It’s fair to say that ASX investors have come to expect, if not demand, fat and fully franked dividends from ASX 200 bank shares. Most of the ASX banks, most prominently the big four bank shares like ANZ Group Holdings Ltd (ASX: ANZ), have been paying out large, fully franked dividends for decades now.

It’s normal to see at least one or two of these shares trade on dividend yields above 5% or even 6% at any given moment.

Right now, it’s ANZ that is leading the big four pack in terms of dividend yield. At current pricing, ANZ shares are offering a trailing dividend yield of 6.04%.

That pips the next-closest rival – Westpac Banking Corp (ASX: WBC) – which is currently displaying a dividend yield of 5.44%. And it’s certainly a lot better than the rate unbanklike 3.9% that Commonwealth Bank of Australia (ASX: CBA) has on the table today.

But ANZ shares have a more fickle past than most ASX banks when it comes to paying out full franking credits.

ANZ shares and franking credits

In 2019, ANZ startled investors by announcing its first dividend that didn’t come with full franking credits attached in decades. Yes, the final dividend that was paid out in December 2019 came only partially franked at 70%. It came as a bit of a shock to investors at the time, who had probably grown accustomed to the steady stream of fully-franked shareholder payouts that ANZ shares had been in the habit of providing.

Here’s why ANZ CEO Shane Elliot made the call back then:

Well first, of course, is just the shape of our business and the degree to which our Australian earnings and the amount that they represent in our overall group profits. So that’s one, and that’s changed. Partly because we’ve sold some businesses in Australia, for the right reason, for the benefit in the long term for shareholders. And partly because, as we’ve mentioned, the profitability of the Australian business is under pressure.

Remember, an Australian company can only pay franking credits on dividends derived from profits that have been taxed in Australia. If a business has commercial interests beyond our shores and is thus not subject to Australian taxes, it cannot generate franking credits. And thus, cannot pass said franking credits onto shareholders.

Does this ASX 200 bank still pay fully franked dividends?

Over subsequent years, ANZ shares returned to paying fully franked dividends, albeit not at the same level as in 2019.

However, 2023 was a different story. July’s interim dividend came in at a fully franked 81 cents per share, a healthy rise over 2022’s corresponding payment of 72 cents.

Nonetheless, the December final dividend was a different matter. ANZ declared a final dividend of 81 cents per share, matching its interim payout. But the bank also revealed that this payment would only come partially franked at 65%.

To help the medicine go down, ANZ also revealed a one-off special dividend of 13 cents per share to accompany its final payout for 2023. The special dividend was completely unfranked.

Shane Elliot was upfront that this special dividend was something of a sop to shareholders, paid to “offset the lower franking rate on the final dividend”.

Here’s some more of what he said on the lack of full franking:

Our ability to frank our dividend is influenced by the percentage of earnings generated in Australia and the tax paid on those earnings. This partial franking largely reflects our geographic diversity and the particularly strong results of our New Zealand operations and our Institutional business outside of Australia.

So no, the dividends from ANZ shares do not come fully franked anymore, at least based on this most recent dividend.

We don’t yet know whether ANZ shares will pay out a fully franked interim dividend this July. Let alone a final one next December. However, given that the franking issue appears to be a structural consequence of the bank’s current earnings base, shareholders might not want to assume those full franking credits are returning.

The post Do the dividends from ANZ shares still come fully franked? appeared first on The Motley Fool Australia.

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• How to earn $3,000 in passive income with less than $3,000 in savings
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• Invested $10,000 in ANZ shares during the 2020 dip? Here’s what you have now!

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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Many leading fund managers have tipped CSL Ltd (ASX: CSL) shares as an appealing ASX healthcare share to own. In this article, we’ll look at who’s backing the biotech giant.

The CSL share price has been mixed in the last few months – it’s up 20% since the end of October 2023 but down 8% from 9 February this year, as we can see on the chart below.

Here’s why most leading fund managers are still optimistic about the business despite recent challenges.

What’s to like about CSL shares?

According to reporting by the Australian Financial Review, an analysis of 30 Australian-focused funds showed that CSL shares were the most widely held within that group. Around two-thirds indicated CSL was among their most significant holdings.

And the strong-performing funds over three and five years were more likely to own CSL shares than BHP Group Ltd (ASX: BHP) shares or Commonwealth Bank of Australia (ASX: CBA) shares.

