project. The latter has the largest JORC resource of titanium, rare earth, and zircon rich mineral sands in the United States.

Clearly a lot to get excited about!

Can this ASX titanium stock keep rising?

While it is impossible to say whether this ASX titanium stock can keep rising after its heroics so far in 2023, the company’s chair, Todd Hannigan, appears to believe it can.

That’s because, according to a change of director’s interest notice, he recently picked up a total of 847,970 ordinary shares through an on-market trade. This came at a cost of $842,269, so clearly he means business.

It is worth noting that insider buying is often seen as a bullish indicator as few people know a company better than their management team or board of directors.

So, for its chair to put that amount of money into this ASX titanium stock, it would seem that he believed he was buying shares at a discount.

Time will tell if that is the case.

The post This ASX titanium stock is up 44% in 2023, and the chair just bought $800,000 worth of shares! appeared first on The Motley Fool Australia.

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More reading

• NextDC share price halted amid $618 million cap raise
• Why are Allkem shares rocketing 14% higher today?
• What might the Allkem mega merger mean for Pilbara Minerals shares?
• Why is the Westpac share price sinking today?
• Here are 2 outstanding ASX 200 growth shares brokers rate as buys

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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S&P/ASX 200 Index (ASX: XJO) lithium share Pilbara Minerals Ltd (ASX: PLS) is rocketing amid news peer Allkem Ltd (ASX: AKE) is to merge with Livent Corp (NYSE: LTHM), creating a $15.7 billion monolith.

Right now, stock in Pilbara Minerals is up 7.25%, trading at $4.88 a share.

At the same time, the Allkem share price is soaring 14.37% to $14.765 while Livent shares leapt 5% overnight to close at US$25.50 apiece.

No doubt, some market watchers are wondering what the merger news could mean for Pilbara Minerals.

What might Allkem’s merger mean for Pilbara Minerals shares?

Allkem has hit headlines overnight with a merger plan that would make Pilbara Minerals the second largest pure-play lithium share on the ASX.

Pilbara Minerals’ $13.6 billion market capitalisation would be dwarfed by that of the entity born from Allkem and Livent. But that’s likely the only direct implication the ASX 200 favourite might expect from the merger of its peers.

Still, the news might have left some Pilbara Minerals investors wondering if the lithium giant could kick off its own merger and acquisition (M&A) campaign.

Well, unfortunately for M&A fans, management shut down hopes of any such activity in the near future. Speaking on the release of the company’s latest quarterly report, CEO and managing director Dale Henderson said:

We’ve got a very full plate delivering on our organic growth strategy … that remains the focus and M&A is well down the list.

But that’s not to say a suitor won’t come knocking for Pilbara Minerals.

Could the ASX 200 lithium stock be a takeover target?

Morgans tipped Pilbara Minerals as a potential takeover target last month after industry giant Albemarle approached the ASX’s Liontown Resources Ltd (ASX: LTR), as my Fool colleague James reported.

Interestingly, the broker foresaw Allkem’s M&A news, saying:

We see both [Allkem] and [Pilbara Minerals] as potential targets in addition to the ongoing interest in [Liontown]. The relative attractiveness of each depends on the needs of the buyer. 

Morgans noted that Allkem was priced cheaper on some measures, but offered less spodumene.

Meanwhile, Pilbara Minerals was said to offer faster exposure to lithium, but a smaller resource base and was more expensive per tonne of lithium carbonate equivalent. Morgans continued last month:

[Pilbara Minerals’] size would restrict interest to larger mining houses, international chemicals companies, battery producers or OEMs.

The broker has an add rating and a $5 price target on Pilbara Minerals shares.

On the other hand, Goldman Sachs doesn’t expect a suitor to knock on the lithium producer’s door. The broker has a neutral rating and a $4.10 price target on Pilbara Minerals shares.

The post What might the Allkem mega merger mean for Pilbara Minerals shares? appeared first on The Motley Fool Australia.

