The City Chic Collective Ltd (ASX: CCX) share price is on watch this morning after the womenswear retailer released its full year results. City Chic reported strong growth in sales revenue despite store closures. Trading profitably through the coronavirus pandemic, City Chic grew its customer base by 72% in FY20 with online penetration reaching 65% of total sales. 

What does City Chic Collective do? 

City Chic is an omni-channel retail specialising in plus size women’s fashion, footwear, and accessories. The company has a network of 93 stores across Australia and New Zealand. It also sells via websites operating in ANZ and the US and via wholesale partnerships. City Chic acquired US business the Avenue late last year, which has driven growth in US and online sales. It is now looking to acquire the eCommerce assets of Catherines, a well-recognised US-based plus size retailer. 

How did City Chic perform in FY20? 

City Chic reported sales revenue of $194.5 million in FY20, an increase of 31% over the previous year. Following the acquisition of Avenue, online channels now represent two thirds of global business. US online websites contributed sales of $65.2 million in FY20 compared to $10.7 million in FY19, largely driven by the expanded customer base from the Avenue acquisition. Australian and New Zealand sales fell by 4.8%. Sales growth of 9.9% in the first half was offset by a 21.5% fall in the second half due to coronavirus and store closures. Trade has improved with the reopening of stores, with sales down 26% in June versus 47% in April. 

City Chic grew its global customer base 72% to 663k active customers in FY20. This contributed to global online website growth of 113.5%. But gross profit margin decreased to 48.1% from 57.8% in FY19 due to the shift in channel mix to online and higher levels of discounting. Underlying EBITDA increased 6.6% to $26.5 million but underlying EBITDA margin fell to 13.6% from 16.8% in FY19, impacted by a lower contribution from stores in the second half. This flowed through to statutory NPAT, which fell to $9.2 million from $14.3 million in FY19. In light of strategic priorities and uncertainty caused by COVID-19, City Chic has elected not to declare a final dividend. 

What’s next for City Chic? 

City Chic’s net cash position was $112.3 million at 24 August, reflecting the proceeds of its $110 million July capital raisIng. Funds will be used to pay for the acquisition of Catherines and provide flexibility to accelerate growth globally. The company says current market conditions are favourable to explore opportunities to expand the global customer base. City Chic believes it is well positioned to leverage its lean, customer-centric model to drive scale and grow its global footprint. 

The City Chic share price was tading a $3.30 at close of trade yesterday.

More reading

• 3 small cap ASX growth shares to buy right now
• The smartest 7 ASX shares to buy if you have $2,000
• Where I’d invest $10,000 today into ASX shares
• Here’s why I think the City Chic share price will keep climbing
• Are ASX retail shares buys right now?

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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The S&P/ASX 200 Index (ASX: XJO) edged 0.7% lower yesterday and continues to be volatile in 2020. However, I think one ASX tech exchange-traded fund (ETF), ETFS Morningstar Global Technology ETF (ASX: TECH), could be the answer.

However, there’s a couple of segments that have been surging since the March bear market. Among those are tech and gold but investors don’t know where to place their bets given current uncertainty.

Here’s why one ASX tech ETF could be the answer to capturing more upside in 2020.

Why this ASX tech ETF can track the market higher

I think the “two-speed” economy we’re seeing is a big factor here. A broad market ETF can be great for diversification and peace of mind.

However, a sector-focused ETF like ETFS Morningstar Global ETF can be a useful part of tactical portfolio allocation.

It is still a broad fund with 34 holdings including some of the biggest tech shares on the market. Among the top 10 holdings are industry leaders like Microsoft Corp (NASDAQ: MSFT) and salesforce.com (NYSE: CRM).

That’s good news for investors seeking easy exposure to the surging international tech stocks. 

I think this ASX tech ETF provides broad exposure to the industry without needing to bet on individual companies.

What’s not to like?

