Category: Stock Market

AI stocks, otherwise known as shares exposed to the mega artificial intelligence tailwind, are currently attracting the attention of ASX investors.

The big ones aren’t in Australia — they’re mostly listed on the NASDAQ-100 Index (NASDAQ: NDX) in the United States, and several are constituents of the much-lauded Magnificent Seven, such as NVIDIA Corp and Microsoft Corp.

AI is certainly the next big thing in technology, but more than that, it’s also seen as a potential answer to the longstanding issue of poor productivity growth in Western economies.

Henry Fisher of CMC Invest says demand for AI technology “could be a defining trend this decade”.

In a blog on asx.com.au, Fisher outlines some tips for investors interested in AI stocks to consider.

We summarise a few of them here.

6 tips for buying AI stocks

1. Understanding the AI ecosystem

AI comes in many forms — generative AI, cloud computing, robotics, AI chips (graphics processing units), data centres, and more. “Given the range of investment options, it’s important for investors to deepen their understanding of the AI landscape, as there isn’t a one-size-fits-all approach,” Fisher says.

2. It’s early days for AI stocks

Fisher says investing early in new technologies can be risky. He points out that only 48% of dot-com companies survived past 2004, and many that did suffered significant share price falls.

He comments:

Today’s AI landscape may have long-term winners and failures, and new AI companies may emerge down the line. Balancing these risks involves considering the uncertain timeline ahead and managing fears of missing out.

3. But AI is going to evolve quickly

The speed of AI’s development and adoption is a key factor to consider, says Fisher.

The internet and mobile phones pave the way for AI tools to reach people even faster and become more integrated into everyday life. Grasping the exponential qualities of the AI trend is essential, as is evaluating the potential risks and rewards associated with the pace of its proliferation.

4. Picks and shovels AI stocks

Picks and shovels shares are companies that provide the tools and services an industry needs. Fisher reminds investors that AI stocks will include picks and shovels businesses.

For AI, this could mean businesses like chip makers and data centres. These investments can be strategic, as they could benefit from the broader trend while maintaining diversified revenue streams. 

However, just as computers have shrunk from the size of a room to the size of our hand, AI hardware could also evolve over time. The tools powering AI in five or 10 years may differ from today’s.

As we recently reported, Australia’s biggest real estate investment trust (REIT) Goodman Group (ASX: GMG) is leaning into the AI trend by building the data centres required to make it work.

AI was a significant tailwind for Goodman in FY24, with the share price rising 73.1%, partly due to AI hype.

5. ETFs provide diversification

Fisher says AI-focused exchange-traded funds (ETFs) could be a strategic way to tap into the trend but warns:

Investors should be aware that holdings and strategies can vary widely among ETFs: some may include big tech names, where AI is just one component of a diversified business, while others may combine AI with other technology themes.

6. Competitive landscape

Fisher says the AI landscape is crowded, comprising approximately 75,700 companies. He questions what a ‘competitive advantage’ may look like in such a new world.

Start-ups with disruptive ideas can do more with less, with AI taking on a range of tasks and freeing up employees.

Meanwhile, big tech players could leverage their network effects and economies of scale to integrate AI into their existing platforms.

Competition is pivotal because, in the world of AI, one company’s software update can put another company out of business.

Foolish takeaway on AI stocks

Fisher says AI is rapidly changing by nature. This means investors must be on top of evolving trends and willing and able to switch investment strategies quickly.

He recommends undertaking thoughtful research before selecting which AI stocks to invest in.

“A long-term, diversified approach to AI through ETFs is a consideration,” he said.

The post ‘Defining trend this decade’: 6 tips for buying AI stocks appeared first on The Motley Fool Australia.

More reading

• Investing in ASX shares? Why CEO pay DOES matter when misaligned
• Could investing $10,000 in ASX shares make you a millionaire?
• Top 5 investment themes exciting ASX shares investors in FY25
• These ASX 200 stocks turned $20,000 into $100,000+ in 10 years
• Why did the Nasdaq Index take a dive on promising US inflation data?

Motley Fool contributor Bronwyn Allen has positions in Goodman Group. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Goodman Group, Microsoft, and Nvidia. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has recommended the following options: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. The Motley Fool Australia has recommended Goodman Group, Microsoft, and Nvidia. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

If you have $5,000 to invest in the share market but aren’t a fan of picking stocks, then exchange-traded funds (ETFs) could be worth considering.

