Despite the pandemic, over the last 12 months the healthcare sector has been a great place to invest your money.

Since this time last year, the S&P/ASX 200 Health Care index has generated a return of 17%. As a comparison, the benchmark S&P/ASX 200 Index (ASX: XJO) is down 7.2% over the same period.

Due to the growing demand for healthcare services because of ageing populations, improving treatment options, and chronic disease burden, I expect this outperformance to continue over the 2020s.

In light of this, I believe having exposure to the healthcare sector would be a great thing for a portfolio.

But which shares should you buy? Here are two options to consider:

iShares Global Healthcare ETF (ASX: IXJ)

I think the iShares Global Healthcare exchange traded fund (ETF) would be a fantastic option for investors looking for healthcare exposure. Through a single investment, it provides investors with access to a wide range of companies across sectors including biotechnology, pharmaceutical, and medical devices.

Among its holdings you’ll find our very own CSL Limited (ASX: CSL) and Ramsay Health Care Limited (ASX: RHC). And among its many international holdings are the likes of Johnson & Johnson, Pfizer, Novartis, Merck & Co, and United Health. I believe these companies are well-placed for growth over the next decade and feel confident the ETF can generate strong long term returns for investors. 

ResMed Inc. (ASX: RMD)

Another ASX healthcare share I think could provide strong returns for investors over the 2020s is ResMed. It is a medical device company with a focus on sleep treatment products and ventilators. It has been growing at a consistently strong rate over the last decade and looks well-placed to continue this positive form. 

This is due to its world-class, cloud-connected hardware and software solutions and its huge addressable market. Management currently estimates that there are 936 million people with sleep apnoea globally. With the majority of these sufferers undiagnosed, I believe this gives it a significant runway for growth. In addition to this, the company notes that there are 380 million people who suffer from chronic obstructive pulmonary disease (COPD) and over 340 million people living with asthma. These are all people whose lives could be improved with ResMed’s products in the future. 

More reading

• 2 defensive ASX ETFs to add to a well-balanced portfolio
• Top brokers name 3 ASX shares to buy today
• 5 things to watch on the ASX 200 on Wednesday
• CSL (ASX:CSL) share price and 2 other ASX stocks among latest broker “buy” ideas
• Leading brokers name 3 ASX shares to sell today

James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of CSL Ltd. The Motley Fool Australia has recommended ResMed Inc. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

The post The ASX healthcare shares I would buy and hold until at least 2030 appeared first on Motley Fool Australia.

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On Wednesday the S&P/ASX 200 Index (ASX: XJO) was back on form and pushed slightly higher. The benchmark index rose 0.1% to 6,191.8 points.

Will the market be able to build on this on Thursday? Here are five things to watch:

ASX 200 expected to sink lower.

News that the U.S. Senate has blocked a US$500 billion COVID-19 stimulus package looks set to weigh on the Australian share market this morning. According to the latest SPI futures, the ASX 200 is poised to open the day 57 points or 0.9% lower. Over on Wall Street, in late trade the Dow Jones is down 0.1%, the S&P 500 is up 0.15%, and the Nasdaq has risen 0.2%.

Oil prices tumble lower.

It could be a difficult day for energy shares such as Oil Search Limited (ASX: OSH) and Woodside Petroleum Limited (ASX: WPL) on Thursday after oil prices tumbled notably lower.  According to Bloomberg, the WTI crude oil price is down 3.9% to US$40.09 a barrel and the Brent crude oil price is down 3.2% to US$41.78 a barrel. Weak demand for gasoline in the United States led to this decline.

Annual general meetings.

It is going to be a busy day of annual general meetings on Thursday. Among the companies holding meetings today are Crown Resorts Ltd (ASX: CWN), and Webjet Limited (ASX: WEB). Both companies are likely to provide an update on how they are performing so far this financial year. Webjet’s bookings and cash burn will be of particular interest.

Gold price charges higher.

It could be a good day for gold miners including Evolution Mining Ltd (ASX: EVN) and Northern Star Resources Ltd (ASX: NST) after the gold price charged higher overnight. According to CNBC, the spot gold price is up 0.5% to US$1,925.30 an ounce. This was driven by further weakness in the U.S. dollar.