Tribeca Alpha Plus fund manager Jun Bei Liu had this to say (courtesy of AFR):

CSL has been a great compounder over many, many years. You find it in the bottom drawer of so many investment portfolios because it seems to grow year in, year out … and has so many of the characteristics of a quality company.

Another bullish investor, ECP Asset Management partner Sam Byrnes, said:

While CSL has encountered challenges… we maintain an optimistic outlook on Behring’s long-term margin potential, and its competitive position in the flu business.

Macquarie analysts are also reportedly bullish on the business, suggesting that the CSL share price could reach $500 if it overcame short-term challenges and traded at a price/earnings (P/E) ratio closer to the average over the past decade.

More profit growth expected

When the biotech company reported its FY24 first half-year result, it reaffirmed its FY24 guidance of underlying net profit after tax (NPATA) being between US$2.9 billion and US$3 billion at constant currency exchange rates, which would grow between 13% and 17%.

Management believes the business is in a solid position to deliver annualised double-digit earnings growth over the medium term.

It expects strong growth with its immunoglobulins business because patient demand remains strong.

CSL has several initiatives in plasma collections that improve efficiencies and processing times to support the continued expansion of CSL Behring’s gross margin.

The vaccine business has performed well in a “challenging season”.

Finally, management said it was operating within an “evolving iron market” for CSL Vifor, with challenges for near-term growth. The company said it was well-positioned for iron competition in the EU and further geographic expansion.

According to projections on Commsec, the CSL share price is valued at 30x FY24’s estimated earnings.

The post Why are so many top fundies overweight on CSL shares? appeared first on The Motley Fool Australia.

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Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended CSL. The Motley Fool Australia has recommended CSL. 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 post Here are the top 10 ASX 200 shares today appeared first on The Motley Fool Australia.

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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 recommended Elders. 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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Investors that are looking for a combination of gains and dividends may want to check out Rural Funds Group (ASX: RFF).

That’s because the team at Bell Potter believes the ASX 300 stock could be significantly undervalued at current levels.

What is this ASX 300 stock?

Firstly, if you’re not familiar with Rural Funds, let’s take a quick look at its business.

It is a real estate property trust that owns a diversified portfolio of Australian agricultural assets. It generates revenue from the leasing of almond orchards, macadamia orchards, poultry property and infrastructure, vineyards, cattle properties, cropping properties, agricultural plant and equipment, cattle, and water rights.

Given that demand for agricultural property is always in demand, this makes the ASX 300 stock a defensive option for investors. Particularly given it long tenancy agreements and built-in rental increases.

At the last count, Rural Funds had a weighted average lease expiry (WALE) of 12.8 years, with leases predominantly on a triple-net structure.

Furthermore, its portfolio is leased out to quality tenants. Management notes that ~80% of FY 2024 income is coming from corporate and listed lessees. This includes JBS, Select Harvests Ltd (ASX: SHV), Stone Axe, and Treasury Wine Estates Ltd (ASX: TWE).

Why is it a buy?

According to a recent note, Bell Potter believes that its shares are too cheap at current levels to ignore. It highlights the significant discount to net asset value (NAV) that the ASX 300 stock is trading at. The broker said:

The ~30% [now 35%] discount to market NAV appears excessive when we consider the material improvement in counterparty profitability indicators in recent months (with cattle, almond and macadamia nut prices all rallying off the lows) and that we are likely to see asset sales at or around the market value of the assets.

Bell Potter currently has a buy rating and $2.40 price target on Rural Funds’ shares. Based on its current share price of $2.00, this implies potential upside of 20% for investors over the next 12 months.

But the returns won’t stop there. Rural Funds is one of the more generous dividend payers on the Australian share market.

Bell Potter expects this to remain the case for the foreseeable future and is forecasting distributions of 11.7 cents per share in FY 2024, 11.7 cents per share in FY 2025, and 12.2 cents per share in FY 2026. This equates to dividend yields of 5.85%, 5.85%, and 6.1%, respectively.

Overall, this means that a total return of 26% could be on the cards for investors between now and this time next year.

The post Buy this cheap ASX 300 stock for a 26% return appeared first on The Motley Fool Australia.

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Motley Fool contributor James Mickleboro has positions in Treasury Wine Estates. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has positions in and has recommended Rural Funds Group. The Motley Fool Australia has recommended Treasury Wine Estates. 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 Winsome Resources Ltd (ASX: WR1) share price has been among the best performers on the Australian share market on Thursday.