That’s because ETFs remove the need to pick stocks and instead give you a slice of a group of shares. In some cases this can be hundreds or even thousands of stocks in one fell swoop.

But which ASX ETFs could be quality options for a $5,000 investment in July? Let’s take a look at three funds that could be quality additions to a portfolio. They are as follows:

VanEck Vectors Morningstar Wide Moat ETF (ASX: MOAT)

Many investors see Warren Buffett as a role model when it comes to investing. And it isn’t hard to see why. The Oracle of Omaha has beaten the market by a large margin over multiple decades.

This has been underpinned by Buffett’s focus on buying companies with wide moats and fair valuations. Well, the good news is that the VanEck Vectors Morningstar Wide Moat ETF has been designed around this focus.

It focuses on investing in high quality companies with sustainable competitive advantages (wide moats) and fair valuations. And with this ASX ETF smashing the market over the last decade, this tried and tested strategy continues to deliver the goods for investors.

Betashares Global Cash Flow Kings ETF (ASX: CFLO)

Another ASX ETF that could be a good option for your hard-earned money is the Betashares Global Cash Flow Kings ETF.

Betashares highlights that this ETF could serve as a core exposure to global equities or alongside existing low-cost passive global ETFs to enhance a portfolio’s emphasis on cash-generating companies. So much so, it has recently named it as one to consider buying when interest rates start to fall.

It focuses on global companies with strong free cash flow, which could be a very good thing. Betashares notes that companies that generate high levels of free cash flow historically have tended to outperform broad global equity benchmarks over the medium to long term.

Among its holdings are Google parent Alphabet (NASDAQ: GOOG), payments giant Visa (NYSE: V), and cyber security leader Accenture (NYSE: ACN).

Vanguard All-World ex-U.S. Shares Index ETF (ASX: VEU)

Finally, the Vanguard All-World ex-U.S. Shares Index ETF could be a good option for a $5,000 investment.

It offers investors access to a whopping ~3,500 companies listed in developed and emerging markets across the globe. However, as its name indicates, it excludes companies from the United States.

This means it could be a good complement to popular US-centric ETFs, if you already own them.

Among this ASX ETF’s holdings are companies such as HSBC Holdings, LVMH Moet Hennessy Louis Vuitton, Samsung, and Taiwan Semiconductor.

The post Where to invest $5,000 into ASX ETFs in July appeared first on The Motley Fool Australia.

More reading

• Which US shares are ASX investors buying in 2024?
• Prediction: 2 US stocks that will be worth more than Nvidia 5 years from now
• Overinvested in ASX-focused ETFs? Here are three alternatives
• Does the VanEck Wide Moat ETF really have an 8% dividend yield?
• Buy and hold these ASX ETFs for 10 years+

Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. HSBC Holdings is an advertising partner of The Ascent, a Motley Fool company. Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Accenture Plc, Alphabet, Taiwan Semiconductor Manufacturing, and Visa. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has recommended HSBC Holdings and has recommended the following options: long January 2025 $290 calls on Accenture Plc and short January 2025 $310 calls on Accenture Plc. The Motley Fool Australia has recommended Alphabet and VanEck Morningstar Wide Moat ETF. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

Wouldn’t it be nice to generate a lasting source of income without having to ever break a sweat?

Well, the good news is that it is possible and the Australian share market is a great place to generate passive income.

This is because there are plenty of ASX shares that distribute a portion of their profits each year in the form of dividends.

Passive income from the share market

In light of the above, if I had $20,000 stashed away in a Commonwealth Bank of Australia (ASX: CBA) bank account or under my bed, I would consider putting it to work in the share market.

However, while it would be tempting to start reaping the rewards of my investment immediately, I think the smarter move is to let my investment compound.

After all, if I can grow my $20,000 into something larger, the potential passive income I generate will also be larger.

Nothing is guaranteed in the share market, but it is widely accepted that a 10% per annum return is possible. This is in line with the historical return of the share market.

With a 10% per annum return, my $20,000 would grow to become worth approximately $135,000 in 20 years. At that point, it could now be worth considering turning it into a source of passive income.

