ASX share market falls can be scary, but could dollar-cost averaging (DCA) be the answer?

To the inexperienced investor, the March bear market made for scary viewing. In fact, even experienced investors were spooked amid unprecedented market volatility.

While it’s good to buy undervalued ASX shares, you don’t want to fall into the trap of market timing. After all, ‘time in the market is better than timing the market’, as the saying goes. 

That’s where a DCA strategy can come into your investment plans and help you think long-term.

What is dollar-cost averaging?

According to Vanguard Australia, DCA is “investing the same amount of money at set intervals over a long period – whether market prices are up or down”.

Essentially, dollar-cost averaging is the opposite of market timing. Obviously, ASX share prices will fluctuate over time. The good news is that if you’re using DCA to your advantage, you can buy more shares at cheap prices.

For instance, let’s say you invested $1,000 per month in Afterpay Ltd (ASX: APT) shares. When the Afterpay share price was trading at $40.50 per share in February that would net you 24 shares.

However, when the ASX tech share fell to its 52-week low of $9.99 in March, that same $1,000 would buy you 100 shares.

Is now a good time to dollar-cost average into ASX shares?

The simple answer is yes, it’s always a good time to DCA into ASX shares.

The whole point of dollar-cost averaging is to ignore market timing. By definition, if you pick and choose when to DCA, you are going against that whole philosophy.

Of course, what you invest in is a whole separate issue. You could continue to buy beaten-down ASX shares like Star Entertainment Group Ltd (ASX: SGR).

However, DCA is more common with passive investors looking to track an index like the S&P/ASX 200 Index (ASX: XJO). Where active investors like to buy undervalued companies, passive investors trust that the market will win in the long run.

A couple of classic broad market ETFs that you could deploy a DCA strategy into are BetaShares Australia 200 ETF (ASX: A200) or Vanguard Australian Shares Index ETF (ASX: VAS).

ETFs don’t just have to track the whole market. For instance, the ETFS Morningstar Global Technology ETF (ASX: TECH) provides exposure to global technology companies and could be a good option for a DCA strategy in a tech-focused portfolio.

Foolish takeaway

Using DCA can be a powerful strategy for both your own thinking and your investments. Rather than panicking in a bear market, you can think of it as a fire sale on your favourite ASX shares.

That means you can sit back, relax and enjoy the long-term investment journey.

More reading

• All Technology Index celebrates 6 months with stunning outperformance
• ASX 200 up 0.25%: Lynas rockets on U.S. deal, gold miners surge, bank shares tumble
• 3 unloved ASX growth shares that could make you rich
• HUB24 and 2 more ASX 200 shares to watch this week
• These shares were the ASX 200’s biggest losers last week

Ken Hall owns shares of Vanguard Australian Shares Index. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of ETFS Morningstar Global Technology ETF. 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.

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It’s been 6 months since the launch of the S&P/ASX All Technology Index (ASX: XTX), or the ‘All Tech’. Launched at the end of February, the new index was just in time for the March market meltdown, which saw its value tumble. The All Tech fell 42% from 2,018 at inception to 1,171 at its March low. 

But the All Tech has staged a strong comeback, with tech shares leading the post-March market rally. The index is now up 92.9% from its March low and nearly 12% since inception. By comparison, the S&P/ASX 200 Index (ASX: XJO) is up 32.7% since its March low, and down 13.6% since 24 February, when the All Technology Index commenced. 

New index representative of tech sector  

The All Technology Index was designed to be representative of Australia’s tech sector. This will enhance the profile and understanding of ASX tech companies and improve opportunities for investors. It provides a benchmark of ASX technology companies and facilitates investment in the sector.

The index provides broad exposure to a portfolio of technology shares, with a scope that goes beyond the GICS Information Technology sector. Technologically focused companies from a number of industries are included, such as those operating online marketplaces or providing healthcare technology. 

The case for the index is compelling. Over the 5 years prior to its launch, the IT sector has had more IPOs than any other sector on the ASX. Over the 3 years prior to the launch of the All Technology Index, the ASX 200’s annualised total return was around 10%. Over the same period, the technology companies that would have been in the index (had it existed) would have returned more than 20%. 

