The S&P/ASX 200 Index (ASX: XJO) has bounced back very strongly on Monday and is on course to record an impressive gain. At lunch, the benchmark index is up 2.3% to 5,924.7 points.

Here’s what has been happening on the market today:

Bank shares charge higher.

The big four banks have started the week in a very positive fashion. At lunch, all four banks are trading at least 3% higher and helping to drive the ASX 200 higher. The best performer in the group is the Westpac Banking Corp (ASX: WBC) share price. The shares of Australia’s oldest bank are up over 4% at the time of writing.

Qantas shares soar.

The Qantas Airways Limited (ASX: QAN) share price is soaring on Monday after being the subject of a bullish broker note out of Goldman Sachs. This morning the broker upgraded the airline operator’s shares to a buy rating and lifted the price target on them by a massive 49% to $5.28. Its analysts appear confident the domestic travel market will recover both quicker and stronger than expected.

Energy shares storm higher.

Also storming higher today are Australia’s leading energy shares. The likes of Beach Energy Ltd (ASX: BPT) and Woodside Petroleum Limited (ASX: WPL) are all trading notably higher after oil prices started their recovery in Asian trade. The S&P/ASX 200 Energy index is up a sizeable 4.5% at the time of writing.

Best and worst ASX 200 performers.

The best performer on the ASX 200 on Monday has been the Oil Search Limited (ASX: OSH) share price with a 6.5% gain. This follows a recovery in oil prices in Asian trade following a sharp decline on Friday. The worst performer has been the Viva Energy Group Ltd (ASX: VEA) share price with a sizeable 11.5% decline. This morning the fuel retailer’s shares traded ex-dividend for its 5.9 cents per share dividend and its 21.46 cents per share capital return. The latter relates to its Waypoint REIT (ASX: WPR) divestment.

More reading

• Why Costa, Qantas, Santos, & Westpac shares are storming higher today
• Why Advance NanoTek, Macquarie Telecom, Nick Scali, & Viva Energy shares are dropping lower
• Could industrial REITs be the best ASX shares to buy for dividends?
• ASX energy stocks like Woodside (ASX:WPL) not pricing in a Biden win
• Leading broker upgrades Qantas (ASX:QAN) shares to buy rating

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

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In late morning trade the S&P/ASX 200 Index (ASX: XJO) is on course to start the week on a very positive note. At the time of writing the benchmark index is up 2.25% to 5,921.1 points.

Four shares that are climbing more than most today are listed below. Here’s why they are storming higher:

The Costa Group Holdings Ltd (ASX: CGC) share price is up 3% to $3.46. This morning analysts at UBS retained their buy rating and $3.55 price target on this horticulture company’s shares. The broker is becoming increasingly confident in the company’s earnings outlook thanks to solid demand in the grocery channel. The broker also feels Costa’s shares are trading on undemanding multiples.

The Qantas Airways Limited (ASX: QAN) share price has charged 4.5% higher to $4.29. The catalyst for this has been a broker note out of Goldman Sachs. This morning the broker upgraded the airline operator’s shares to a buy rating with a massively improved price target of $5.28. It made the move due to its belief that the domestic travel market will recovery quicker and stronger than it previously expected.

The Santos Ltd (ASX: STO) share price has risen over 4% to $4.86. Investors have been buying Santos and other energy shares after oil prices recovered in Asian trade following a sharp decline on Friday evening. The S&P/ASX 200 Energy index is up a sizeable 4.7% at the time of writing.

The Westpac Banking Corp (ASX: WBC) share price has stormed over 4% higher to $17.29. Investors have been taking advantage of a pullback in bank shares on Friday to make an investment this morning. This appears to have been driven by news that President Trump is recovering well from COVID-19. It isn’t just Westpac pushing higher, all the big four banks are rising by at least 3% on Monday.

More reading

• ASX 200 up 2.3%: Big four banks charge higher, Qantas soars, energy shares jump
• ASX energy stocks like Woodside (ASX:WPL) not pricing in a Biden win
• Leading broker upgrades Qantas (ASX:QAN) shares to buy rating
• 5 things to watch on the ASX 200 on Monday
• Meet the ASX 200 stock with a dividend yield that’ll hit ~14% in FY22

Motley Fool contributor James Mickleboro owns shares of Westpac Banking. The Motley Fool Australia owns shares of and has recommended COSTA GRP FPO. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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The S&P/ASX 200 Index (ASX: XJO) has started the week on a very positive note and is storming notably higher. At the time of writing the benchmark index is up 2.3% to 5,926.1 points.