If I were able to build a portfolio of ASX dividend stocks with an average dividend yield of 6%, my $135,000 would pull in dividends of $8,100 a year. That’s the equivalent of $675 a month if distributed evenly across the months.

Should I keep going for longer? Let’s see what would happen if I did.

30-year timeframe

If I were to let my $20,000 compound at 10% per annum for 30 years instead of 20 years, it would grow to a sizeable $350,000.

The passive income on this amount would be significantly more. As before, with an average 6% dividend yield, I would be looking at dividends of $21,000 per annum.

This equates to monthly passive income of $1,750, which is more than double what I would have received if I stopped the process 10 years earlier.

It is also worth noting that my investment portfolio would continue to compound, albeit at a slower rate, after withdrawing dividends each year. This means that my income stream continues to grow year after year without having to lift a finger.

Overall, I believe this demonstrates just how wealthy you can become when you put your spare capital to work in the share market.

The post $20,000 stashed away? Here’s how I’d use it to target a $1,750-a-month passive income appeared first on The Motley Fool Australia.

More reading

• Top 4 reasons why more Aussies are managing their own superannuation
• Investing in ASX shares? Why CEO pay DOES matter when misaligned
• Why mum and dad investors aren’t buying ASX bank shares like they used to
• CBA share price rallies to become the new top dog on the block
• 3 reasons everyone’s talking about CBA shares this week

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.

ASX consumer discretionary shares led the ASX 200 market sectors last week with a 3.81% gain over the five trading days.

Meantime, the S&P/ASX 200 Index (ASX: XJO) swished 2.19% higher to finish the week at 7,959.3 points. The market benchmark hit a new record high during intraday trading on Friday at 7,969.1 points.

This followed positive inflation news out of the United States, which lifted hopes of interest rate cuts in the world’s biggest economy soon.

Eight of the 11 market sectors finished the week in the green.

Let’s review.

Consumer discretionary shares led the ASX sectors last week

Among the heavyweights of the ASX 200 consumer discretionary sector, Wesfarmers Ltd (ASX: WES) shares lifted a hefty 4.51% to finish the week at $68.57.

Shares in gaming technology company Aristocrat Leisure Limited (ASX: ALL) rose by 3.85% to $52.92. The Lottery Corporation Ltd (ASX: TLC) share price rose 2.48% to $4.96.

There was no price-sensitive news out of these top three companies in the ASX 200 retail sector last week.

JB Hi-Fi Ltd (ASX: JBH) shares smashed it despite news of a legal scuffle. The JB Hi-Fi share price rose 5.95% to finish on Friday at $66.11 per share.

Furniture retailer Harvey Norman Holdings Limited (ASX: HVN) shares lifted 4.09% to $4.45 apiece.

ASX 200 travel share Flight Centre Travel Group Ltd (ASX: FLT) took off 3.1% and landed at $21.95 per share.

Premier Investments Limited (ASX: PMV), owner of Just Jeans and Smiggle, rose 3.74% to finish at $30.52 per share on Friday.

There was no further news last week on the proposal from Myer Holdings Ltd (ASX: MYR) to acquire Premier’s Apparel Brands business in exchange for new Myer shares. It’s a watch and wait for now.

Other consumer discretionary shares that performed well last week included Lovisa Holdings Ltd (ASX: LOV) shares. The Lovisa share price rose by 5.36% to finish the week at $33.42.

Lovisa was the No. 1 ASX retail share for share price growth in FY24 with a 70.3% capital gain.

Last week, we discussed the fact that ASX retail shares rose by a healthy 19.29% in FY24 amid a serious cost of living crisis. That was more than twice the growth rate of the ASX 200 benchmark.

David Rumbens, a partner at Deloitte Access Economics, provided an answer on why this happened.

ASX 200 market sector snapshot

Here’s how the 11 market sectors stacked up last week, according to CommSec data.

Over the five trading days:

S&P/ASX 200 market sector	Change last week
Consumer Discretionary (ASX: XDJ)	3.81%
A-REIT (ASX: XPJ)	3.27%
Communication (ASX: XTJ)	2.94%
Financials (ASX: XFJ)	2.76%
Healthcare (ASX: XHJ)	2.32%
Industrials (ASX: XNJ)	1.88%
Consumer Staples (ASX: XSJ)	1.33%
Information Technology (ASX: XIJ)	1.18%
Energy (ASX: XEJ)	(0.4%)
Materials (ASX: XMJ)	(0.57%)
Utilities (ASX: XUJ)	(0.66%)

The post Here’s how the ASX 200 market sectors stacked up last week appeared first on The Motley Fool Australia.