In afternoon trade, the small cap ASX mining stock is up 16% to $1.46.

Why is this small cap ASX mining stock rocketing?

Investors have been fighting to get hold of the lithium explorer’s shares today following the release of exploration drilling results. These are from the 100%-owned Adina Lithium Project in the Eeyou Istchee James Bay region of Quebec, Canada.

According to the release, recent exploration drilling has discovered a new high grade lithium zone 200m southwest of the current Adina Lithium Resource.

The company revealed that results from AD-24-170, drilled to the south-west of Adina Main, have returned an “outstanding” result of 61.5m at 1.62% Li2O. This include 24.0m at 2.82% Li2O.

Further drilling is now underway around AD-24-170 to explore the scale and orientation of this new pegmatite zone at Adina.

In addition, resource delineation drilling is continuing to provide excellent results in the central portion of the Adina Deposit at the project.

Work is also progressing on an update to the mineral resource estimate (MRE) for Adina, which currently sits at 59Mt at 1.12% Li2O, classified in the inferred category. Its next update is expected to include material in the higher confidence indicated category due to the closer spacing of drill data now available.

Furthermore, the small cap ASX mining stock advised that the updated MRE will be used in initial project studies for Adina, which will now consider operating scenarios both with and without the repurposing of the Renard Project and associated infrastructure for lithium concentrate production.

‘Globally significant’

Winsome’s managing director, Chris Evans, was pleased with the discovery. He said:

The discovery of a new zone of high-grade mineralisation 200m outside the current 59Mt Resource at Adina continues to open up the potential scale of Winsome’s globally significant lithium deposit in Quebec. In addition, we are also progressing work on an update to the Mineral Resource at Adina this Quarter which will feed directly into our project studies for Adina, including the evaluation of the new Renard processing and infrastructure opportunity. Furthermore, results from infill resource delineation drilling continue to confirm and verify previous drilling results at Adina Main including the presence of thick, high grade, near surface lithium mineralisation.

This small cap ASX mining stock is now up almost 60% since this time last month.

The post Guess which small cap ASX mining stock is rocketing 16% on ‘outstanding’ discovery appeared first on The Motley Fool Australia.

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More reading

• Shares vs. property: What $100 invested in 1926 is worth now
• Why Avita Medical, Netwealth, Peninsula Energy, and Zip shares are sinking today
• Where I’d invest $5,000 in April 2024
• Why Computershare, Core Lithium, Northern Star, and Vulcan Energy shares are storming higher
• One ASX share to buy right now after the US market pullback

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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Before we get into the historical price performance of shares vs. property, let’s check out the first quarter results of 2024.

Over the period, the S&P/ASX 200 Index (ASX: XJO) rose by 4.03% and hit a new all-time record of 7,848.5 points along the way.

Meantime, the median Australian house price rose by 1.7% to $883,854 and the median apartment price rose by 1.3% to $640,162, according to CoreLogic data.

As always, some individual ASX shares and metro and regional property markets outperformed.

Perth and regional Western Australia remain the hottest metro and regional markets in the country.

The median house price in Perth ascended 5.5% to $735,276 over the March quarter. In regional Western Australia, the median house price lifted 4.7% to $508,513.

Among ASX shares, the best performers included Life360 Inc (ASX: 360) up 73% and Megaport Ltd (ASX: MP1) up 63%. ASX tech share Altium Ltd (ASX: ALU) rose 39% while Paladin Energy (ASX: PDN) lifted 38%. And GQG Partners Inc (ASX: GQG) shares increased by 31%.

Shares vs. property: The long-term performance

For every investor who has grappled with the choice between shares vs. property, we have good news.

In his latest blog, AMP chief economist Dr Shane Oliver reveals that shares vs. property deliver very similar long-term returns. All up, 11.2% per year for shares and 10.9% for property over nearly 100 years.

Dr Oliver published a chart showing what $100 invested in real estate and shares in 1926 would be worth today (assuming dividends and rent after costs were reinvested along the way).

Source: Oliver’s insights: Seven things you need to know about the Australian property market.

As you can see, that $100 would now be worth more than $1.6 million either way you invested.

The chart compares the performance of $100 invested in cash and bonds since 1926 as well.

Oliver comments:

Over the period both shares and property return around 11% pa.