Four shares that have failed to follow the market higher today are listed below. Here’s why they are dropping lower:

The Advance NanoTek Ltd (ASX: ANO) share price is down almost 2.5% to a 52-week low of $3.08. Investors have been selling the advanced materials company’s shares this year amid a collapse in demand for its zinc products from sunscreen manufacturers. This led to the company recently downgrading its guidance for FY 2021.

The Macquarie Telecom Group Ltd (ASX: MAQ) share price has dropped 3% lower to $47.07. This appears to have been driven by a report in the AFR in relation to a statement of claim filed in the Supreme Court of NSW. Cocoon Data has accused the company’s Government division of failing to honour the terms of an agreement for it to resell its Safe Share security platform. Instead, it alleges, Macquarie Telecom created its own copycat version, which was passed off as an incremental upgrade.

The Nick Scali Limited (ASX: NCK) share price has fallen almost 3% to $8.22. This decline is attributable in full to the furniture retailer’s shares trading ex-dividend this morning for its final dividend. Eligible shareholders can now look forward to being paid Nick Scali’s 22.5 cents per share fully franked dividend in approximately three weeks on 27 October 2020.

The Viva Energy Group Ltd (ASX: VEA) share price has crashed over 12% lower to $1.37. As with Nick Scali, this decline is due to the fuel retailer’s shares trading ex-dividend this morning. Viva Energy is not only paying a 5.9 cents per share dividend, it is also returning 21.46 cents per share of capital to shareholders. If you exclude these from the equation, Viva Energy’s shares would be up over 5% on Monday. The capital return was the result of the company divesting its stapled securities in Waypoint REIT (ASX: WPR).

More reading

• 5 things to watch on the ASX 200 next week
• 3 ASX shares poised for huge growth in FY21
• The ASX stocks most leveraged to the Victorian economy re-start
• Advance NanoTek (ASX:ANO) share price crashes lower on COVID-19 sales update
• Can Macquarie Telecom (ASX: MAQ) become the next NextDC?

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

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Social distancing and lockdown measures have caused many real estate investment trust (REITs) to defer dividends and fall out of favour. Industrial REITs could be a hidden gem within the real estate sector with reliable clients such as eCommerce, manufacturing, logistics and construction that have been able to carry out business as usual. 

The reliability of its clients could make industrial REITs some of the best ASX 200 dividend shares to buy right now. Let’s take a closer look.

Why are REITs struggling?

REITs typically maintain properties within the office, retail, industrial and residential sectors. Office and retail-oriented REITs have struggled through COVID-19 due to shopping centre closures, rental disputes and the shift to working from home. This has seen the likes of Scentre Group (ASX: SCG) and Vicinity Centres (ASX: VCX) share prices fall more than 40% and defer interim dividends. 

In the case of Scentre Group, its April rental collection figures went as low as 28% of its regular monthly gross rental bills. There has since been a V-shaped recovery with August representing 86% of regular monthly gross rental bills. Despite the swift recovery, the impact throughout April and May has meant Scentre Group has opted to defer its interim dividend. I believe it could become difficult to gauge the reliability of dividends from office and retail REITs moving forward.

Enter industrial REITs

Industrial REITs such as Goodman Group (ASX: GMG), Centuria Industrial REIT (ASX: CIP) and APN Industria REIT (ASX: ADI) have not only outperformed the S&P/ASX 200 Index (ASX: XJO) but also maintained its all important dividend payment. The consistency of its cash flow and outperformance of the general market could make it an ASX 200 dividend share for yield focused investors. 

Centuria Industrial is one of Australia’s largest domestic pure play industrial REITs. The company has more than 50 high quality assets and a portfolio value of $1.6 billion as of 30 June 2020. 52% of portfolio income is derived from tenant customers directly linked to the production, packaging and distribution of consumer staples and pharmaceuticals. This includes high profile names such as Arnott’s, Visy, Australia Post and Toll. The company currently pays a dividend yield of 5.70%.  