The index originally consisted of 46 companies with a combined market cap of $100 million. Ten of these companies were considered ‘unicorns’ (valued at over $1 billion) when the index debuted. Key components of the index can be found below: 

Company	Market Cap	Business
Afterpay Ltd (ASX: APT)	$19.4 billion	Australia’s best known buy now, pay later provider, headquartered in Melbourne.
REA Group Limited (ASX: REA)	$14.1 billion	A digital advertising company specialising in real estate and home loans and based in Melbourne.
Xero Limited (ASX: XRO)	$13.2 billion	An accounting software provider headquartered in Wellington, New Zealand.
Computershare Limited (ASX: CPU)	$7.3 billion	Provides share registry services and is based in Melbourne.
WiseTech Global Ltd (ASX: WTC)	$6.7 billion	Cloud-based logistics software provider based in Sydney.
NEXTDC Ltd (ASX: NXT)	$5.1 billion	A data storage company based in Brisbane.
Carsales.com Ltd (ASX: CAR)	$4.5 billion	Owns online marketplaces for vehicle sales, headquartered in Melbourne.
Appen Ltd (ASX: APX)	$4.4 billion	Provides training data for machine learning and artificial intelligence headquarter in Chatswood, NSW.
Altium Limited (ASX: ALU)	$4.3 billion	Provides software used to design printed circuit boards and is based in San Diego in the United States.
Link Administration Holdings Ltd (ASX: LNK)	$2.2 billion	Provides data management, analytics, and administration services to the superannuation industry from its headquarters in Sydney.
Kogan.com Ltd (ASX: KGN)	$1.8 billion	Online retailer of diversified products and services.
EML Payments Ltd  (ASX: EML)	$1.1 billion	Payment solutions provider offering prepaid, gift, and incentive cards used in everything from gambling to salary packaging.

Index components outperform 

The outperformance of the All Technology Index is thanks largely to Afterpay, which is up more than 685% from its March low. The buy now, pay later provider has powered through the downturn, reporting a 112% increase in underlying sales in FY20. Performance accelerated in the fourth quarter with sales up 127% to $3.8 billion.

But Afterpay wasn’t the only notable contributor to the index’s outperformance. The Appen share price is up more than 110% from its March low, with the artificial intelligence data provider reporting 10% revenue growth over the full year. 

The Xero share price is up 58% from its March low. Xero’s financial year ends 30 March, so the coronavirus crisis had a very limited impact on its most recent results. The accounting software provider reported 29% growth in annualised monthly recurring revenue as well as 30% growth in operating revenue over the year.

Kogan shares have also outperformed, gaining around 355% from their March lows. Kogan has benefitted from the shift to online shopping prompted by the pandemic, reporting growth of 95% in gross sales in 4Q FY20, and 115% growth in profit. 

New additions to the index 

A rebalance in June added 5 new shares to the index and resulted in one removal. Over The Wire Holdings Ltd (ASX: OTW) was dropped from the index. New additions were Seek Limited (ASX: SEK), Tyro Payments Ltd (ASX:TYR), Temple & Webster Group Ltd (ASX: TPW), Nitro Software (ASX: NTO), and RPMGlobal Holdings Ltd (ASX: RUL).

These new additions add further depth and breadth to the index: 

Company	Market Cap	Business
Seek	$7.7 billion	Online employment advertising.
Tyro Payments	$1.8 billion	Payment system provider enabling debit and credit card payments.
Temple & Webster	$943 million	Online furniture and homewares retailer.
Nitro Software	$377 million	Develops software used to create, edit, sign, and secure PDF files and digital documents.
RPMGlobal Holdings	$219 million	Provides technical consulting, training and software licensing and support products and services to the mining industry.

Since joining the index, the Temple & Webster share price has gained 38% with gross sales in June up 130% over the prior corresponding period. Tyro Payments has also seen its share price rise over 5% since joining the index in June, with transaction volumes recovering in June giving a 15% increase in transaction volumes in FY20. 

Foolish outlook

The All Technology Index had a rocky start but has bounced back from the March meltdown to lead the share market recovery. Many of its constituent shares are benefitting from trends arising from the spread of COVID-19, including the shift to digital commerce and payments. This has seen share prices rise, boosting the overall index. 