More reading

• Top brokers name 3 ASX shares to buy next week
• Investing in ASX shares? Why CEO pay DOES matter when misaligned
• How I’d aim to build a $75,000 income from ASX shares and never work again!
• These ASX 200 stocks turned $20,000 into $100,000+ in 10 years
• Xero shares doubled the ASX 200 return in FY24. What’s next in FY25?

Motley Fool contributor Bronwyn Allen has positions in Harvey Norman. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Lottery, Lovisa, and Wesfarmers. The Motley Fool Australia has positions in and has recommended Harvey Norman and Wesfarmers. The Motley Fool Australia has recommended Flight Centre Travel Group, Jb Hi-Fi, Lovisa, and Premier Investments. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

It has been another busy week for Australia’s top brokers. This has led to the release of a number of broker notes.

Three broker buy ratings that you might want to know more about are summarised below. Here’s why brokers think these ASX shares are in the buy zone:

Coronado Global Resources Inc (ASX: CRN)

According to a note out of Bell Potter, its analysts have retained their buy rating on this coal miner’s shares with an improved price target of $1.85. The broker is feeling very positive on Coronado Global’s outlook. This is thanks to improving production volumes and subsequent cost benefits following self-funded investments across its Australian and US operations. The broker expects this to generate improved free cash flow and shareholder returns going forward. Particularly given its belief that metallurgical coal prices will be strong over the long term due to supply constraints. It also sees potential for Coronado Global to participate in industry consolidation. The Coronado Global share price ended the week at $1.41.

Premier Investments Limited (ASX: PMV)

A note out of Citi reveals that its analysts have retained their buy rating and $36.00 price target on this retail conglomerate’s shares. Citi has been reviewing the potential merger of Premier Investments’ apparel brands with department store operator Myer Holdings Ltd (ASX: MYR). The broker is feeling positive about the proposal and believes it could support margin expansion for the latter. It also sees potential for significant synergies from the combination of the two parties. Another positive is that Citi is upbeat on the proposed spinoff of the Peter Alexander and Smiggle brands, which are expanding internationally. Overall, the broker thinks that buying Premier Investments gives investors an opportunity to gain exposure to both growth opportunities. The Premier Investments share price was trading at $30.52 on Friday.

Telstra Group Ltd (ASX: TLS)

Analysts at Goldman Sachs have reaffirmed their buy rating on this telco giant’s shares with an improved price target of $4.30. According to the note, the broker was pleased with Telstra’s decision to lift its mobile prices by $2 to $4. Goldman believes it will boost Telstra’s average revenue per user (ARPU) metric by $2.50 and demonstrates that mobile market rationality remains, particularly when combined with the recent Optus increase. In response to the update, the broker has lifted its earnings and dividend estimates for FY 2025 and FY 2026. The Telstra share price was trading at $3.82 at Friday’s close.

The post Top brokers name 3 ASX shares to buy next week appeared first on The Motley Fool Australia.

More reading

• Do you own the 3 best performing ASX 200 shares of FY 2025?
• 1 ASX 200 coal stock to buy and 1 to hold
• Buy Coles and these ASX 200 dividend stocks in July
• Why did ASX retail shares rise 19% in FY24 amid a cost of living crisis?
• Why I keep buying shares of this 5%-yielding ASX dividend stock

Citigroup is an advertising partner of The Ascent, a Motley Fool company. Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Goldman Sachs Group. The Motley Fool Australia has positions in and has recommended Telstra Group. The Motley Fool Australia has recommended Premier Investments. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

The ResMed Inc (ASX: RMD) share price hit some rough patches in the financial year just past.

Shares in the S&P/ASX 200 Index (ASX: XJO) healthcare stock closed out FY 2023 trading for $32.81. On 28 June, the last trading day of FY 2024, shares ended the day changing hands for $29.10 apiece.

That saw the ResMed share price down 11.3% over the financial year.