Westpac sells Zip stake.

The Zip Co Ltd (ASX: Z1P) share price will be one to watch this morning after Westpac Banking Corp (ASX: WBC) announced an agreement to sell its 10.7% stake to institutional investors for a 6% discount of $6.65 per share. Westpac owns 55,460,987 Zip shares, which values its stake at approximately $368.8 million, based on the offer price. The bank notes that the sale will add around 8 basis points to its common equity tier 1 capital ratio.

More reading

• Here’s why Westpac (ASX:WBC) just sold its entire Zip (ASX:Z1P) stake
• The best ASX shares to buy during a market crash
• The ASX 200 finished 0.1% higher today
• How has COVID-19 shaken up the Sydney Airport share price?
• Are US shares a better investment than the ASX 200?

James Mickleboro owns shares of Westpac Banking. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of ZIPCOLTD FPO. The Motley Fool Australia owns shares of and has recommended Webjet Ltd. The Motley Fool Australia has recommended Crown Resorts Limited. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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Hot on the heels of the announcement of a partnership with payments company Afterpay Ltd (ASX: APT), this afternoon Westpac Banking Corp (ASX: WBC) has revealed plans to sell its entire stake in rival buy now pay later provider Zip Co Ltd (ASX: Z1P).

What did Westpac announce?

Westpac has announced that it has signed an agreement with UBS for an underwritten sale of its 10.7% stake in Zip by way of a fully underwritten book build to institutional investors.

According to the release, the bank has agreed an offer price of $6.65 per share, which equates to a discount of 6.07% to Zip’s closing price of $7.08 on Wednesday.

The settlement of the transaction is expected to occur on 26 October 2020.

Why is Westpac selling its stake?

Australia’s oldest bank revealed that it is selling its stake as part of its strategy to simplify its business and ensure that it is using its capital efficiently.

The bank notes that the sale will add around 8 basis points to Westpac’s common equity tier 1 capital ratio when its settles.

At the last count, Westpac owned Zip 55,460,987 shares. This values its stake at approximately $368.8 million, based on the offer price.

What now for Westpac and Zip?

Despite this news and Westpac’s recent partnership with Afterpay, this doesn’t mean the end of the two companies working together.

Westpac Chief Information Officer, Gary Thursby, commented: “Larry Diamond, Peter Gray and the management team of Zip have done a tremendous job growing the company, including expanding globally. We look forward to seeing them continue to grow a global customer franchise.”

“We are continuing to explore opportunities with Zip, including working to integrate their buy now pay later functionality into our mobile banking apps across Westpac and our Regional bank brands. This would expand our offering to customers and broaden the customers Zip can reach.”

“We are also working with Zip on other opportunities for consumer, business, and corporate customers that we believe could be mutually beneficial, while continuing to develop our banking relationship with Zip,” Mr Thursby concluded.

More reading

• The best ASX shares to buy during a market crash
• Zip (ASX:Z1P) announces major payments expansion with Tap & Zip
• The ASX 200 slid 0.72% lower today
• Leading brokers name 3 ASX shares to sell today
• Douugh and Afterpay were among the most traded shares on the ASX last week

James Mickleboro owns shares of Westpac Banking. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of ZIPCOLTD FPO. The Motley Fool Australia owns shares of AFTERPAY T FPO. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

The post Here’s why Westpac (ASX:WBC) just sold its entire Zip (ASX:Z1P) stake appeared first on Motley Fool Australia.

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The Dubber Corp Ltd (ASX: DUB) share price shot up by 16% today as investors fought to get a parcel of its shares.

Shares in the cloud-based software-as-a-service (SaaS) company closed out the day at $1.45. Let’s take a look at what was driving the gains in the Dubber share price today.

What does Dubber do?

Dubber is a cloud call recording and data capture company that provides unified communication products to its clients. The company’s technology enables voice calls to be analysed and turned into data for process improvement.

New product launch

Dubber unveiled today the global launch of its unified recording and voice artificial intelligence solution for Microsoft Corporation (NASDAQ: MSFT)’s Microsoft Teams.

This marks the first-of-its-kind capability for Microsoft. The technology automatically records voice and video of every conversation and converts it into rich voice data. The captured information is then transformed for compliance and performance improvement.