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More reading

• Here are the 3 most heavily traded ASX 200 shares on Wednesday
• The 3 best lithium and rare earths ASX shares to buy right now
• Here are the top 10 ASX 200 shares today
• Here are the 3 most heavily traded ASX 200 shares on Tuesday
• Why Arafura Rare Earths, Imugene, Pilbara Minerals, and Worley are charging higher

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 NextDc Ltd (ASX: NXT) share price is frozen today at $11.78 at the company’s request.

The S&P/ASX 200 Index (ASX: XJO) tech share has been a strong outperformer in 2023. As you can see in the chart below, the NextDC share price is up 31% year to date.

The NextDC share price freeze will lift on Monday after management announces the outcome of the institutional component of an accelerated entitlement offer.

What’s all that about?

Read on.

Why is the ASX 200 tech company raising $618 million?

This morning NextDC reported it will develop two new data centres as part of its regional expansion strategy.

The centres will be constructed on recently acquired commercial property sites in Kuala Lumpur, Malaysia and Auckland, New Zealand.

The new projects, alongside an accelerated fit out at its S3 centre, will be funded by a $618 million fully underwritten 1 for 8 pro-rata accelerated non-renounceable entitlement offer.

The offer prices of $10.80 per share represents a discount of just over 8% from the current NextDC share price.

This led NextDC to also update its FY23 guidance. The new forecast is for:

• Data centre services revenue in the range of $350 million to $360 million (previously the upper end of the $340 million to $355 million range)
• Underlying earnings before interest, taxes, depreciation and amortisation (EBITDA) in the range of $192 million to $196 million (previous range: $190 million to $198 million)
• Capital expenditure in the range of $670 million to $720 million (previous range: $620 million to $670 million)

Commenting on the new developments that could offer the NextDC share price some tailwinds in the year ahead, CEO Craig Scroggie said, “Building upon the success we have achieved in Australia over the past decade, we aim to replicate our proven business model in these new markets.”

Hinting at further growth plans, Scroggie added, “New Zealand and Malaysia are just the first greenfield geographic expansion opportunities outside of Australia.”

NextDC share price snapshot

The NextDC share price is up 15% over the past full year. Longer-term the ASX 200 tech share has gained 57% over five years.

The post NextDC share price halted amid $618 million cap raise appeared first on The Motley Fool Australia.

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More reading

• Goldman Sachs just added this ASX All Ords tech share to its conviction list
• These are the 10 most shorted ASX shares this week
• Top brokers name 3 ASX shares to buy next week
• Brokers are raving about this ASX 200 tech share benefiting from ChatGPT’s rise
• Brokers name 3 ASX shares to buy now

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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Allkem Ltd (ASX: AKE) shares are shooting higher on Thursday morning.

At the time of writing, the lithium miner’s shares are up 14% to $14.76.

This means the Allkem share price is now up 30% since this time last year, as you can see on the chart below.

Why is the Allkem share price shooting higher?

Investors have been scrambling to buy Allkem shares today after it announced an agreement to merge with lithium giant Livent Corp (NYSE: LTHM).

Allkem, which is no stranger to mergers, will combine with Livent in an all-stock merger of equals. This will create a US$10.6 billion (A$15.7 billion) leading global lithium chemicals producer.

And while there are still quite a few hurdles to jump through, if all goes to plan, the company expects the transaction to close by the end of 2023.

If it does, it will see “NewCo” listed on the NYSE with a secondary listing on the ASX. Allkem shareholders will own approximately 56% and Livent shareholders will own the balance.

Reaction

Wall Street responded positively overnight, driving the Livent share price over 5% higher to US$25.50.

This equates to A$36.95 at current exchange rates. So, with an agreed exchange ratio of 2.406 NewCo shares per Livent share (and Allkem shareholders getting one NewCo share per share), this values the Allkem share price at A$15.63. Which explains why Allkem shares are shooting higher today.

Investors appear excited by the prospect of the two companies joining forces for a number of reasons. This includes its proposed vertically integrated business model with the scale and expertise to meet the rapidly growing demand for lithium chemical products.

In addition, NewCo’s run-rate operating cost synergies are estimated to be approximately US$125 million (pre-tax) per annum. It also expects to realise approximately US$200 million in one-time capital expenditure savings. That’s US$325 million in value creation just there!