For one, investing in this ASX tech ETF means you’re expecting tech to continue to outperform. The tech sector is hot right now and will likely see further growth, but much of that is already priced in.

For instance, the Xero Limited (ASX: XRO) share price trades at a price to earnings (P/E) ratio of 4,700. That means a lot of that expected earnings growth is already factored into market values.

On an ETF specific level, the ETFS Morningstar Global ETF does come at a cost. The management fee is a lofty 0.45% per annum according to the fund’s website.

That may not seem like much, but it does add up over time compared to some funds charging as little as 0.07% per annum.

There’s also currency risk to consider. This ASX tech ETF is unhedged which could be good or bad, but leaves you exposed to currency risk which could eat into gains.

Foolish takeaway

If you’re after a globally diversified ASX tech ETF, I think this ETF Morningstar fund is a good option.

It’s not without its drawbacks, but it could be an easy option for investors with FOMO on the tech sector bull run.

More reading

• Why the CBA share price could surge this morning
• 5 things to watch on the ASX 200 on Thursday
• ASX 200 drops 0.7%, Zip rises 27.5%
• What’s sent WiseTech’s share price up 36% so far in August
• ASX 200 down 1.25%: Big four banks tumble, Cleanaway impresses, Whitehaven disappoints

Teresa Kersten, an employee of LinkedIn, a Microsoft subsidiary, is a member of The Motley Fool’s board of directors. Ken Hall 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 Microsoft. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of ETFS Morningstar Global Technology ETF and Xero and recommends the following options: long January 2021 $85 calls on Microsoft and short January 2021 $115 calls on Microsoft. 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 Woolworths Group Ltd (ASX: WOW) share price will be on watch on Thursday following the release of its eagerly anticipated full year results.

How did Woolworths perform in FY 2020?

For the 12 months ended 30 June 2020, Woolworths delivered an 8.1% increase in sales to $63,675 million. This was driven by strong sales growth across all businesses, excluding the Hotels business which was forced to close during the height of the pandemic.

A key driver of growth during the year was its online business. It generated online sales across its brands of $3,523 million in FY 2020, up 41.8% year on year. This means group online penetration is now 5.5%, up 131 basis points on the prior corresponding period. Customer visitation across its digital assets increased 63.8% during the year.

However, due to an increase in its cost of doing business, this strong sales growth didn’t flow through fully to the bottom line. Woolworths advised that its higher costs primarily reflect operating in a COVID-19 environment in the second half, higher team member payments under new enterprise agreements, and one-off items impacting central overheads a year earlier.

As a result, the company’s earnings before interest and tax (EBIT) from continuing operations before significant items decreased by 0.4% to $3,219 million on a normalised basis. Though, excluding the Hotels business, EBIT would have been up 5.8% year on year.

Finally, on the bottom line, normalised net profit after tax was down 1.2% year on year to $1,602 million excluding significant items. Including them, net profit after tax was $1,165 million.

A final fully franked dividend of 48 cents per share was declared, bringing its full year dividend to 94 cents per share. This is down from $1.02 per share in FY 2019.

Material COVID-19 impact.

Woolworths Group’s CEO, Brad Banducci, revealed that the pandemic had a material impact on the company’s performance.

He commented: “COVID-19 had a material impact on the Group’s financial performance for the year. After strong first half Group EBIT growth of 11.4%, EBIT growth in H2 was distorted by COVID. The closure of Hotels for much of the last four months of the financial year led to a material decline in its H2 EBIT compared to the prior year.”

“However, the impact of the closures was partially offset by strong sales-driven EBIT growth across our retail businesses, despite materially higher customer and team safety costs.”

Outlook.

Woolworths has started the new financial year strongly, but notes that “the outlook for the remainder of the year is very difficult to predict as evidenced by recent events in Victoria and New Zealand.”

For the first 8 weeks of FY 2021, total sales are up 12.4% compared to the prior corresponding period.