The global channel program is expected to eliminate the cost, complexity and risk of traditional recording. In turn this allows the user to unlock benefits of voice data at scale.

Dubber advised the extensive launch for its Microsoft partners will include support, deployment, and training resources.

Management commentary

Commenting on the market gap, Dubber CEO Mr Steve McGovern said:

COVID has dramatically accelerated the demand globally for unified communications solutions. As workforces have dispersed and network end-points multiplied the demand for automated call recording at scale has become essential to addressing regulatory requirements and enterprise-wide visibility. With Dubber supporting Microsoft Teams via our global platform, users can activate recording immediately in the cloud – eliminating the need to build solutions or buy hardware.

He added:

Our integration with Microsoft Teams advances Dubber as the preeminent and de facto cloud-based unified call recording solution for communications providers – and as a source of differentiation and value for resellers globally.

More reading

• Why the Dubber (ASX:DUB) share price is tumbling lower today
• Why Dubber, New Hope, Pro Medicus, & Rio Tinto shares are dropping lower
• Why the Dubber (ASX:DUB) share price rocketed 16% higher today

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

The post Why the Dubber (ASX:DUB) share price rocketed 16% today appeared first on Motley Fool Australia.

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They say that more millionaires are minted during share market crashes than at any other time. But why is that the case? Most of us think of share market crashes as times where our personal wealth takes a big (but hopefully temporary) dive, at least on paper. It’s a much-dreaded event, to be sure, and one that every ASX investor thinks about quite a lot, I’d wager.

But the reason market crashes can be so lucrative is this very fear itself. See, as value investing legend Benjamin Graham once said, markets are sometimes driven by one of 2 emotions: fear and greed. It’s these emotions that cause markets to become temporarily irrational. And in the case of fear, this is what you see during a market crash. Think back to the nasty crash we saw in March.

Did the intrinsic and rational value of S&P/ASX 200 Index (ASX: XJO) companies really fall 36.5% between 20 February and 23 March? I don’t think so. And yet that’s exactly what the ASX 200 did, which was of course followed by a rapid recovery.

Friends, this temporary divorce from rationality is something we can all exploit. It’s why the most millionaires are minted in these times. That’s why I think all investors should have a small percentage of their portfolios in cash, so you can take advantage of these situations.

But which shares to buy in a crash? Well, that’s a good question.

What are the best ASX shares to buy in a market crash?

You could always simply stick with index funds, like those tracking the ASX 200 for instance. As an example, the iShares Core S&P/ASX 200 (ASX: IOZ) rose around 33% in value between 23 March and 10 June. Not a bad return for 2½ months.

But, after looking at the performance of various ASX shares in March and April, I have concluded that the best area to focus on are cyclical growth shares, in particular, those involved in the tech space.

ASX growth shares are funny things. They tend to outperform the broader share market during bull markets, but underperform during bear markets. That’s because, due to their smaller natures, growth shares don’t tend to be as financially resilient as larger companies in times of trouble. However, because tech companies tend to have fixed costs that are relatively low, tech shares tend to be able to weather these storms far better than others, say a small mining exploration company.

If we look at the companies that have performed the best since 23 March, the list is dominated by tech. We have Afterpay Ltd (ASX: APT), up more than 1,000% going off today’s share prices. Xero Limited (ASX: XRO) is up nearly 100%, Zip Co Ltd (ASX: Z1P) is up 480%, while Sezzle Inc (ASX: SZL) is up a mind-blowing 2,000%.

In fact, the entire S&P/ASX All Technology Index (ASX: XTX) is up 130% since 23 March.

Foolish takeaway

Now I’m not advocating that anyone should start trying to ‘time the market’ here. However, next time a market crash comes around, I am suggesting that the first ASX shares on your watchlist should be growth shares. Especially those in the tech space. Obviously, if a particular company is being disproportionally affected by the cause of the market crash (eg Webjet Limited (ASX: WEB) in March), it might be better to sit on the sidelines.

I made the mistake of buying some value plays in March, instead of focusing on the companies with the biggest upside potential (first world problems). I won’t be making the same mistake again, and I don’t think you should either!