Goodman Group on the other hand offers a much lower dividend yield but has provided more in terms of capital gains compared to the ASX 200 and its REIT peers. In FY20, the company delivered a 12.5% increase in operating profit driven by continued demand from several segments for both temporary and permanent space, and a general acceleration of requirements across the digital economy. Goodman could provide the best of both worlds with a small dividend yield of 1.70% and higher share price gains. 

Foolish takeaway

The high quality occupants for industrial REITs position them as both reliable ASX 200 dividend shares and potential for share price gains. For investors looking for lower risk companies with consistent cash flows, I would look at industrial REITs as an option. 

More reading

• ASX energy stocks like Woodside (ASX:WPL) not pricing in a Biden win
• Centuria Capital’s fund managers’ insights on A-REITs and unlisted property funds
• 5 things to watch on the ASX 200 on Monday
• Are these 3 ASX shares strong recovery opportunities?
• Why Trump catching COVID-19 could actually be a good thing for ASX shares

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

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The Piedmont Lithium Ltd (ASX: PLL) share price soared more than 200% in a week following the announcement of an offtake deal with Tesla Inc (NASDAQ: TSLA). With Tesla’s intentions to localise the lithium supply chain within Nevada, could these ASX lithium shares with United States operations be the ones to land a deal? 

ASX lithium shares in the US 

Ioneer Ltd (ASX: INR) 

Ioneer is an exploration company currently focusing on the development of its Rhyolite Ridge lithium-boron project in Nevada. Following its definitive feasibility study, it highlighted well defined and reliable operating cost and capital cost estimates. The project would have an all-in sustaining cash cost of US$2,510 per metric tonne of lithium carbonate placing the project at the very bottom of the global lithium cost curve. 

On 31 August, the company announced that its plan of operations for the Rhyolite Ridge lithium-boron project had been accepted by the Bureau of Land Management. The plan will now undergo an environmental review followed by preparation of an environmental impact statement (EIS). Ioneer is targeting being ‘construction ready’ in Q2 of 2021. 

Jindalee Resources Limited (ASX: JRL) 

Jindalee Resources holds interest in tenements in the US, Tasmania and Western Australia prospective for lithium, magnesite, gold, diamonds, nickel and iron ore. 

Jindalee owns the McDermitt project in Oregon which could be a source to provide long-life and low-cost lithium to the US electric vehicle battery market. The company’s metallurgical test work to date has been very encouraging, indicating high lithium recoveries and the potential to be one of the largest lithium deposits in the US. Moving forward, the company has proposed a drilling program to the Bureau of Land Management for permitting. Drilling is expected to commence in October, subject to final approvals.

Foolish takeaway

The nature of microcap exploration companies is highly risky with many projects never making it to the production phase. In the case of Piedmont Lithium, the company is still undertaking its definitive feasibility study with a recent US market initial public offering (IPO) for additional capital. In its Tesla deal, the start date for spodumene concentrate deliverables is planned to commence between July 2022 and July 2023 based on the development schedules of both parties. There are still many inherent exploration, operational and capital-related risks to overcome between now and the planned start date.

Nonetheless, Ioneer and Jindalee represent two ASX lithium shares that are within close proximity of Tesla with highly prospective lithium projects. 

More reading

• ASX investors were buying Tesla (NASDAQ:TSLA) and Apple (NASDAQ:AAPL) shares last week
• Forget day trading and buy and hold these fantastic ASX shares
• ASX 200 finishes flat, A2 Milk shares drop 10%
• Is the run over for ASX lithium shares after Tesla’s battery day? 
• Piedmont Lithium (ASX:PLL) share price rockets 83% higher on Tesla deal

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

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If you’re interested in gaining exposure to the small cap side of the market, I think it could be worth looking for options in the healthcare sector.

In this sector there are a number of companies that are benefiting from favourable tailwinds and have the potential to grow materially in the future.

Three small cap ASX healthcare shares to watch are listed below:

Mach7 Technologies Ltd (ASX: M7T)

Mach7 is a medical imaging data management solutions provider which uses software to create a clear and complete view of the patient. The company’s software helps to inform diagnosis, reduce care delivery delays and costs, and, importantly, improve patient outcomes. It recently expanded its offering via the acquisition of enterprise image viewing technology company Client Outlook. Combined, Mach7 now has a total addressable market of US$2.75 billion.