All in all, the way Allkem shares are performing today appears to indicate that the market agrees with the company’s CEO, Martín Pérez de Solay, when he says:

I believe Allkem shareholders will realize significant benefits from the Transaction as the business transforms into a truly global player with listings in the US and Australia.

The post Why are Allkem shares rocketing 14% higher today? appeared first on The Motley Fool Australia.

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More reading

• 5 things to watch on the ASX 200 on Thursday
• Allkem share price on watch amid $15.7b mega lithium merger with Livent
• Here are the top 10 ASX 200 shares today
• What’s with ASX 200 lithium stocks today?
• Add these ASX growth stocks to your portfolio today: analysts

Motley Fool contributor James Mickleboro has positions in Allkem. 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 Westpac Banking Corp (ASX: WBC) share price is taking another tumble on Thursday morning.

At the time of writing, the banking giant’s shares are down 3.5% to $20.92.

This means the Westpac share price is now down 7% since the start of the month.

However, this decline is a bit different to the others. This decline is, in many respects, actually something positive for shareholders.

Why is the Westpac share price falling?

The weakness in the Westpac share price on Thursday is due to the bank’s shares going ex-dividend for its upcoming dividend payment.

Earlier this week, Australia’s oldest bank released its half-year results and reported a 22% increase in profit to $4 billion. This was underpinned by a combination of solid net interest income growth and lower expenses.

In response to this profit growth, the Westpac board elected to declare a 70 cents per share fully franked interim dividend. This was a sizeable 15% increase year over year, much to the delight of shareholders.

Well, at yesterday’s market close the rights to that dividend payment were locked in. This means that anyone buying Westpac shares today won’t be entitled to receive this payout. The rights will instead stay with the seller.

And given how the cash funding the dividend is part of the valuation of a company, a company’s share price will usually drop in line with the payout to reflect this. After all, new buyers don’t want to pay for something that they won’t receive.

What’s next?

Firstly, eligible shareholders can look forward to receiving this fully franked 70 cents per share dividend towards the end of next month on 27 June.

After which, if Goldman Sachs is on the money with its estimates, they can also look forward to another fully franked 70 cents per share dividend with its full-year results later this year.

This will mean a full-year dividend of $1.40 per share, which based on the Westpac share price at yesterday’s close, equates to a generous fully franked 6.45% yield.

The post Why is the Westpac share price sinking today? appeared first on The Motley Fool Australia.

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More reading

• 5 things to watch on the ASX 200 on Thursday
• Top brokers name 3 ASX shares to buy today
• Hoping to bag the boosted Westpac dividend? You’ll need to buy shares today
• The Westpac share price could offer a 20% return: Goldman Sachs
• 5 things to watch on the ASX 200 on Tuesday

Motley Fool contributor James Mickleboro has positions in Westpac Banking Corporation. 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 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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I’m a big fan of growth shares and feel lucky to have so many at my disposal on the ASX.

But with so many to choose from, it can be hard to decide which ones to buy over others.

The good news is that brokers have done the hard work, so we don’t have to. For example, two ASX 200 growth shares that have been given the thumbs up recently are listed below.

Here’s why brokers think we should be snapping them up right now:

Cochlear Limited (ASX: COH)

The first ASX 200 growth share that has been named as a buy is hearing solutions company, Cochlear.

Goldman Sachs is the broker that is bullish on the company. Its analysts currently have a buy rating and $265.00 price target on its shares.

The broker is recommending Cochlear shares as a buy due to its belief that improving trading conditions could see Cochlear outperform its guidance in FY 2023. It commented:

We believe Cochlear screens well on these fundamental factors, and largely avoids the margin uncertainties prevalent across other verticals. We expect a sequential improvement in momentum through 2H23 (further elective volume improvement and new processor launch momentum, potentially tempered by some moderation in Acoustics). We forecast above guidance in FY23E (GSe: $306m vs. $290-305m) and believe shares will now be further supported by a newly announced multi-year buyback program (GSe: $75m/year).

Treasury Wine Estates Ltd (ASX: TWE)

Another ASX 200 growth share that has been named as a buy is Treasury Wine. It is the wine giant behind popular brands including 19 Crimes and Penfolds.