More reading

• The ASX 200 finished 0.1% higher today
• How has COVID-19 shaken up the Sydney Airport share price?
• Are US shares a better investment than the ASX 200?
• What you need to know about the surge in the NSX (ASX:NSX) share price
• Are these shares the next Afterpay (ASX:APT) and Appen (ASX:APX)?

Sebastian Bowen has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Xero and ZIPCOLTD FPO. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. recommends Sezzle Inc. The Motley Fool Australia owns shares of and has recommended Webjet Ltd. The Motley Fool Australia owns shares of AFTERPAY T FPO. The Motley Fool Australia has recommended Sezzle Inc. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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The S&P/ASX 200 Index (ASX: XJO) finished 0.12% higher today, ending at 6,192 points.

Here are some of the highlights from the ASX today:

Megaport Ltd (ASX: MP1)

Megaport reported its first quarter of FY21 to investors today.

It said that it grew its quarterly revenue to $17.3 million, up 2% from the last quarter. Monthly recurring revenue (MRR) for September 2020 was $5.8 million, up 2% quarter on quarter.

Total installed data centres grew 5% to 385 and total enabled data centres went up 5% to 702 over the quarter.

Megaport had 1,980 customers at the end of the quarter, an increase of 7% compared to the last quarter.

Total ports rose by 10% quarter on quarter to 6,333. Average revenue per port was $913. At the end of September 2020 it had $152.8 million of cash.

Megaport’s CEO, Vincent English, said: “Megaport remains committed to driving value for our customers, partners and shareholders. We are constantly evolving our platform so our customers can more easily connect with the services they need to power their business. MVE will play a fundamental part in our success by allowing our customers to access Megaport’s elastic interconnection platform from locations beyond traditional data centres – including branch offices, corporate campuses, and point of sale locations.

“Profitability remains a company-wide priority. We are focused on achieving earnings before interest, tax, depreciation and amortisation (EBITDA) breakeven on an exit run-rate basis by the close of fiscal year 2021 by driving further customer growth across all regions.”

The Megaport share price fell 13% today, making it the worst performer in the ASX 200.

Temple & Webster Group Ltd (ASX: TPW)

The e-commerce business announced a trading update today.

Year to date revenue for the period from 1 July 2020 to 19 October 2020 was up 138% compared to the prior corresponding period.

Temple & Webster reported that it made $8.6 million of EBITDA in the first quarter of FY21, which was more than the whole of FY20.

October revenue growth was still more than 100%. The company said this was pleasing because it has entered its peak trading months.

Management said the company is committed to a high growth strategy to take advantage of the structural shift towards online, to capitalise on both organic and inorganic opportunities.

However, the Temple & Webster share price sank around 17% today.

EML Payments Ltd (ASX: EML)

Payments business EML announced its first quarter trading update today as well.

EML revealed that its gross debit volume (GDV) was $4.85 billion in the first quarter. Up 20% on the prior quarter (being the fourth quarter of FY20) and up 51% on the prior corresponding period (PCP – the first quarter of FY20).

EML Payments said that its revenue was up 20% on the prior quarter and up 75% on the PCP. This helped drive EBITDA up 69% on the prior quarter and it grew 215% over the PCP.

Management were pleased with this update because historically the first quarter is normally the weakest quarter of the year.

Cost control initiatives by the ASX 200 share reduced cash overheads by $0.7 million compared to the prior corresponding period (excluding the PFS acquisition).

Looking at the PCP for the different divisions. Virtual account numbers’ GDV was in line with the PCP.  Total general purpose reloadable GDV was up 234% largely due to the PFS acquisition – without the PFS acquisition, EML GDV increased 16% and PFS GDV went up 24%. Gift and incentive GDV was down 11% on the PCP because of COVID-19 impacts, however it was up 41% compared to the fourth quarter of FY20.

The EML share price fell 2.4% today. 

More reading

• How has COVID-19 shaken up the Sydney Airport share price?
• Are US shares a better investment than the ASX 200?
• Temple & Webster (ASX:TPW) share price sinks 15% lower: Is this a buying opportunity?
• What you need to know about the surge in the NSX (ASX:NSX) share price
• Will the outlook for ASX 200 shares stay bullish?

Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and recommends MEGAPORT FPO. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Temple & Webster Group Ltd. The Motley Fool Australia owns shares of and has recommended EML Payments. The Motley Fool Australia has recommended MEGAPORT FPO and Temple & Webster Group Ltd. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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Shareholders in Recce Pharmaceuticals Ltd (ASX: RCE) have been hitting the sell button today following the release of its quarterly update.

At the time of writing, the Recce share price is trading 7.59% lower at $1.10. This represents a decline of 40% since the price reached an all-time high of $1.87 last month.

Let’s see what Recce achieved for the quarter.

Trading update

For the period ending September 30, Recce reported a cash balance of $25.6 million due to a successful capital raise. Cash out-flows from operations came to $3.3 million with $2.5 million invested in research and development.

The company received a $37,508 grant as part of the Entrepreneurs’ Program run by the Department of Industry, Science, Energy and Resources. The funds are expected to be put towards its Recce 327 SARS-CoV-2 antiviral screening program.

The company said it was well-funded to advance its clinical and commercial programs to date.

Operational highlights

Recce briefly touched on its operational developments over the last quarter, highlighting key achievements.

Recce 327

The phase I clinical study of its flagship drug, Recce 327 is currently being trialled at South Australia’s CMAX Clinical Research. The company said that the program was progressing well with significant volumes of Recce 327 and placebos being produced. The phase I study aims to assess the safety and tolerability of Recce 327 in healthy patients as a single ascending dose.

SARS-CoV-2 International Studies

In addition to the clinical trial, University of Tennessee researchers evaluated the Recce 327 and Recce 529 compounds. Medical professionals are looking into the viability that the company’s products could assist recovery in the respiratory illness.

In response, Recce plans to test the compounds on animals, with data available at the end of the calendar year.

Recce 435

The company has formulated a new oral antibiotic to fight against Helicobacter pylori (H. pylori) bacteria. The Murdoch Children’s Research Institute entered an agreement with Recce to conduct a range of pre-clinical studies assessing Recce 435. The program is being carried out by the Mucosal Immunology Group at the MCRI, Royal Children’s Hospital in Melbourne.

Management changes

During the reporting period, Recce expanded its management and advisory teams with a number of new appointments.

Dr Alan W Dunton joined the board as an independent non-executive director and member of the company’s audit & risk/remuneration & nomination committees. Dr Dunton has previously led clinical research development teams through the regulatory review and commercialisation process.

Professor Phillip Sutton will lead the team working on the Recce 435’s helicobacter pylori stomach development program. Mr Sutton has more than 30 years’ experience of research, having served as the former head of immunology at CSL Limited (ASX: CSL).

And lastly, Mr James Graham was appointed CEO and Michele Dilizia as chief scientific officer. Both have been with the company since inception and will continue their roles as members of the board.

More reading

• The Recce (ASX:RCE) share price has surged up today. Here’s why
• Why the Recce Pharmaceuticals (ASX:RCE) share price is jumping 10% higher
• Why Corp Travel Management, EOS, Evolution, & Recce shares are charging higher
• Why the Recce Pharmaceuticals (ASX:RCE) share price crashed 15% lower today
• Why Kathmandu, New Hope, Recce, & Ramelius shares are dropping lower today

Aaron Teboneras owns shares of CSL Ltd. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of CSL Ltd. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

The post Here’s why the Recce (ASX:RCE) share price has fallen 7% today appeared first on Motley Fool Australia.

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The S&P/ASX 200 Index (ASX: XJO) has jumped more than 18% in half a year since the outbreak of the COVID-19 pandemic. This is partly due to the resources sector rally, which saw investors buying into companies such as Silver Lake Resources Limited (ASX: SLR) (+27% in 6 months), Fortescue Metals Group Limited (ASX: FMG) (+54% in 6 months) and Mineral Resources Limited (ASX: MIN) (+56% in 6 months). There has also been a moderate rebound in the infrastructure sector after the Australian Government announced a $1.5 billion infrastructure stimulus package in June.

Infrastructure assets such as Sydney Airport Holdings Pty Ltd (ASX: SYD) have historically delivered excellent returns. Since its inception, Sydney Airport shares have returned more than 300% in 20 years. But in 2020 the airport has underperformed the broader market, with the Sydney Airport share price falling by 27% over the last 12 months.