Medadvisor Ltd (ASX: MDR)

Medadvisor is a software systems developer with a focus on personal medication adherence. It offers an app that connects to pharmacy dispensing systems and has been designed to ensure correct and reliable medication use. In Australia it has connected over one million users through nearly 60% of Australian pharmacies and a network of thousands of GPs. Outside Australia, the company has growing operations in the United States, Asia, and UK markets.

Volpara Health Technologies Ltd (ASX: VHT)

Volpara uses artificial intelligence imaging algorithms to assist with the early detection of breast cancer. At the last count, its market share in the United States had grown to 27% of women screened for breast cancer. The company also advised that the annual revenue per user (ARPU) within its US breast cancer operations stood at approximately NZ$1.70 (US$1.09). However, thanks to the expansion of its product suite, during the second quarter the company has been seeing quotes with ARPU rising up to US$8.00. This is a huge step forward and validates management’s belief that its whole software platform will command ARPU of US$10.00.

More reading

• 3 small cap ASX shares to put on your watchlist right now
• Could these small cap ASX shares be the next Afterpay (ASX:APT) or Zip (ASX:Z1P)?
• 3 exciting small cap ASX tech shares that could be the next big thing
• 3 exciting small cap ASX healthcare shares to watch
• 3 very exciting small cap ASX shares to watch

James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and recommends MACH7 FPO. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of MedAdvisor and VOLPARA FPO NZ. The Motley Fool Australia has recommended MACH7 FPO, MedAdvisor, and VOLPARA FPO NZ. 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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If the polls are to be believed – and that’s a big IF – ASX energy stocks like the Woodside Petroleum Limited (ASX: WPL) share price could be in for a tougher 2021.

The odds of Joe Biden unseating Donald Trump at the upcoming US presidential election just got better after the incumbent caught COVID-19.

A Biden presidency isn’t a bad thing for the S&P/ASX 200 Index (Index:^AXJO) or global equities, but the same may not be said for the oil market.

ASX oil stocks facing the Biden blues

The oil price is already under pressure with the Brent crude benchmark falling to under US$40 a barrel when it was hovering near US$70 a barrel at the start of 2020.

This explains why the ASX energy sector is underperforming the broader market. The Oil Search Limited (ASX: OSH) share price crashed by 65%, the Woodside share price lost more than half its value and Santos Ltd (ASX: STO) tumbled 43% since January.

As mentioned, there may be no light at the end of the tunnel if Biden takes over the White House. There are two significant consequences for the oil market under a Biden presidency, according to the Financial Times.

Two big impacts from a Biden presidency

The first is obvious. Biden committed to re-joining the Paris Climate Agreement, pledged to spend US$2 trillion on clean energy and decarbonise the US economy.

His policy stands in sharp contrast to Trump, which has gone out of his way to support US oil and prop up the US shale producers.

The other impact from a Biden win is the possible dismantling of the OPEC+ production cuts. OPEC, led by Saudi Arabia, struck a deal with other major oil exporters like Russia to limit supply of crude to artificially put a floor to prices.

But Saudi Arabia was reluctantly dragged into the deal in April by Trump, who threatened to suspend US military support to the country.

Combustible mixture of oil and politics

Trump did this to win support in key battleground states that rely on the US shale industry, while the Saudis abandoned their resolve to teach Russia a lesson for not sticking to quotas.

The FT speculates that Biden won’t be so quick to pursue a similar policy as the clean energy transition becomes his top priority.

Adding fuel to the fire

What’s more, President Biden will likely reopen Iran’s oil spigots – adding additional supply to a market experiencing weak demand.

Biden indicated he will recommit the US to the international nuclear agreement with Iran. This will pave the way for sanctions against the country to be lifted for the first time since 2018.

Oil investors should be on alert. A Democrat victory will have both short- and medium-term negative implications for the sector. These risks are not priced into markets.

More reading

• 5 things to watch on the ASX 200 on Monday
• Why Trump catching COVID-19 could actually be a good thing for ASX shares
• 5 things to watch on the ASX 200 next week
• These were the best performing shares on the ASX 200 last week
• ASX 200 drops, Trump has COVID-19, Mesoblast (ASX:MSB) share price sinks

Motley Fool contributor Brendon Lau has no position in any of the stocks mentioned. Connect with me on Twitter @brenlau.

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

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If you’re looking to start your investment journey, then I think you should look beyond short term trades and focus on investing for the long term.