Australian Food sales are up 11.9%, New Zealand Food sales are up 8.3%, BIG W sales have jumped 21.1%, and Endeavour Drinks sales are up 23.7%. This has offset a 31.3% sales decline from the Hotels business.

Also growing strongly are its online sales, which are up 84.6% during the first 8 weeks of the financial year.

Though, offsetting some of this sales growth is $107 million of COVID-19 costs during the period. This represents 1.1% of its total sales.

Mr Banducci commented: “Sales growth in the first eight weeks of F21 has been strong across all of our businesses except for Hotels. However, the resurgence in COVID cases and increased restrictions, particularly in Victoria, has also led to higher costs to operate in a COVIDSafe way. For the first eight weeks, incremental COVID-related costs have been approximately $107 million (excluding typically higher team and Supply Chain costs due to higher sales volumes). Currently, we are assuming that some level of elevated sales and costs will continue for the remainder of H1 F21.”

“In summary, while there are many uncertainties in the year ahead, we will continue to be guided by our Purpose, Agile Ways-ofWorking and Core Values and are committed to making COVIDSafe and COVIDCare part of everything we do. We have an experienced and resilient team, our business in a strong financial position, and we are focused on continuing to create better experiences for our customers, team and shareholders in F21,” he concluded.

More reading

• 5 things to watch on the ASX 200 on Thursday
• How to boost your share market gains
• 5 things to watch on the ASX 200 on Wednesday
• Why you shouldn’t just focus on dividend income from ASX shares
• Ecofibre share price on watch after doubling profits

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of 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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The idea of turning $10,000 into $100,000 is often met with disbelief. Yet, I personally have done this a number of times with ASX shares over the past thirty years. Sure, it’s not an overnight thing. It also takes a degree of courage, especially when you see your companies fall in value by up to 40% at times. However, it is very definitely possible.

If you think back to where you were ten years ago, it seems like a long time, yet it also passed very quickly. If you have $10,000 to invest, then there are a few options to consider over a 5 – 10 year period. No matter what else happens, you will likely end in a better financial situation than if you did nothing. 

Creating $100,000 worth of ASX shares

The magic number here is 30%. If you are able to achieve a compound annual growth rate (CAGR) of 30% or higher over ten years then you will turn $10,000 into over $100,000. One example of an ASX share that has delivered this over the last decade is Saracen Mineral Holdings Limited (ASX: SAR). In slightly over ten years, between 2 January 2010 and 22 May 2020, Saracen had a CAGR of 30.7%. Consequently, if you had invested $10,000 at the beginning, you would have ended the period with $145,945.

Every now and then, you are able to find an ASX share that will really grow fast. For example, from 1 June 2017 until Wednesday this week, Afterpay Ltd (ASX: APT) has enjoyed a CAGR of 212.9%. Accordingly, it would have turned $10,000 into $306,452.

On that note, here are 3 ASX shares I think could help investors turn $10,000 into $100,000 over the next 5 to 10 years.

Jumbo Interactive Ltd (ASX: JIN)

Jumbo fell by 6.83% yesterday on release of its annual report. However, I thought the report contained predominantly good news. The company provides a software-as-a-service (SaaS) platform for selling lottery tickets on licence from Tabcorp Holdings Limited (ASX: TAH). 

The annual report showed that closure of physical kiosks and news agencies pushed many ticket buyers online, even though it was a period of low jackpots. This ASX share saw an increase in total tickets sold by 9%. Accordingly, revenue was up by 9%, with earnings before interest, taxes, depreciation and amortisation (EBITDA) up by 6.1%. However, net profit after taxes (NPAT) was steady. 

The reason for this was a ~$2 million increase in depreciation and amortisation. This money has not left the company and was used in part to help fund acquisitions and develop the company’s website functionality.

I think Jumbo is undervalued by the share market right now. Aside from the levelling up growth, the company also has a lot of market space to expand into based on its business model. It also pays a ~3% trailing 12 month dividend yield. I would include $3,000 worth of Jumbo shares.