Let’s look at the way COVID-19 has changed the game for Sydney Airport, and why I am slightly concerned about whether it can return to its former strength.

The nature of infrastructure assets

Pre-COVID, infrastructure assets were considered ‘fortress assets’ due to their strong market positions and high asset quality. These assets are available for use by the public and they usually generate great long-term returns. 

However, the pandemic may prove investors wrong in terms of asset quality when we look at the Sydney Airport share price. Its performance has weakened over the past few months amid the pandemic-fuelled economic carnage. 

Focusing on the fundamentals 

Two important metrics when looking at Sydney Airport’s valuation are its cash flow and the volume of air traffic.

Looking at Sydney Airport’s financial position, it is clear that the management team has piled up some cash in FY20. The net cash flow of the airport as of June 2020 increased by 300% compared with June 2019, according to Sydney Airport’s interim financial report for the half year ended 30 June 2020.

In the same period, the airport’s overall cash position looked positive, but the cash flow cover ratio (an indicator of the ability of a company to pay interest and principal amounts when they become due) went down 33% to 2.4x. This means that its interest expenses went up as the company used extra debt financing to protect its balance sheet.

In addition, since late February, passenger traffic through Sydney Airport has been severely impacted due to the lockdown. In its 2020 half-year result Sydney Airport reported its international and domestic passenger traffic went down 57.3% and 56.1%, respectively, compared to the prior corresponding period.

Foolish takeaway

Amid the looming economic challenges, I have some concerns about the long-term investment return of Sydney Airport in the post-COVID era. Although the lifting of travel restrictions and recovery of business activities may help the Sydney Airport share price in the short run, in my view it has a long road to full recovery.

More reading

• Are US shares a better investment than the ASX 200?
• What you need to know about the surge in the NSX (ASX:NSX) share price
• Will the outlook for ASX 200 shares stay bullish?
• ASX 200 flat: Big four banks push higher, Afterpay drops, Megaport sinks 10%
• 3 ASX shares I’d buy for summer 2021

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

The post How has COVID-19 shaken up the Sydney Airport share price? appeared first on Motley Fool Australia.

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Here at the Fool, we’re in the business of discussing the S&P/ASX 200 Index (ASX: XJO) and the wonders of the Aussie share market. Over the past 100-plus years, ASX shares have proven to be wealth creation machines. And yet, these days, ASX investors are increasingly turning to the US markets to either supplement or supplant their ASX share portfolios.

On one level, this is understandable. The US is the largest capital market in the world by far. That’s the reason why Aussie tech company Atlassian Inc chose to list on the Nasdaq exchange in America rather than our own ASX. And when you have companies like Apple Inc, Amazon.com Inc, Berkshire Hathaway Inc and Alphabet Inc amongst the US’s biggest players, it’s hard (at least for many investors) to get excited about top ASX 200 shares like BHP Group Ltd (ASX: BHP) and Westpac Banking Corp (ASX: WBC).

But are US shares really a better option to invest in than our own ASX? Let’s look at some numbers.

To compare our 2 markets, we’ll look at the performance of some exchange-traded index funds (ETFs).

US shares vs ASX: a trans-Pacific matchup

The Vanguard Australian Shares Index ETF (ASX: VAS) is an index fund that tracks the S&P/ASX 300 Index (ASX: XKO) – a comprehensive barometer of the Australian share market. Over the past 5 years, this ETF has returned an average of 7.33% per annum, and 6.73% per annum over the past 10.

Let’s compare that with an ETF tracking the US’s S&P 500 Index, the flagship index that most investors use for US markets.

The iShares S&P 500 ETF (ASX: IVV) has returned an average of 13.44% per annum over the past 5 years, and 17.05% over the past 10.

Case closed, right? The US has handily smashed our ASX, so let’s all sell our ASX shares and hop on the American bandwagon.

Well, not so fast. See, the IVV ETF is not hedged against currency movements. And our dollar has spent most of the past decade falling in value against the US dollar (remember the days of parity in 2010 and 2011?). That falling dollar has helped push up the returns of the S&P 500 in Australian dollar terms.