Property’s low correlation with shares, lower volatility but lower liquidity makes it a good portfolio diversifier. So, there is clearly a role for it in investors’ portfolios.

For further reading, you can check out the most recent 10-year returns of shares vs. property here.

Property price growth predictions for 2024

Dr Oliver says property prices are rising in 2024 because a major chronic undersupply is creating a supply/demand dynamic that is producing rising prices despite rising interest rates.

Historically, rising interest rates have typically caused housing values to fall.

Dr Oliver explains:

Our base case is now for 5% or so home price growth this year, down from 8% last year, as still high interest rates constrain demand and along with higher unemployment lead to some increase in distressed listings.

However, the supply shortfall should provide support and rate cuts are expected to boost price growth later this year.

Delays to rate cuts and a sharp rise in unemployment would signal downside risks whereas the supply shortfall points to upside risk.

Dr Oliver said the key for property investors this year “is to look for properties offering decent rental yields” to offset the impact of high interest rates pushing up mortgage repayments.

The post Shares vs. property: What $100 invested in 1926 is worth now appeared first on The Motley Fool Australia.

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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 positions in and has recommended Altium, Life360, and Megaport. The Motley Fool Australia has recommended Megaport. 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 S&P/ASX 200 Index (ASX: XJO) is having a tough session on Thursday following a hotter than expected US inflation reading. In afternoon trade, the benchmark index is down 0.5% to 7,811.4 points.

Four ASX shares that are falling more than most today are listed below. Here’s why they are dropping:

AVITA Medical Inc (ASX: AVH)

The AVITA Medical share price is down almost 11% to $4.02. This follows the release of a first-quarter sales update from the regenerative medicine company. Management advised that it now expects commercial revenue to be in the range of US$11 million to US$11.3 million for the quarter. This compares to its previous guidance of US$14.8 million to US$15.6 million. The revision in guidance is attributable to a slower-than-expected conversion rate of new accounts for its expanded label of full-thickness skin defects.

Netwealth Group Ltd (ASX: NWL)

The Netwealth share price is down 5% to $19.24. This seems to have been driven by weakness in the tech sector today which has offset the release of the investment platform provider’s quarterly business update. In respect to the latter, Netwealth’s funds under administration (FUA) increased by $6.7 billion during the quarter to $84.7 billion. This comprises FUA net inflows of $2.7 billion and positive market movement of $4 billion.

Peninsula Energy Ltd (ASX: PEN)

The Peninsula Energy share price is down almost 7% to 11.2 cents. This morning, the uranium developer announced that Samuel Engineering has been appointed as contractor for engineering, procurement, and construction services for the expansion of the Ross Central Processing Plant at the Lance Uranium Project. Peninsula has also increased its funding requirement for the project to US$100 million. This is up US$5 million from previous estimates and compares to its current cash balance of US$49.6 million.

Zip Co Ltd (ASX: ZIP)

The Zip Co share price is down 5.5% to $1.30. This is despite there being no news out of the buy now pay later provider on Thursday. However, it is worth noting that the tech sector is under pressure today amid concerns that interest rate cuts could be some way off after the hotter than expected inflation reading in the United States. In addition, Zip’s shares have been on fire recently, so profit taking could be happening today. For example, the Zip share price remains up over 100% since the start of the year. This has been driven by its significantly improved operational performance.

The post Why Avita Medical, Netwealth, Peninsula Energy, and Zip shares are sinking today appeared first on The Motley Fool Australia.

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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 Avita Medical, Netwealth Group, and Zip Co. The Motley Fool Australia has positions in and has recommended Netwealth Group. The Motley Fool Australia has recommended Avita Medical. 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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Choosing the ASX shares to invest a significant sum of cash in is always a difficult task. There are so many quality options on the ASX alone to choose from. And when you throw in international share markets, the menu can quickly become overwhelming for many investors. But this April, the question of where to invest $5,000 on the ASX has a simple answer for me.

I must admit, I’m a little worried about the state of the stock markets. Both the US markets and the ASX have been knocking over new all-time record highs like dominoes in recent months.

That’s been great for investors. But investing in the share market when it is at or near an all-time high is inherently more risky. That’s not a dealbreaker in itself, but I am looking at what could potentially be some storm clouds on the horizon right now.

Do the latest US inflation numbers bode ill for the share market?

Much of the recent rises in both the US and ASX markets have almost certainly been a result of the expectation that we will see a global reduction in interest rates in 2024.