For some context, the ASX 200 gained 7.8% over this same period.

Here’s what happened.

What happened with the ResMed share price in FY 2024?

As you can see on the above chart, 3 August would have been an opportune time to sell your stock in the medical device manufacturer.

On 4 August, the ResMed share price closed the day down 9.3%. This slide would continue through to 25 September, by which point shares were down 36.7% from the 3 August close.

Investors began favouring their sell buttons following the release of the company’s full-year results.

Although revenue for the 12 months to 30 June 2023 was up 18% year on year to US$4.2 billion, gross margins shrank in the final quarter. This saw the company’s full-year gross margin decline by 0.8% to 55.8%, contrary to analyst expectations of improved margins.

The margin pressure looks to have come from higher manufacturing costs and an unfavourable product mix.

Now investors who bought the dip on 25 September will have seen the ResMed share price gain 35.7% from that day through to the end of FY 2024.

But those results could have been markedly better if not for the 13.2% sell-off on 24 June, the final week of FY 2024.

This came after pharmaceutical giant Eli Lilly And Co (NYSE: LLY) released some promising clinical test results from its sleep apnoea trial in the United States. Eli Lilly is evaluating tirzepatide to treat the condition in adults with obesity.

That success could potentially take a bite out of ResMed’s own addressable market.

What’s ahead for the ASX 200 healthcare share in FY 2025?

On Friday, the ResMed share price closed at $29.90, putting the ASX 200 stock up 2.75% in the early days of FY 2025.

But if Morgans is right, shares could run a lot higher from here.

“While weight loss drugs have grabbed headlines and investor attention, we see these products having little impact on the large, underserved sleep disorder breathing market, and do not view them as category killers,” the broker recently noted.

Morgans added:

Although quarters are likely to remain volatile, nothing changes our view that the company remains well placed and uniquely positioned as it builds a patient-centric, connected-care digital platform that addresses the main pinch points across the healthcare value chain.

The broker has an ‘add’ rating on the ASX 200 healthcare stock with a $34.11 target for the ResMed share price. That’s 14% above Friday’s close.

The post Why the ResMed share price tanked in FY 2024 and what to expect in FY 2025 appeared first on The Motley Fool Australia.

More reading

• Investing in ASX shares? Why CEO pay DOES matter when misaligned
• Here are the top 10 ASX 200 shares today
• These top ASX 200 growth shares could rise 20% to 45%
• Top ASX shares to buy for FY25
• Where to invest $10,000 in ASX 200 shares in July

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 positions in and has recommended ResMed. The Motley Fool Australia has positions in and has recommended ResMed. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

The Woolworths Group Ltd (ASX: WOW) stock price has risen 12% since early May from its 52-week low of $30.49 to $34.17 as of Friday’s close. However, as the chart below shows, it is still down more than 11% over the past year.

Investors may be wondering whether this is an opportunity or if it has risen as far as it can go for the foreseeable future.

Firstly, we shouldn’t anchor to an old share price – just because the Woolworths share price was $40 just over a year ago doesn’t mean it has a right to recover to that level any time soon.

Woolworths’ stock price is lower for a variety of possible reasons, but I’d attribute some of that to weak sales growth, including lessening inflation. While reducing inflation is a good thing for households, it means Woolworths has lost the tailwind for its sales.

Is the Woolworths stock price now fair value?

In the third quarter of FY24, Woolworths reported that its Australian food sales increased just 1.5% to $12.6 billion, while total third-quarter group sales increased 2.8% to $16.8 billion.

The broker UBS said its core Australian food sales were weak, causing the broker to reduce its estimate for Woolworths’ earnings per share (EPS) by 6.9% and 8.5% due to a few factors. UBS referred to lower Australian food and Big W earnings before interest and tax (EBIT), as well as lower dividends from Endeavour Group Ltd (ASX: EDV) after Woolworths sold shares. Meanwhile, UBS increased its estimate for New Zealand food EBIT.

The broker has a neutral rating on Woolworths stock because of the weakness in the food sales and a potential for further slowing at Big W.

A price target tells investors where the broker thinks Woolworths shares will be in 12 months. UBS has a price target of $32.50 on Woolworths shares, which is currently around 5% lower than its current level.