More reading

• Which ASX furniture share has the edge?
• Is it time to dollar-cost average into ASX shares?
• ASX 200 up 0.25%: Lynas rockets on U.S. deal, gold miners surge, bank shares tumble
• Why Lynas, Northern Star, REA Group, & Sezzle shares are storming higher
• 3 unloved ASX growth shares that could make you rich

Kate O’Brien owns shares of Altium and Appen Ltd. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and recommends Altium. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Kogan.com ltd, Link Administration Holdings Ltd, RungePincockMinarco Limited, Temple & Webster Group Ltd, Tyro Payments, and Xero. The Motley Fool Australia owns shares of and has recommended Emerchants Limited. The Motley Fool Australia owns shares of AFTERPAY T FPO, Appen Ltd, and WiseTech Global. The Motley Fool Australia has recommended carsales.com Limited, Kogan.com ltd, Link Administration Holdings Ltd, Nitro Software Limited, REA Group Limited, RungePincockMinarco Limited, SEEK Limited, 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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With a new month upon us, now could be an opportune time to look at your portfolio and see if there are any additions that could take it to the next level.

To help you on your way, I’ve picked out three top ASX growth shares that I believe are well-placed to be market beaters over the coming years.

Here’s why I think it would be worth adding them to your portfolio in August:

Bubs Australia Ltd (ASX: BUB)

The first growth share to consider buying in August is Bubs. It is a growing infant formula, baby food, and vitamins company which could be destined for big things. It has been growing its sales at a strong rate over the last few years and looks well-positioned to continue this positive trend in the coming years. This is especially the case given increasing demand on Chinese ecommerce platform, it launch into the vitamins market, and its expanded supply agreements with Coles Group Ltd (ASX: COL) and Woolworths Group Ltd (ASX: WOW) supermarkets. It released its fourth quarter update today, which can be found here.

Nearmap Ltd (ASX: NEA)

Nearmap is a leading aerial imagery technology and location data company. Its products allow users to conduct accurate virtual site visits without needing to leave the home or office. This ultimately enables informed decisions, streamlined operations, and, importantly, significant cost savings. Given the quality of its software and the highly fragmented market it operates in, I believe it is well-positioned to grow its recurring revenues materially in the coming years.

Pushpay Holdings Group Ltd (ASX: PPH)

Another ASX growth share to consider buying is Pushpay. It is a rapidly growing donor management platform provider with a strong presence in the U.S. market. Although it has grown very strongly in recent years, I believe it still has the potential to grow materially over the next 10 years. Especially with management targeting a 50% share of the medium to large church market. This represents a US$1 billion per year revenue opportunity, which is many multiples more than the US$127.5 million revenue it delivered in FY 2020. Given the quality of its product and its leadership position in the industry, I expect Pushpay to deliver on its targets.

More reading

• Why Bubs, IAG, Star Entertainment, & Webjet shares are dropping lower
• 2 ASX tech shares to buy and hold beyond 2025
• Bubs share price sinks lower on Q4 update and new product launch announcement
• These are the 10 most shorted shares on the ASX
• 3 stellar ASX tech shares I would buy in August

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 and has recommended BUBS AUST FPO and Nearmap Ltd. The Motley Fool Australia owns shares of COLESGROUP DEF SET and Woolworths Limited. The Motley Fool Australia has recommended PUSHPAY FPO NZX. 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 I would buy Pushpay and these ASX growth shares in August appeared first on Motley Fool Australia.

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With so many shares to choose from on the ASX, it can be hard to decide which ones to buy.

The good news is that brokers across the country are doing a lot of the hard work for you.

Three top shares that leading brokers have named as buys this week are listed below. Here’s why they are bullish on them:

Aristocrat Leisure Limited (ASX: ALL)

According to a note out of Citi, its analysts have retained their buy rating and $30.10 price target on this gaming technology company’s shares. Although the broker expects Aristocrat’s land-based business to remain under pressure in the near term, it is optimistic that the worst is now behind it. And while it expects FY 2020 to be a tough year for the company, it is forecasting a recovery in its earnings from next year. I agree with Citi on Aristocrat Leisure and would be a buyer of its shares with a long term view.