As of today, this is looking far less likely, thanks to some hotter-than-expected inflation numbers out of the United States. As we’ve just looked at, core American inflation is still running at a spicy 3.8% on an annualised basis. That is well above the 2% that the US Federal Reserve wants to see.

What does this mean for ASX shares? Well, as my Fool colleague Bernd put it, “it could see the official US cash rate stay at the current 5.25% to 5.5% for considerably longer than ASX 200 investors have been hoping”.

If the US, and Australia by extension, have to deal with higher interest rates for longer, we could well see increased economic turmoil, not to mention lower stock markets, over 2024.

So how does one invest in this environment?

How to invest $5,000 on the ASX this April

Well, I wouldn’t stop investing, or ‘go to cash’, that’s for sure. It is folly to stop investing or to cash out your shares on a whim. However, I’d still be playing it a little safe in April.

Rather than investing in my favourite ASX shares, most of which are still at historically elevated prices, I’d steer more capital into an investment that has proved to be highly durable in the past, while still offering decent returns.

That investment would be consumer staples shares. I love investing in consumer staples shares, thanks to the inherent defensiveness and resilience this sector provides. Consumer staples shares are companies that produce goods that we cannot live without. That’s things like food, drinks and household essentials.

A great way to gain exposure to this sector is through an exchange-traded fund (ETF). The iShares Global Consumer Staples ETF (ASX: IXI) is a fund that allows investors to access a broad portfolio of different consumer staples stocks, all under one ticker code.

Some of its top holdings are household names, including Coca-Cola, PepsiCo, Nestle and Colgate-Palmolive.

Given these companies tend to move their products regardless of the economic weather, I think they make for sturdy investments with relatively lower volatility during uncertain times. I would also argue that it’s a great time to buy this ETF as well from a pricing perspective.

IXI units have returned an average of 9.57% per annum (including dividend returns) over the ten years to 31 March. But over the past 12 months, investors have banked just 3.67%.

When compared to other ASX shares that are trading at or near record highs this April, I’d much rather stick to a conservative investment like the iShares Global Consumer Staples ETF.

The post Where I’d invest $5,000 in April 2024 appeared first on The Motley Fool Australia.

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More reading

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• This 7% yield ASX 200 stock trades ex-dividend next week. Should you buy?
• Up 16% in 2024! Are ASX tech shares now overvalued?

Motley Fool contributor Sebastian Bowen has positions in Coca-Cola, PepsiCo, and iShares International Equity ETFs – iShares Global Consumer Staples ETF. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has recommended Nestlé. The Motley Fool Australia has positions in and has recommended iShares International Equity ETFs – iShares Global Consumer Staples ETF. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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In afternoon trade, the S&P/ASX 200 Index (ASX: XJO) has followed Wall Street’s lead and dropped into the red. At the time of writing, the benchmark index is down 0.5% to 7,808.9 points.

Four ASX shares that are not letting that hold them back today are listed below. Here’s why they are rising:

Computershare Ltd (ASX: CPU)

The Computershare share price is up 3.5% to $27.91. This is despite there being no news out of the administration services company on Thursday. However, it is worth noting that treasury yields in the United States jumped last night in response to a hotter than expected inflation reading. As Computershare is a big winner from higher interest rates, the prospect of rate cuts being pushed back could be giving its shares a lift today. Its shares are now up over 25% since this time last year.

Core Lithium Ltd (ASX: CXO)

The Core Lithium share price is up 6.5% to 16.5 cents. This follows the release of a mineral resource estimate update for the lithium miner’s Finniss Project in the Northern Territory. Core Lithium has reported a 58% increase in the Finniss Lithium Project mineral resource estimate to 48.2Mt at 1.26% Li2O. This reflects the culmination of all drilling undertaken by the company’s exploration team in 2023. It also notes that the measured and indicated resource categories have increased to 27.9Mt @ 1.32% Li2O.

Northern Star Resources Ltd (ASX: NST)

The Northern Star Resources share price is up 3% to $15.41. Investors initially sold down this gold miner’s shares this morning in response to its third quarter update. However, that weakness was short-lived and its shares are on course to end the day meaningfully higher. Although Northern Star’s production suffered during the third quarter due to a weather event, it has reiterated its full year guidance.