Whispir Ltd (ASX: WSP)

The Whispir share price fell by 6.49% yesterday despite this ASX share turning in a great annual report. The company reported a very solid set of figures and metrics. For example, it increased revenues by 25.5%, holds a gross profit margin of 62.5%, and 95.6% of revenues are annual recurring revenues (ARR), so like an annuity. Whispir is another SaaS company which helps organisations to communicate effectively from a function-rich platform. 

One of the more interesting metrics the company published is the life time value (LTV)/customer acquisition cost (CAC). Anything below 1 is unprofitable, 3 is often quoted as an effective figure. Whispir has a ratio of 23.7. This is an outstanding figure. Lastly, and most importantly, the company acquired 630 new customers through FY20, 9 ahead of its prospectus forecast. 

The company is sitting with $15.2 million in cash and equivalents and is spending mainly on customer acquisition and platform development. I really like this company, with a current market capitalisation of $464.32 I believe this ASX share has a long growth runway ahead of it. I would include $3,500 of Whispir shares. 

Sezzle Inc (ASX: SZL)

I think that Sezzle is one of the best value buy now, pay-later (BNPL) companies available at this moment. Its annual report is due out soon and I am confident it will see a price uplift. Unlike Afterpay or Zip Co Ltd (ASX: Z1P), the company does not have to enter the $5 trillion United States market. It is already there and does not do business in Australia. In addition, its market capitalisation just broke the $1 billion mark on Wednesday. In contrast, both Afterpay and Zip Co have eye wateringly high market caps. 

My belief in Sezzle comes partly because it is a US company targeting Millennials and Gen Z, but also because it doesn’t trade in Australia. All Australian BNPL ASX shares are going to feel the impact of Klarna, the BNPL giant from Sweden. In Australia, this is 50% owned and operated by Commonwealth Bank of Australia (ASX: CBA). CBA is the nation’s largest digital payments processor and is already moving to introduce Klarna at point of sale. I would include $3,500 of Sezzle shares.

More reading

• Why APA, Bravura, Jumbo, & Whitehaven shares are sinking lower
• Flexigroup share price in trade halt ahead of capital raise
• Jumbo share price drops lower on flat FY 2020 profits
• Whispir share price drops lower despite smashing forecasts in FY 2020
• Jumbo Interactive share price on watch after signing Tabcorp deal

Daryl Mather owns shares of Sezzle Inc. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and recommends Jumbo Interactive Limited and Whispir Ltd. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of ZIPCOLTD FPO. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. recommends Sezzle Inc. The Motley Fool Australia owns shares of AFTERPAY T FPO. The Motley Fool Australia has recommended Jumbo Interactive Limited, Sezzle Inc, and Whispir 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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The Accent Group Ltd (ASX: AX1) share price is on watch today following the release of the company’s full year financial results.

Accent Group is a retailer and also a distributor of performance and lifestyle footwear. The group has over 500 stores across Australia and New Zealand. Accent has exposure to the fast growing active footwear market through brands that include Hype DC, Platypus, and The Athlete’s Foot.

Modest overall growth in challenging market conditions

Investors will be watching the Accent share price this morning after the company revealed total sales reached $948.9 million for the 12 months to 20 June 2020. That’s up 1.5% on the prior 12 month period. Earnings before interest, taxes, depreciation and amortisation (EBITDA) grew more strongly, up by 11.8% during the year to $121.7 million. Meanwhile, EBIT for Accent was up by 8.2%, while net profit after tax (NPAT) came in at $58 million. That was an increase of 7.5%.

Within the core retail market, major brands including Platypus, Hype DC, Skechers, Vans as well as Dr Martens recorded gross margins more or less in line with the prior year.

The Accent Group opened 57 new stores during the 12 month period, while 12 stores were closed. Sales in vertical product and brands gained strong momentum. They rose to $13 million, more than double the prior year.