This is because short term trading is a high risk endeavour and prevents investors from benefiting from the power of compounding.

What is compounding?

Compounding is what happens when you earn interest on top of interest – or rather, returns on top of returns for shares.

As of the end of June, the Australian share market has provided investors with an average total return of 8.76% per annum over the last 30 years.

This means that if you had invested $1,000 into the share market every three months ($4,000 per year) since 1990, your investments would have grown to be worth $567,000 today.

But what’s more, thanks to the power of compounding, if you carried on investing this amount of money and earned the same return for a further five years, your portfolio would grow to $888,000.

That’s a massive $321,000 added to your wealth in just five years thanks to compounding. Willing to go another five years? Then your investments would grow to be worth a staggering ~$1.4 million.

The key takeaway from this for me is that starting early gives you the best chance of creating significant wealth from the share market.

With this in mind, if you’re an investor in your 20s or 30s, I would suggest you consider starting your journey with investments in a company with very strong long term growth potential.

Which ASX shares should you buy?

A few ASX shares that spring to mind immediately are payments company Afterpay Ltd (ASX: APT), donations and engagement platform provider Pushpay Holdings Ltd (ASX: PPH), and sleep treatment-focused medical device company ResMed Inc. (ASX: RMD).

I believe all three are in a perfect position to grow their earnings at a very strong rate over the 2020s. This could lead to their shares generating market-beating returns for investors.

More reading

• 5 things to watch on the ASX 200 on Monday
• 3 ASX tech shares to buy and hold for the next decade
• This ASX share is my top contrarian play right now
• The smartest ASX shares to buy if you have $2,000
• These ASX growth shares could be strong buys in October

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 PUSHPAY FPO NZX. The Motley Fool Australia owns shares of AFTERPAY T FPO. The Motley Fool Australia has recommended PUSHPAY FPO NZX and ResMed Inc. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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The Nearmap Ltd (ASX: NEA) share price had humble beginnings from a mere microcap to one of ASX’s leading tech shares. Could this 1000% runner be the next Nearmap share price? 

Enter Pointerra Ltd (ASX: 3DP) 

Pointerra provides a 3D data-as-a-service (DaaS) solution to support digital asset management activities across a range of sectors including civil infrastructure, mining, oil and gas, architecture, engineering and construction and government agencies at all levels. Its cloud-based solution is designed around compression, visualisation and analytics algorithms which index massive 3D data sets. The processed and hosted 3D data can be dynamically searched, accessed, visualised, analysed and shared by anyone, anywhere on any device. Its major client wins and plans for growth have seen the Pointerra share price run from 4 cents in July to 47 cents today (at the time of writing). This represents an increase of 1075% in only three months. 

The company is in its infancy but follows a similar business model as Nearmap’s with a diverse offering of analytics as a service (AaaS), data protection as a service (DPaaS) and DaaS. Moving forward, the company will continue to commercialise its technology via its DPaaS, DaaS and AaaS recurring subscription-based revenue model. Its ultimate vision is to create an online marketplace for the massive amounts of 3D data captured by the private and public sectors globally. 

In FY20, the company delivered a 115% increase in revenue to $2 million with an operating loss of $2.8 million and $2.3 million cash as at 30 June. 

Can Pointerra become the next Nearmap share price? 

Pointerra is in its early days but currently boasts a significant market capitalisation of $315 million. In the company’s most recent enterprise sales and annual contract value (ACV) update on 1 September, it reported further growth in spend by existing customers in addition to the onboarding of new customers in the United States energy utilities sector. 

The one month impact on ACV from increased spend by existing and new utility sector customers has already exceeded the company’s entire prior quarter uplift. ACV currently stands at US$3.98 million as at 31 August, representing a $1.11 million or 39% increase in just 30 days. 

Pointerra is now engaged directly and indirectly in servicing six paying utility customers across the US, with many more currently using and trialling Pointerra’s digital asset management platform. 

The total addressable market for the energy utility sector in the US comprises of 168 private (investor owned) companies, 812 cooperatives and more than 1,950 federal, state and municipal owned utilities. These organisations invest extensively in 3D data capture to better understand and manage the condition of their networks. Pointerra’s platform is positioned to deliver powerful insights and assist utilities in network management by simplifying workflow and improving the quality and accuracy of 3D data analytics. 