Vulcan Energy Resources Ltd (ASX: VUL)

The Vulcan Energy share price is up almost 17% to $3.34. This has been driven by the release of an update on the lithium developer’s Lithium Extraction Optimisation Plant (LEOP) in Germany. Vulcan revealed that it has started production of the first Lithium Chloride (LiCl) product at the LEOP. This represents the first lithium chemicals domestically produced from a local source in Europe for the European market. Positively, LEOP is showing strong early results with consistently over 90% (up to 95%) lithium extraction efficiency from its Adsorption-type Direct Lithium Extraction (A-DLE) unit.

The post Why Computershare, Core Lithium, Northern Star, and Vulcan Energy shares are storming higher appeared first on The Motley Fool Australia.

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More reading

• Why is this ASX lithium stock racing 15% higher today?
• Why is the Core Lithium share price jumping 10% today?
• Northern Star share price tumbles on difficult quarter
• Here are the iron ore and lithium price forecasts through to 2027
• Is it too late to get on board the ASX gold train?

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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There’s one highly diversified ASX share I think is a buy right now following the overnight pullback in US tech stocks.

As we covered here earlier, US markets closed sharply lower overnight following hotter-than-expected inflation readings through to the end of March.

Headline inflation was up 0.4% in March, running at 3.5% on an annual basis. That’s up from 3.2% last month and remains significantly higher than the US Federal Reserve’s 2% target.

With investors paring back expectations of the timing and number of interest rate cuts, ASX shares are joining in the overnight US retrace, with the All Ordinaries Index (ASX: XAO) down 0.6% in afternoon trade.

In the US, the tech-heavy Nasdaq Composite Index (NASDAQ: .IXIC) closed down 0.8% while the NASDAQ-100 Index (NASDAQ: NDX), which holds 100 of the largest tech stocks, ended the day down 0.9%.

Which brings us to the ASX share to buy right now.

Why this ASX share is a buy

The ASX share in question is the Betashares NASDAQ 100 ETF (ASX: NDQ).

NDQ is an ASX-listed exchange-traded fund (ETF), and you can buy and sell shares just as you would with any other stock.

The ETF aims to track the performance of the Nasdaq 100, providing investors with exposure to some of the world’s leading tech companies at the forefront of the new economy with a single ASX investment.

NDQ’s top five holdings are: Microsoft Corp (NASDAQ: MSFT), Apple Inc (NASDAQ: AAPL), Nvidia Corp (NASDAQ: NVDA), Amazon.com, Inc. (NASDAQ: AMZN), and Meta Platforms Inc (NASDAQ: META), or Facebook to you and me.

Annual management fees run at 0.48%.

Just like US tech stocks, this ASX share has been shooting higher. Shares in the ETF are up 12% year to date and up 38% over 12 months.

Why now?

So, with inflation proving sticky and interest rates potentially staying elevated for longer than expected, why is now the time to buy the Betashares NASDAQ 100 ETF?

First, I believe this ASX share will continue to outperform on the back of the nascent AI revolution. Just have another look at the ETF’s top five holdings. All of these companies are heavily involved in AI. And all of them could hit new highs in the year ahead amid any new AI breakthroughs.

I’m also optimistic about the outlook for the US economy, which has proven resilient over the past 18 months despite high inflation and soaring interest rates.

As Jefferies chief market strategist David Zervos says (quoted by Bloomberg):

Risk assets should stabilise here and resume their uptrend as good news on the economic growth front will dominate the headwinds from a Fed that needs to stay a little higher for a little longer to fully anchor long-run inflation expectations.

Finally, good news for the economy could spell good news for US and ASX shares!

The post One ASX share to buy right now after the US market pullback appeared first on The Motley Fool Australia.

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More reading

• I think this ASX growth stock has market-beating potential
• 3 of the best ASX ETFs to buy now
• Which ASX ETFs give Aussie investors access to US stocks?
• How much would I have now if I’d invested $10,000 in the BetaShares Nasdaq 100 ETF (NDQ) a year ago?
• Buy and hold these ASX ETFs until 2034

John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to Meta Platforms CEO Mark Zuckerberg, is a member of The Motley Fool’s board of directors. Motley Fool contributor 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 Amazon, Apple, BetaShares Nasdaq 100 ETF, Meta Platforms, 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 positions in and has recommended BetaShares Nasdaq 100 ETF. The Motley Fool Australia has recommended Amazon, Apple, Meta Platforms, and Nvidia. 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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