UBS forecasts that Woolworths could generate EPS of $1.32 in both FY24 and FY25, putting the current valuation at 26x forward earnings.

What could send the company higher?

Interest rate cuts could certainly help support the Woolworths stock price if and when they come. Investors may be more willing to pay a higher price for Woolworths’ earnings if safer investments (like bonds) don’t yield as much.

Warren Buffett, one of the world’s greatest investors, once described why interest rates are so important:

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.

Over the long term, if the ASX share can grow its earnings, then that could lead to an increase in the Woolworths share price over time.

The broker UBS thinks Woolworths’ EPS could increase by 7.6% in FY26, 10.6% in FY27, and 10.8% in FY28. That’s not exactly rocketing growth, but I think it can help push up Woolworths shares over time if its profit keeps growing. The market usually judges a business by how much profit it’s making.

The post Up 12% from 52-week lows, is Woolworths stock still a buy? appeared first on The Motley Fool Australia.

More reading

• Wesfarmers vs Woolworths: Which are the best ASX shares to buy today?
• Why did the Woolworths share price sink 15% in FY 2024?
• How much cash do you need to quit work and live off ASX dividend income?
• 2 ASX shares to buy for a retirement portfolio in FY25
• 10 ASX shares to buy in FY25

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 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.

Greater investment control is the No. 1 reason why about 1.15 million Australians are choosing to manage their own superannuation via a self-managed superannuation fund (SMSF), new research shows.

A survey of more than 2,000 investors conducted by online trading platform, Stake found 55% of respondents who had a self-managed superannuation fund set it up to gain more investment control.

More Australians are deciding to go this way, with 18,079 net self-managed superannuation funds set up in 2023, according to the Australian Taxation Office. This compares to 10,446 in 2022 and 11,262 in 2021.

ATO figures show there are 616,400 SMSFs in Australia today. Nine in 10 have just one or two members, equating to just under 1.15 million SMSF investors overall.

Superannuation provider Vanguard says the average age at which Australians are establishing their own SMSFs is younger than ever, at 46.

Renae Smith, Chief of Personal Investor, Vanguard Australia, said:

The sustained rebound in SMSF establishment rates reflects the growing interest and confidence among investors in managing their own superannuation funds and the autonomous nature of this cohort.

Their desire for control or choice over investment products or their fund’s asset allocation far outweighs the time, effort and complexity required in managing their funds.

Why do people want to manage their own superannuation?

The Stake survey revealed several other reasons why Australians had chosen to set up an SMSF.

The next most popular reason was the ability to buy property.

In March 2024, Australian SMSFs had $49.9 billion invested in residential property, up 11.5% year over year. There was also $91.9 billion invested in commercial property, also up 11.5%.

While SMSF owners cannot live in any residential property they own through their superannuation, they can run their own business out of a commercial property owned through their SMSF.

This is likely one of the reasons why there are more self-managed superannuation monies invested in commercial property than residential property.

The Stake survey also found cost-effectiveness was a driver for 27% of investors with SMSFs.

Additionally, 26% of SMSF investors said they felt there was greater potential for better returns if they managed their superannuation themselves.

Vanguard’s own research backs up this implied confidence.

Smith comments that SMSF trustees are nearly twice as likely to feel highly confident in funding their desired retirement lifestyle than members of APRA-regulated retail superannuation funds.

However, it’s worth noting that SMSF members tend to have more superannuation savings than average workers, which likely contributes to those higher confidence levels.

According to the latest full-year financial data published by the ATO (FY22), the average wealth per SMSF member is $780,254, and the median is $467,187.

This compares to an average superannuation balance of $404,553 and a median balance of $198,715 among all Australians aged between 65 and 69 years (the current ‘retirement age’ is 67 years).

ASX shares popular with SMSF members

Of the $933 billion managed through self-managed superannuation funds, $271 billion is invested in ASX shares. There is $145 billion in cash and term deposits and $122.5 billion in unlisted trusts.

Super Guide reports that the most popular ASX shares selected by SMSFs for investment are:

• BHP Group Ltd (ASX: BHP) shares (48% of SMSFs holding ASX shares are invested in BHP)
• Woodside Energy Group Ltd (ASX: WDS) shares (45.6%)
• Westpac Banking Corp (ASX: WBC) shares (40.9%)
• Commonwealth Bank of Australia (ASX: CBA) shares (39.1%)
• National Australia Bank Ltd (ASX: NAB) shares (38.9%)

As we recently reported, Vanguard says there has been a “shift in asset allocations”, with SMSF trustees doubling their allocation to exchange-traded funds (ETFs) in 2024.