The group announced a final dividend of 4.0 cents per share fully franked.

Online sales for Accent surge by 69%

The real winner for Accent during the last 12 months has been its online channel.

Total digital sales for FY 2020 climbed by 69% on the prior year. They now represent 17% of total sales for Accent. This is quite significant for a mainstream bricks and mortar retailer in Australia.

It was during the fourth quarter when digital sales really soared for Accent due to the coronavirus pandemic restrictions. During this final quarter for FY 2020, online sales grew by a massive 142% and represented 35% of all sales. Over 50% of online customers in the fourth quarter had never shopped at Accent Group before.

Accent Group CEO, Daniel Agostinelli, said “Given the challenging environment, we are pleased to report that Accent Group has delivered another record year. …. Key to this result was the integrated digital capability the Company has built over the last 3 years, which enabled us to connect with our customers and shift our channel mix from stores to digital when all stores were closed in April. Driven by this strong digital growth, retail sales, gross profit and resultant operating profit in May and June were significantly ahead of the prior year..”

Digital channel leads growth strategy for FY 2021 and beyond

Accent has an ambitious growth plan in place targeting at least 30% of sales to be delivered by the digital channel. During FY 2021, the group has in its pipeline the opening of 30 to 40 new stores. The Pivot brand in particular will see strong expansion, with the rollout of 12 new stores and an emphasis on growing online sales.

In a trading update, Accent noted that like-for-like retail sales across Australia and New Zealand grew by 1.3% during the first 8 weeks of FY 2021.

The Accent share price closed yesterday at $1.66.

More reading

• Take a look at last week’s best performing ASX shares
• How will Victoria’s stage 4 lockdowns impact ASX shares?

Motley Fool contributor Phil Harpur has no position in any of the stocks mentioned. The Motley Fool Australia has recommended Accent Group. 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 Afterpay Ltd (ASX: APT) share price will be in focus today following the release of the payments company’s full year results for FY 2020.

How did Afterpay perform in FY 2020?

Afterpay was an exceptionally strong performer in FY 2020 and delivered further explosive growth in sales and customer numbers.

For the 12 months ended 30 June 2020, Afterpay delivered a 112% increase in underlying sales to $11.1 billion. This comprises underlying sales of $6.6 billion in the ANZ market, $0.6 billion in the UK market, and $4 billion in the US market. The latter was up a whopping 330% on the prior corresponding period.

Based on its fourth quarter trading, Afterpay ended the period with an underlying sales run rate of $15 billion.

This strong result was driven by increased repeat usage and a 116% lift in active customers to 9.9 million. ANZ customers grew 18% to 3.3 million, UK customers reached 1 million, and US customers increased 219% to 5.6 million. The latter now contributes 56.5% of its total customers. In respect to repeat usage, approximately 90% of underlying monthly sales are coming from repeat customers.

Also supporting its growth was an increase in its active merchants. There are now 55,400 active merchants on the Afterpay platform, up 72% year on year. This comprises 42,800 merchants in the ANZ market, 11,500 in the US, and 1,100 in the UK.

What about its profits?

Over the 12 months, Afterpay reported a 97% increase in total income to $519.2 million and a 73% lift in earnings before interest, tax, depreciation and amortisation (EBITDA) of $44.4 million.

This was supported by a 24% improvement in its gross loss as a percentage of underlying sales to 0.9%. Management notes this represents a historic low, which was achieved despite the uncertain economic conditions and higher contributions from newer markets.

Also of note was that its late fees are contributing less to its total income. In FY 2020 they contributed under 14% of total income, down from 19% in FY 2019 and 24% in FY 2018. Late fee revenue now represents 0.6% of underlying sales, which the company feels is validating its inbuilt customer protections and budget-focused and differentiated business model.