Morgans is a big fan of the company and has an add rating and $15.05 price target on its shares.

Its analysts are tipping Treasury Wine to deliver strong earnings growth in the coming years. This is expected to be underpinned by its strong management team and popular brands. In addition, Morgans believes its shares are cheap compared to global peers. It explains:

TWE owns much loved iconic wine brands, the jewel in the crown being Penfolds. We rate its management team highly. The foundations are now in place for TWE to deliver strong earnings growth […] over the next few years. Trading at a material discount to our valuation and other luxury brand owners, TWE is a key pick for us.

The post Here are 2 outstanding ASX 200 growth shares brokers rate as buys appeared first on The Motley Fool Australia.

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More reading

• Could this be another positive step for the Treasury Wine share price?
• Brokers name 3 ASX 200 blue chip shares to buy
• Dalio says US and China ‘on brink of war’. Which ASX shares could be impacted?
• ‘Under the radar success’: 3 quality ASX 200 growth shares to buy right now
• Top ASX shares to buy in May 2023

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If you’re on the lookout for a passive income boost, then you may want to check out the ASX dividend stocks listed below.

Analysts have named these dividend stocks as buys and tipped them to provide very large yields in the near term. Here’s what you need to know:

Harvey Norman Holdings Limited (ASX: HVN)

Harvey Norman could be an ASX dividend stock to buy according to analysts at Goldman Sachs.

The broker remains positive on the retailer due to its belief that it is in a strong position to fight off online competition. This is due to its exposure to regional markets and its older customer base.

Goldman highlights that “Harvey Norman holds a unique position within the electronics and appliances retail industry as a result of its franchise model of operations in Australia, property portfolio and regional exposure.”

Its analysts are expecting this to allow Harvey Norman to pay fully franked dividends per share of 36 cents in FY 2023, then 30 cents in FY 2024, before a return to 36 cents in FY 2025. Based on the current Harvey Norman share price of $3.66, this will mean massive yields of 9.8%, 8.2%, and 9.8%, respectively.

Goldman has a buy rating and $4.70 price target on its shares.

Healthco Healthcare and Wellness REIT (ASX: HCW)

Another ASX dividend stock that could be a buy for income investors is the Healthco Healthcare and Wellness REIT.

This real estate investment trust invests in properties such as hospitals, aged care, childcare, government, life sciences and research, and primary care and wellness properties. These are all relatively defensive assets and should be in demand whatever is happening in the economy.

Morgans is a fan of the company and believes it is well-placed to increase its dividend. It is forecasting dividends per share of 7.5 cents in FY 2023 and 7.8 cents FY 2024. Based on the current Healthco Healthcare and Wellness REIT unit price of $1.35, this will mean yields of 5.5% and 5.8%, respectively.

Morgans also sees plenty of upside for its shares. It has an add rating and $2.06 price target on them.

The post Analysts say buy these top ASX dividend stocks with 5%+ yields appeared first on The Motley Fool Australia.

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More reading

• 2 ASX 200 dividend shares to buy following recent updates: brokers
• Rio Tinto and this ASX 200 share are strong buys: analysts
• 5 reasons Rio Tinto shares could surge 21%
• Brokers say these ASX 200 mining shares are top buys
• Why the iron ore price is ‘not out of the danger zone’

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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Engineering companies are not often discussed among ASX investors, but there are a couple at the moment that look like excellent buys.

That’s according to Shaw and Partners portfolio manager James Gerrish, who said in his Market Matters newsletter that Worley Ltd (ASX: WOR) and Austin Engineering Ltd (ASX: ANG) had recently “caught our eye”.

‘Double-digit sustainable earnings growth’

Gerrish’s team is “long and bullish” on engineering company Worley after an investor day this week showed an impressive outlook.

“[Management] articulated its growth strategy, which they believe will drive double-digit sustainable earnings growth over the medium term – something that has eluded them in the past,” said Gerrish.

“Worley is ramping up its capabilities towards battery metals, carbon capture, utilisation & storage & low carbon hydrogen.”

The market is already taking notice, rocketing the Worley share price up 11.8% over the past week.

The business will be a beneficiary of a worldwide transition.