Alliance Aviation Services Ltd (ASX: AQZ)

Analysts at Morgans have initiated coverage on this airline operator with an add rating and $3.54 price target. According to the note, the broker believes Alliance is one of the few operators to have escaped the pandemic unscathed. This is due to its position as a leading provider of contract services to mining, energy, and government sectors. And although its shares are closing in on a record high, the broker still sees value in them at the current level. I think Morgans makes some great points and Alliance could be worth a closer look.

QBE Insurance Group Ltd (ASX: QBE)

A note out of Goldman Sachs reveals that its analysts have retained their conviction buy rating and an $11.52 price target on this insurance giant’s shares. According to the note, the broker believes that underlying trends are tracking well and it is taking solid momentum into FY 2021. Goldman notes that pricing has continued to harden through the June quarter, where QBE revealed a second quarter group renewal rate increase of ~10.1%. This is up on the 7.3% achieved in the first quarter. While it isn’t a company that I’m a big fan of, it could be worth considering.

More reading

• These were the ASX 200’s biggest share gainers last week
• ASX 200 Weekly Wrap: ASX has week of high volatility
• 5 things to watch on the ASX 200 on Monday
• Top broker picks the cheapest ASX stocks to buy today
• Where to invest $100,000 into ASX shares

Motley Fool contributor James Mickleboro 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 Leading brokers name 3 ASX shares to buy today appeared first on Motley Fool Australia.

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Elon Musk called for greater nickel production last week, sending the price of the metal skyward. Nickel is a key ingredient in batteries used in electric vehicles (EVs). Musk is looking to cut the cost of batteries, which are a major component of the price of EVs. The eccentric billionaire added that his company could offer a long-term contact for nickel producers, stating: “Tesla will give you a giant contract for a long period of time if you mine nickel efficiently and in an environmentally sensitive way.”

Nickel makes batteries more energy dense, so they can last longer between charges, increasing the range of electric vehicles. The nickel price fell from around US$14,000 a tonne at the start of the year to around US$11,000 a tonne in March on virus fears. Covid-19 subsequently disrupted mines and refineries globally, with a shortage of supply pushing the price back up to around US$13,500 a tonne currently. 

So, if you want to get on the nickel bandwagon, here are 2 ASX shares with exposure to the metal. 

Western Areas Ltd (ASX: WSA)

Western Areas is a leading nickel producer with 2 of the highest grade nickel mines in the world. The company has operations located 400km east of Perth in Western Australia (WA). It is currently developing a third mine 30km north of Leinster in WA. 

Western Areas released its quarterly activities report last week. The company produced 20,926 nickel tonnes in concentrate, which was 99.7% of guidance. According to the company, unplanned downtime throughout June relating to power supply accounted for the shortfall. Western Areas reports that it finished the FY20 financial year with $144.8 million cash at bank and no debt. The most significant cashflow item for the quarter was the $28.6 million paid for a 19.9% investment in Panoramic Resources Ltd (ASX: PAN). 

Panoramic Resources 

Panoramic Resources is a mining and exploration company with expertise in nickel, copper, and cobalt sulphide projects. It operates a nickel sulphide mine and processing plant in the East Kimberley region of WA, the Savannah Nickel Project. Panoramic decided to suspend operations at Savannah on 15 April. The decision was based on the combination of significant operational uncertainty, disruptions, and cost escalation caused by COVID-19 restrictions. Prior to the suspension, 16,459 tonnes of ore were mined.

Panoramic recently undertook a $128 million capital raising to repay debt facilities and provide funds for working capital purposes. This will also fund certain development activities at Savannah and some exploration activities. 

Foolish takeaway

EV producers are looking to reduce the use of cobalt in EVs due to soaring costs. This means they are turning to nickel. ASX nickel shares should see increasing demand as use of electric vehicles increases. 

More reading

• These shares were the ASX 200’s biggest losers last week
• ASX 200 Weekly Wrap: ASX has week of high volatility
• These were the worst performing ASX 200 shares last week
• Western Areas share price drops 5% following quarterly report
• ASX 200 Weekly Wrap: ASX retreats as confidence wanes

Motley Fool contributor Kate O’Brien 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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