On the bottom line, the company posted a statutory loss after tax of $22.9 million. This statutory loss includes the impact of significant items (including one-off items, Share-Based Payments, Net Loss on Financial Liabilities at Fair Value, Share of Loss of Associate, and foreign currency gains) which totalled $20 million on a pre-tax basis.

FY 2021 update.

Management revealed that its strong fourth quarter performance has continued into FY 2021 across all regions.

It notes that online sales in the ANZ market accelerated into July and August. Furthermore, the recent on-boarding of large scale, new vertical merchants in ANZ is expected to deliver continued growth into FY 2021.

The company also advised that US underlying sales in July continued at the record levels experienced in the fourth quarter and customer acquisition has remained strong.

Over in the UK, merchant acceptance has continued strongly since 30 June, with 450 additional active merchants added to the platform.

Global expansion.

Management advised that the company has launched into Canada this month as planned, extending its prominent US market position across North America.

As was announced earlier this week, its acquisition of European-based Pagantis will facilitate the expansion of the Clearpay business into multiple European markets in FY 2021.

And the company has set its sights on the Asian market. It is exploring opportunities in select Asian markets this year. An in-region team will be established via a small acquisition of a Singapore-based company operating in Indonesia – EmpatKali. It is also looking to leverage Tencent’s network and relationships to expand into these markets. Tencent is the owner of WeChat and a major Afterpay shareholder.

More reading

• 5 things to watch on the ASX 200 on Thursday
• Top brokers name 3 ASX 200 shares to buy today
• If you invested $10,000 into Zip shares in March, here’s how much you’d have today
• How to boost your share market gains
• Flexigroup share price in trade halt ahead of capital raise

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. 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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The Commonwealth Bank of Australia (ASX: CBA) share price is one to watch this morning after ASIC dropped a key investigation into the Aussie bank.

What did CBA announce?

CBA was notified that the Aussie corporate cop had dropped its investigation into the bank over its AUSTRAC scandal.

The proceedings, commenced by the Australian Transaction Reports and Analysis Centre (AUSTRAC) in August 2017, alleged money laundering breaches by the bank.

However, ASIC has concluded its investigations and will take no action against CBA or its directors.

That’s good news for the CBA share price which could be on the move in early trade following the update late yesterday.

What does this mean for the CBA share price?

The AUSTRAC scandal has weighed on CBA for three years now and this latest update does provide some closure.

I think it’s good news for the CBA share price with less uncertainty facing the bank and its shareholders.

On top of that, no penalties means investors aren’t worried about the potentially huge liability hanging over future profits. The bank settled the AUSTRAC case for a record $700 million penalty in June 2018.

In turn, I would expect the CBA share price to climb higher in early trade barring any broader negative market factors.

It also is a big tick for the bank as it continues to fight a class action from shareholders.

A group of investors are seeking damages due to alleged failure to disclose material information. That includes allegations CommBank failed to inform shareholders it was potentially exposed to AUSTRAC enforcement action.

How has CBA performed in 2020?

It’s been a rollercoaster of a year for the bank’s investors. The CBA share price is down 12.8% in 2020 with even bigger falls seen among its big four bank peers.

Meanwhile, the S&P/ASX 200 Index (ASX: XJO) is down 8.6% to 6,116.40 points.

More reading

• 5 things to watch on the ASX 200 on Thursday
• ASX 200 drops 0.7%, Zip rises 27.5%
• ASX giants say cutting staff hours will save jobs
• What’s sent WiseTech’s share price up 36% so far in August
• Hydrix and Zip were among the most traded shares on the ASX last week

Motley Fool contributor Ken Hall 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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I continue to believe that the best way for investors to grow their wealth is to invest in quality companies with strong business models and growth prospects.

However, rather than trading in and out of them, I believe a long term focus should be taken. This is because by doing things this way, investors can benefit from compound interest.

Compound interest is what happens when you reinvest interest, instead of paying it out. It explains why a $20,000 investment generating a 10% return per annum will be worth $22,000 in one year and then ~$52,000 in 10 years.