Foolish takeaway 

Pointerra is in its early days and is arguably a high risk/high reward investment. The company’s cash position could mean a potential capital raising in the near term. I believe this ASX share will continue to grow strongly and the Pointerra share price may provide a buying opportunity in the future. 

More reading

• Why EOS, Jumbo, Nearmap, & OceanaGold shares are dropping lower today
• 3 cheap ASX shares in the buy zone today
• 3 stellar mid cap ASX tech shares to buy for the long term
• The Nearmap (ASX:NEA) share price is down 28% in September: Time to buy?
• New to investing? I would invest $500 into these exciting ASX shares

Lina Lim has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Nearmap Ltd. The Motley Fool Australia has recommended Nearmap 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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If I were going to buy one ASX share this week it would be the exchange-traded fund (ETF) Betashares Ftse 100 ETF (ASX: F100).

What is Betashares Ftse 100 ETF?

This ETF is about giving investors exposure to the UK share market. As the name may suggest, it is invested in 100 of the biggest businesses on the London Stock Exchange.

The UK doesn’t have the large tech giants that the US does. But I like the diversification that the UK share market offers. Plus, plenty of its underlying holdings generate global earnings from many countries – they just happen to be listed in London.

It’s offered by BetaShares, one of the largest providers of passive investing options in Australia with a diverse array of ETFs.

How much is the annual management fee?

A key part of passively investing in ETFs is the management fee. The lower the annual fees the more of the net returns are left in the hands of the investors, which is obviously preferable.

Betashares Ftse 100 ETF has an annual cost of 0.45% per annum. That’s certainly not the cheapest fee out there available to ASX investors, but it’s a fair bit cheaper than many Australian active fund managers.

What shares does it own?

An ETF’s return will be entirely decided by its underlying holdings. So obviously it’s important to know what UK shares you’re actually invested in when you pick this investment option.

Betashares Ftse 100 ETF’s top 10 holdings are: AstraZeneca, GlaxoSmithKline, British American Tobacco, Diegeo, HSBC, Unilever, Rio Tinto, Reckitt Benckiser, BP and Royal Dutch Shell.

But there are plenty of interesting businesses outside of the top 10 such as: BHP Group, National Grid, Relx, London Stock Exchange, Prudential, Vodafone, Experian, Tesco, Ferguson, BAE Systems, Flutter Entertainment, Scottish Mortgage Investment Trust, Ocado, Just Eat, Smith & Nephew and Severn Trent.

I like the sector allocation of Betashares Ftse 100 ETF. Consumer staples has a 17.8% allocation, financials has a 17.4% allocation, healthcare has a 13.5% allocation, materials has a 11.2% allocation, industrials has a 11% allocation, energy has a 9.3% allocation, consumer discretionary has a 8.3% allocation, communication services has a 4.8% allocation, utilities has a 4% allocation and ‘other’ has a 2.8% allocation.

Whilst the lack of investment in ‘tech’ may be disappointing, there are plenty of other exciting and quality sectors to get exposure to. There isn’t too much of a focus on one industry. 

Why buy this week?

Good Australian ASX shares are trading strongly, so I’m not seeing too many opportunities here.

It can be a bit complicated when it comes to overseas investing. The investment needs to make sense both of the value of the underlying shares and a good exchange rate for the Australian dollar.

I think it makes a lot of sense to consider UK shares at the moment. There is a lot of uncertainty because of Brexit and COVID-19. The Betashares Ftse 100 ETF share price is still 27% lower than the pre-COVID-19 price.

Sometimes it’s a good time to buy shares whilst fear is elevated. Sometimes a share market can be under pressure for more than just a few months, but I don’t think the UK share market is going to be permanently impaired by the current issues.

The oil shares may be hurt for a while – but there are oil businesses in every major share market. I believe most of the shares in Betashares Ftse 100 ETF have a solid long-term future.

Earnings and dividends are being heavily affected at the moment because of COVID-19. But in the longer-term I think Betashares Ftse 100 ETF can return to having a solid dividend yield. At the moment the Australian dollar is close to a 52-week high again, so it’s a good time to buy GBP earnings.

More reading

• Where I’d invest $10,000 into ETFs right now
• Why I just bought shares of this ASX ETF
• COVID-19 fear hits the UK, 2 ASX shares to buy
• Here’s how I would spend $10,000 on ASX shares right now

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

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