“An expected four-fold increase in global energy investment and decarbonisation projects provides a great backdrop to generate revenue,” said Gerrish.

“However, it will be their ability to expand the currently thin margins that will provide the real kicker to profits.”

Worley has admittedly been a disappointment for past investors, with the stock flat over the last five years.

Gerrish said this week’s presentation “was a step in the right direction for this cyclical business”.

“Trust has also been a missing ingredient, with the market having been disappointed in the past as targets have fallen by the wayside.”

Punished too harshly, and ready to bounce back

The Austin Engineering Ltd (ASX: ANG) share price has crashed 27% since 2 May after a profit guidance downgrade.

According to Gerrish, there was a single source for the change in numbers. 

“The downgrade stemmed from their Perth business unit which was expecting to deliver on a contract before year-end before the order was delayed,” he said. 

“As a result, much of the fixed costs associated with the contract will be booked this year, while the revenue won’t land until 1Q24.”

Even with that nose dive, the stock is 18.75% higher than it was a year ago, which is an enviable performance considering the rest of the market.

The reality is that the rest of Austin Engineering is sound.

“The other business units are progressing well with revenue growth coming through and margins improving as a result.”

Thus Gerrish’s team is “bullish” on Austin Engineering shares.

“We see Austin Engineering as oversold, given the share price decline was harsh relative to the downgrade.”

The post 2 obscure ASX shares to go ‘long and bullish’ on right now appeared first on The Motley Fool Australia.

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More reading

• Here are the top 10 ASX 200 shares today
• Why Arafura Rare Earths, Imugene, Pilbara Minerals, and Worley are charging higher
• 2 ASX All Ords shares defying Tuesday’s slump to crack multi-year highs

Motley Fool contributor Tony Yoo 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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Ironically, ASX-listed investment companies have been out of favour with ASX investors in recent years.

The depressed sentiment in share markets over the past 18 months hasn’t helped, with many customers pulling their money out to “safer” assets such as cash.

But now with many wealth manager stocks trading at a heavy discount, it could be the time to pick them up for cheap.

Here’s a couple of suggestions from the S&P/ASX 200 Index (ASX: XJO):

Is the nightmare over now for Magellan?

The most infamous of the investment management stocks, Magellan Financial Group Ltd (ASX: MFG), has fallen a horrifying 83% since July 2021.

The drop in valuation has left its dividend yield at an enormous 13.44%.

Underperformance of its products and the very public exit of celebrity co-founder Hamish Douglass has devastated the company to an extent that even professionals are shocked.

Shaw and Partners portfolio manager James Gerrish certainly didn’t see it coming.

“Like many investors, we underestimated the enormity of the implosion caused by their once dominant chief investment officer Hamish Douglass,” he said in a Market Matters memo.

“A big fall from grace with Magellan now managing around one-third the amount of money they had at the peak of their powers, but are things finally on the improve?”

The answer is a “yes” from Gerrish’s team.

“We are warming to Magellan, believing the worst is now behind them,” said Gerrish.

“Over the last 3 months, performance has improved meaningfully in its flagship global fund, which has resulted in investment returns of +15.5% calendar year to date, outperforming the benchmark by around 3%.”

This turnaround in product performance would have “positive ramifications” on stemming the outflow and alleviating pressure to cut fees.

“You’d have to think that those who were leaving would have already left by now, which implies that the FUM [funds under management] they now have (~$42.7 billion) is sticky.”

Gerrish calculated that if you deduct the value of Magellan’s non-fund assets such as Barrenjoey and Finclear, the funds management business is worth about $4 per share in the current market.

“Someone could easily come in, sell off the principal investments, take the FUM and address the performance & perception issues surrounding Magellan,” he said.

“Or they can fix performance and flows internally, which seems to have already started, and the result will be a positive one from currently depressed levels.”

Regal thought Perpetual was cheap, and it still is

Meanwhile, Perpetual Limited (ASX: PPT) has been busy on the corporate dance floor.

“In November last year, a consortium led by the Regal Partners Ltd (ASX: RPL) launched a takeover bid for Perpetual, who themselves were attempting a takeover of Pendal.”

Although Regal failed in its acquisition attempt, its bid gave an insight into what the investment industry thinks the value of Perpetual is. 