With that in mind, I thought I would look at shares which I believe could provide outsized returns for investors over the next decade and beyond.

Three that I believe can achieve this are listed below. Here’s why I would buy them:

Appen Ltd (ASX: APX)

The first ASX share to consider buying is Appen. It is a leading developer of high-quality, human annotated datasets for the machine learning and artificial intelligence (AI) markets. Due to the importance of machine learning and AI for businesses and governments, spending on these markets is expected to grow materially over the next decade. This bodes well for Appen due to its strong market position and long track record of working with tech giants such as Apple, Facebook, and Microsoft.

CSL Limited (ASX: CSL)

I think CSL would be a fantastic buy and hold option for investors. This is due to the quality and strength of the biotherapeutics company’s CSL Behring and Seqirus businesses. I believe their life-saving therapies and vaccines, expansive plasma collection network, and lucrative research and development pipelines have positioned CSL perfectly for long term growth. 

NEXTDC Ltd (ASX: NXT)

Another top option to consider buying is NEXTDC. It is an innovative data centre operator which has a collection of world class centres in key locations across the country. Demand for its services has been growing very strongly in recent years, underpinning solid earnings growth. Pleasingly, with demand expected to continue growing at a rapid rate for some time to come due to the cloud computing boom, I expect more of the same from NEXTDC over the next decade.

More reading

• 5 things to watch on the ASX 200 on Thursday
• Hydrix and Zip were among the most traded shares on the ASX last week
• 3 big surprises from the CSL full year results
• 2 top ASX tech shares to buy in September
• 3 ASX shares that could give investors a stock split in 2020

James Mickleboro owns shares of NEXTDC Limited. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of CSL Ltd. The Motley Fool Australia owns shares of Appen 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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Aussie investors may be wondering what the best exchange-traded fund (ETF) is to buy for a long-term investment.

There are lots of different options to consider like iShares S&P 500 ETF (ASX: IVV), Vanguard Diversified High Growth Index ETF (ASX: VDHG), Vanguard MSCI Index International Shares ETF (ASX: VGS) and BetaShares Australia 200 ETF (ASX: A200).

Each of the above options has their positives and negatives. The diversified Vanguard ETF makes things easy for investors wanting diversification. But do investors need bonds now, particularly with how low interest rates are?

iShares S&P 500 ETF and BetaShares Australia 200 ETF both offer cheap ways to access the US and Australian share markets. But they offer exposure to just one country’s share market.

The Vanguard MSCI Index International Shares option offers good diversification. It owns over 1,500 businesses. It’s invested across the world and the management fee is very reasonable for what it does. But the problem is that it’s invested in plenty of businesses which are only delivering mediocre performance. That may explain why the returns over the past five years have been pretty disappointing at just 8.2% per annum – much lower than some other ETFs.

My preferred ETF pick is:

BetaShares Global Quality Leaders ETF (ASX: QLTY)

This ETF is invested in 150 high quality businesses from across the world. Yes, around two thirds of the ETF is invested in US shares – but the other third is spread across the world in places like Japan, Switzerland, France, Denmark, Hong Kong, the UK, Spain, Finland and so on.

It’s not invested in uninspiring businesses. To get into the holdings list, companies have to have a high return on equity, cash flow generation ability, low leverage and earnings stability. If a business can do well on all of these metrics then its bottom line (and shareholder returns) should hopefully be pretty good.

Returns

BetaShares Global Quality Leaders ETF was created in November 2018, it has produced net returns of 18.8% per annum since then. That sounds good to me considering its global composition. That performance has occurred despite COVID-19 impacts. 

Holdings

It’s not just full of tech shares. Around a third is IT businesses, but more than a quarter of it is invested in healthcare shares and there is decent representation by industrials, communication services and consumer discretionary too.