So let’s instead use a currency-hedged version of the S&P 500 – represented by the iShares S&P 500 (AUD Hedged) ETF (ASX: IHVV). This ETF functions exactly the same as IVV, except it takes this currency factor out of the equation.

So, over the past 5 years, IHVV has returned an average of 12.61%. unfortunately, this ETF has only been around since 2014, so we can’t see a 10-year performance. But looking at the US-listed iShares S&P 500 Fund (which is benchmarked to US dollars), we can get a rough idea. Over the past 10 years, that fund has returned an average of 13.68%.

That still looks pretty good against VAS’s 10-year average of 6.73%.

Foolish takeaway

It is incontrovertible that US shares have handily outperformed ASX shares over the past 5 and 10 years. However, it’s worth noting that all countries have their time in the sun, and the US markets have benefitted enormously from the growth of their large tech companies over the past decade – a feat unlikely to be matched over the next decade in my view. Thus, there’s every reason to believe ASX shares will beat the US at various periods in the future. Therefore, I don’t think it matters too much which shares or index you invest in. You could even hedge your bets and go with both.

More reading

• What you need to know about the surge in the NSX (ASX:NSX) share price
• Will the outlook for ASX 200 shares stay bullish?
• ASX 200 flat: Big four banks push higher, Afterpay drops, Megaport sinks 10%
• 3 ASX shares I’d buy for summer 2021
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We are seeing a reversal of fortunes today with the Reject Shop Ltd (ASX: TRS) share price crashing and shopping mall stocks rally.

The Reject Shop share price tumbled 8.3% to $6.49 in the last hour of trade as the discount retailer held its annual general meeting.

But comments from its chief executive Andre Reich should send shivers down the spines of retail property stocks instead.

Reject Shop share price vs. ASX shopping centre stocks

He warned that the retailer planned to renegotiate rents for more than 60% of its stores over the next two years, reported the Australian Financial Review.

This didn’t faze mall owners. The Vicinity Centres (ASX: VCX) share price jumped 2.3% to $1.36, the Scentre Group (ASX: SCG) share price gained 2.9% to $2.30 and the Mirvac Group (ASX: MGR) share price added 2% to $2.28 at the time of writing.

But the turn in share prices today is only a blip. The TRS share price has surged 90% since the start of this calendar year, while ASX shopping centre stocks have crashed by between 16% and 40%.

Reject Shop throws down the gauntlet

Mr Reich is threatening to play hard ball. He will not hesitate to close stores if he can’t get what he wants, particularly shops in larger shopping centres.

This is because stores in neighbourhood centres and strip malls have outperformed those in the big malls and CBD locations.

This is probably the result of COVID‐19 restrictions where foot traffic in large malls and city centres have tumbled.

Cutting its way to growth

While Reject Shop is threatening to close stores on the one hand, it’s on the lookout to open new ones in lower cost locations.

It’s also trying to develop its online shopping portal to capitalise on the structural change in the way consumers shop.

Driving cost down is a key priority for the retailer as it’s on the first phase of its turnaround strategy. The key goal is to stop the slide in earnings and expand earnings before interest and tax (EBIT) margins to 5% from 0.6% that it posted in 2020.

Mr Reich is also looking to reduce range of items sold in stores by as much as 75% to simplify operations, cut costs and increase buying power.

Could supermarkets follow Reject Shop’s lead?

To better capitalise on the post-COVID world, Reject Shop will focus on everyday essentials such as detergent, package foods and pet products.

These items are in hot demand as consumers spend more time at home. Just ask Woolworths Group Ltd (ASX: WOW) and Coles Group Ltd (ASX: COL).

Speaking of which, I am sure the giant supermarkets are also thinking of ways to cut their leasing costs for much the same reason as Reject Shop.

More reading

• Top brokers name 3 ASX shares to buy today
• Here’s how much Coles (ASX:COL) and Woolworths (ASX:WOW) are benefiting from COVID-19
• 3 ASX shares I’d buy for summer 2021
• 5 ASX 200 events to watch for this week
• Buy Coles (ASX:COL) and this dividend share before the next RBA meeting

Motley Fool contributor Brendon Lau owns shares of Woolworths Limited. Connect with me on Twitter @brenlau.

The Motley Fool Australia owns shares of COLESGROUP DEF SET and Woolworths Limited. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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