“The consortium bid $1.7 billion for Perpetual which equated to $30 per share. Perpetual said it materially undervalued them despite being a 23% premium to their 30-day average.”

During the to-ing and fro-ing, Perpetual prepared for a sale of its corporate trust business for $1.4 billion.

“Clearly, Regal thought Perpetual was cheap before they took out Pendal, and we think that’s still the case now,” said Gerrish.

“In Market Matters’ view, Perpetual is worth well north of $30, or 15% to 20% higher.”

Perpetual shares pay out an outstanding dividend yield of 7.4%. The stock price is 22.7% down over the past 12 months.

The post ‘Worst is now behind them’: 2 unloved ASX 200 shares paying FAT dividends appeared first on The Motley Fool Australia.

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• Here are the top 10 ASX 200 shares today
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• 12 ASX dividend shares with yields over 10%. Are they too good to be true?
• Here are the top 10 ASX 200 shares today

Motley Fool contributor Tony Yoo 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 rise of the exchange-traded fund (ETF) is not a new trend on the ASX. ETFs, particularly index funds, have been booming in popularity for two decades now. Today, the ASX is home to dozens and dozens of ETFs.

There are your index funds, of course. The most popular of these are ASX ETFs, proving our local preference for Australian shares. But there are also index ETFs covering US shares, international markets, and emerging markets too.

Other ETFs, such as those covering specific sectors, trends, or commodities have also flourished. These days, you can invest in funds that track everything from global cybersecurity companies to oil futures, and gold or silver.

But which ETFs will continue to grow the most over the next few years?

ETF expert points to ethical and responsible investing

ETF provider BetaShares has some ideas about that. BetaShares is one of the ASX’s most prolific purveyors of exchange-traded funds.

BetaShares’ boss Alex Vynokur was asked about the future of the ETF sector in a report in The Australian this week.

Vynokur identified the ethical and responsible investing sector as the one he reckons will experience the largest growth rates over the next few years. Vynokur estimates that ethical and responsible ETFs are set to explode by $50 billion by late 2028, and even thinks they could hit $100 billion by the end of the decade.

As of 31 March, these ETFs reportedly accounted for $10.1 billion in funds under management (up from $3.5 billion in 2021).

That’s despite the best-performing ETFs in recent months and years being those that focus on sectors like resources and energy.

Here’s some of what Vynokur said:

There’s no doubt the last 12 to 18 months have been volatile for investors… The reality is that investors increasingly recognise there is no need to sacrifice their investment objectives over the long term to build a portfolio that aligns with their values…

While younger investors are perhaps considered the poster child for adoption of ethical and responsible ETFs, we’re now seeing increasing adoption from a broad range of Australian investors, including self-managed super funds.

Why are ASX investors flooding into ethical ETFs?

Vynokur identified three reasons for his optimism for ethical and responsible ETFs. He named the growing number of investors who wanted to “align their portfolio with their values while also meeting their investment objectives” for one.

Secondly, he pointed to “the cost-effectiveness” of using ETFs in order to pursue a responsible and values-aligned portfolio.

Thirdly, Vynokur argued that the “growing range of asset classes” that an ETF can provide investors access to is also driving interest in exchange-traded funds in pursuing ethical and responsible investing.

BetaShares currently offers eight ethical/responsible ETFs, including the BetaShares Global Sustainability Leaders ETF (ASX: ETHI) and the Ethical Diversified Growth ETF (ASX: DGGF).

Other ASX options in this space include the Vanguard Ethically Conscious Australian Shares ETF (ASX: VETH) and the iShares S&P/ASX Dividend Opportunities ESG Screened ETF (ASX: IHD).

So it will be interesting to plot the rise of ethical and responsible ETFs over the next few years to see if their growth conforms to Vynokur’s strong predictions.

The post Betashares forecasts this ASX ETF sector to boom x5 by 2028 appeared first on The Motley Fool Australia.

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More reading

• I’d invest $10,000 into these excellent ASX shares for the long-term
• 2 ASX ETFs I’d buy for my child and gift again in 15 years

Motley Fool contributor Sebastian Bowen 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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