So, what shares make it into this ETF’s holdings? Some of the largest positions include: Apple, Nvidia, Accenture, Adobe, Facebook, Intuitive Surgical, L’Oreal, Intuit and Cisco Systems.

Costs

You’d probably have to pay at least 1% per annum for an active manager. This ETF costs just 0.35%, which is cheap compared to actively managed funds. The lower the costs the higher the net returns for investors.

Income potential

The dividend yield isn’t shabby either. According to BetaShares, the 12-month distribution is 2.5%. That’s materially more than the S&P 500 at the moment. Some of the big US tech shares just don’t pay dividends. 

Other thoughts

I think that BetaShares Global Quality Leaders ETF has the ability to outperform other global benchmark share indices for a very reasonable annual management fee cost.

‘Quality’ businesses can’t always guarantee good shareholder returns. However, the economic advantages that they have could mean the ETF falls less when the share market falls. Indeed, BetaShares says that the fund’s index of quality companies has historically exhibited reduced declines during market falls, when compared to the MSCI World Index.

I think I’d sleep better knowing that my portfolio was full of quality businesses rather than lower quality businesses. This ETF has proven to be a good performer. I really like it. 

Foolish takeaway

I think BetaShares Global Quality Leaders ETF could be the best ETF to own for the long-term for its focus on strong economic metrics, the global diversification it offers and the low cost.

More reading

• This share platform forces you to invest long-term
• Is iShares S&P 500 ETF the best long-term investment?
• 2 ASX shares to buy for growth and income
• 2 of the best ETFs for investing in ASX shares
• Here’s how much money you can actually make from investing in ASX shares

Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia has recommended Vanguard MSCI Index International Shares ETF. 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 What is the best ETF for Aussie investors? appeared first on Motley Fool Australia.

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It certainly was a busy day of results releases on Wednesday, with results being unveiled from the likes of Bravura Solutions Ltd (ASX: BVS) and Cleanaway Waste Management Ltd (ASX: CWY).

In light of the large number of releases, a few may have understandably slipped under the radar. Here are two ASX results you might have missed:

National Storage REIT (ASX: NSR)

The National Storage share price traded largely flat on Wednesday despite overcoming the pandemic to deliver solid earnings growth. The self-storage giant posted a 9% increase in underlying earnings to $67.7 million over the 12 months. This was driven partly by its growth through acquisition strategy. National Storage completed 22 acquisitions totalling $218 million in FY 2020.

The company declared a final distribution of 3.4 cents per share, bringing its full year distribution to 8.1 cents per share. A similar distribution is expected next year, with management advising that it intends to pay out 90% to 100% of its earnings per share. It is guiding to earnings of 7.7 cents to 8.3 cents per share in FY 2021.

Regis Resources Limited (ASX: RRL)

The Regis share price dropped lower yesterday despite reporting a record full year net profit for FY 2020. The gold miner delivered a 16% increase in revenue to $757 million from 353,182 ounces of gold sold at an average price of $2,200 an ounce. And thanks to the widening of its margins, Regis’ net profit after tax grew at the even quicker rate of 22% to $200 million.

This allowed the board to declare a final fully franked dividend of 8 cents per share, bringing its full year dividend to 16 cents per share. This represents a ~3% yield based on the current Regis share price. Looking ahead, Regis expects its production to increase from 352,042 ounces to between 355,000 and 380,000 ounces in FY 2021. This is expected to be achieved at an all-in sustaining cost (AISC) of $1,230-$1,300 an ounce. This compares to an AISC of $1,246 an ounce in FY 2020.

More reading

• 2 quality ASX dividend shares to buy
• 2 ASX dividend shares for income investors to buy next week
• Why is Aussie gold producer Medusa’ Mining’s share price skyrocketing?
• Why I would buy CBA and this ASX dividend share for income
• Warren Buffett is buying gold shares and top fundies assess ASX share price moves

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 2 top ASX results you might have missed on Wednesday appeared first on Motley Fool Australia.

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