The post Top 4 reasons why more Aussies are managing their own superannuation appeared first on The Motley Fool Australia.

More reading

• Investing in ASX shares? Why CEO pay DOES matter when misaligned
• Why mum and dad investors aren’t buying ASX bank shares like they used to
• Will the BHP share price keep falling?
• CBA share price rallies to become the new top dog on the block
• 3 reasons everyone’s talking about CBA shares this week

Motley Fool contributor Bronwyn Allen has positions in BHP Group, Commonwealth Bank Of Australia, and Woodside Energy Group. 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.

Investing legend Charlie Munger, Warren Buffett’s long-term business partner, is famous for his witty and wise quotes. He once said, “Show me the incentive, and I will show you the outcome.”

This quote emphasises the importance of aligning incentives with desired outcomes, highlighting how compensation structures can drive behaviour and decisions.

High pay for management can be a powerful motivational tool when wisely designed to link to business performance. However, it may be a yellow flag for shareholders when there’s a disconnect between compensation and business results.

With this in mind, let’s examine the S&P/ASX 200 Index (ASX: XJO) CEO compensation as reflected in the FY23 financial reports.

ASX 200 CEO pay table for FY23

Every July, the Australian Council of Superannuation Investors (ACSI) publishes an annual survey of CEO pay in Australia’s largest listed companies based on the previous financial year’s data.

Some of the interesting findings from ACSI’s 2024 report, released on Friday, include:

• The median CEO total realised pay for ASX 100 companies fell from $3.93 million to $3.87 million, which is the lowest median in the 10 years.
• In FY23, ASX 100 CEOs received a bonus at 66.3% of the maximum, while for the ASX 101-200 companies, the median bonus outcome was 60.7% of the maximum.
• CEOs in companies listed on ASX but based in the US tend to have higher realised pay outcomes.
• The highest termination payment in FY23 was $7.61 million for former CSL Ltd (ASX: CSL) CEO Paul Perreault.

The top 10 highest-paid CEOs are as follows:

Rank	Company	CEO	Realised pay
1	Resmed CDI (ASX: RMD)	Mick Farrell	$47.58 million
2	News Corporation CDI (ASX: NWS)	Robert Thomson	$41.53 million
3	Goodman Group (ASX: GMG)	Greg Goodman	$27.34 million
4	Macquarie Group Ltd (ASX: MQG)	Shemara Wikramanayake	$25.32 million
5	BHP Group Ltd (ASX: BHP)	Mike Henry	$19.68 million
6	Commonwealth Bank of Australia (ASX: CBA)	Matt Comyn	$10.52 million
7	Rio Tinto Ltd (ASX: RIO)	Jakob Stausholm	$10.47 million
8	Wesfarmers Ltd (ASX: WES)	Rob Scott	$9.57 million
9	Amcor CDI (ASX: AMC)	Ron Delia	$9.33 million
10	Sonic Healthcare Ltd (ASX: SHL)	Colin Goldschmidt	$8.35 million

Greg Goodman of Goodman Group remains the highest-paid domestic CEO with a realised pay of $27.34 million. Macquarie’s Shemara Wikramanayake was in second place, with a realised pay of $25.32 million.

Why should ASX share investors care about CEO pay?

In recent years, the topic of CEO compensation has increasingly come under scrutiny. We often hear about CEOs earning exorbitant salaries and bonuses, disconnected from the company’s performance or the shareholders return.

This misalignment between management pay and company outcomes is especially important for minority shareholders like us. It can create a disconnect between the interests of the executives and those of the stakeholders they are meant to serve. This misalignment can result in decisions that prioritise short-term gains over long-term sustainability, potentially jeopardising the company’s future.

The key is whether the incentive structure is objective and well-aligned with business performance.

One of the best ways to avoid these issues is to invest in companies with high insider ownership. For larger companies with widespread share ownership, it’s often beneficial to review the management remuneration section in the annual reports.

The post Investing in ASX shares? Why CEO pay DOES matter when misaligned appeared first on The Motley Fool Australia.

More reading

• Could investing $10,000 in ASX shares make you a millionaire?
• How I’d aim to build a $75,000 income from ASX shares and never work again!
• These ASX 200 stocks turned $20,000 into $100,000+ in 10 years
• Why mum and dad investors aren’t buying ASX bank shares like they used to
• Will the BHP share price keep falling?

Motley Fool contributor Kate Lee 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 CSL, Goodman Group, Macquarie Group, ResMed, and Wesfarmers. The Motley Fool Australia has positions in and has recommended Amcor Plc, Macquarie Group, ResMed, and Wesfarmers. The Motley Fool Australia has recommended CSL, Goodman Group, and Sonic Healthcare. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

ASX exchange-traded funds (ETFs) provide an easy way for Aussie investors to gain exposure to global shares without the hassle of having to trade on several different international exchanges.

There are hundreds of global shares ETFs to choose from on the ASX. Some track indexes like the MSCI World Index, the NASDAQ-100 Index (NASDAQ: NDX) and the CRSP US Total Market Index. Some are sector-based. But most ETFs have specific strategies designed by the providers, who seek to beat the market’s benchmark returns.

Some global shares did better than ASX shares in FY24.

In the United States, the Nasdaq Composite Index (NASDAQ: .IXIC) rose by 28.61%, the S&P 500 Index (SP: .INX) ascended by 22.7%, and the Dow Jones Industrial Average Index (DJX: .DJI) lifted by 13.69%. The MSCI World Index rose by 18.37%.

By comparison, the S&P/ASX 200 Index (ASX: XJO) rose by 7.83% (or 12.1% with dividends included).

Global shares ETFs give Aussie investors immediate diversification in terms of stocks and geography in a single trade. The disparities in the performances of ASX shares and US shares outlined above demonstrate how useful geographical diversification can be, with or without hedging to the Australian dollar.

So, which ASX global shares ETFs delivered the best total returns in FY24?

New figures just released by the ASX reveal the top performers of the year. Let’s take a look.

Top 6 ASX global shares ETFs for total returns

This article focuses on ETFs that invest in global shares. They include index-based and sector-based ETFs, as well as those operating under a specific strategy designed by their ETF provider.

We’ve included each ETF’s management expense ratio (MER), which is the fee you pay every year. Fees can vary widely between providers, so this is always useful research information.

According to the data, here are the top six global shares ETFs for FY24.

Betashares Crypto Innovators ETF (ASX: CRYP)

The Betashares Crypto Innovators ETF returned 68.49% in FY24. The historical distribution yield is 0%, and the MER is 0.67%.

Global X Ultra Long Nasdaq 100 Complex ETF (ASX: LNAS)

The Global X Ultra Long Nasdaq 100 Complex ETF returned 65.59% in FY24. The historical distribution yield is 24.44%. The MER is 1%.

Global X Semiconductor ETF (ASX: SEMI)

The Global X Semiconductor ETF returned 58.86% in FY24. The historical distribution yield is 3.39%, and the MER is 0.57%.

Betashares Global Uranium ETF (ASX: URNM)

The Betashares Global Uranium ETF returned 57.34% in FY24. The historical distribution yield is 2.04%, and the MER is 0.69%.

Global X Fang+ ETF (ASX: FANG)

The Global X Fang+ ETF returned 51.02% in FY24. The historical distribution yield is 5.27%, and the MER is 0.35%.

Geared US Equity Fund – Currency Hedged (Hedge Fund) (ASX: GGUS)

The Geared US Equity Fund – Currency Hedged ETF returned 49.03% in FY24. The historical distribution yield is 0%, and the MER is 0.80%.

The post These top ASX global shares ETFs delivered stunning returns of 50% to 70% last year appeared first on The Motley Fool Australia.

More reading

• 5 excellent ASX ETFs to buy this month
• The 5 best ASX ETFs of FY24 revealed!
• Here’s the outlook for 3 ASX artificial intelligence (AI) shares in FY25
• Top ASX shares to buy in July 2024
• 4 of the best ASX ETFs to buy in July

Motley Fool contributor Bronwyn Allen 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 Betashares Global Uranium Etf. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.