Exchange-traded funds (ETFs) can be a great way to grow your wealth by investing in shares without thinking about it too much.

But which ETFs would be good to invest in the current market? COVID-19 has made it very difficult to invest. How long will ultra-low interest rates stay this low? The RBA has already cut Australia’s interest rate to 0.25% and said it’s likely to stay like this for a few years. Japan’s interest rate has been low for a very long time. Is Australia headed for the same fate?

I think exchange-traded funds (ETFs) could be a way to invest across a broad group of businesses. This can limit risk with any particular holding. Diversification may be the best defence to get through this difficult period.

I don’t normally invest in ETFs, but I would buy these two for my portfolio:

BetaShares Asia Technology Tigers ETF (ASX: ASIA)

I think Asia is a region that more Aussie investors could look to benefit from. When people invest outside of Australia they typically go for US shares. But Asia also has plenty of quality businesses to consider.

BetaShares Asia Technology Tigers ETF gives exposure to the 50 largest technology and online retail shares in Asia outside of Japan.

Shares like Tencent, Alibaba, Taiwan Semiconductor Manufacturing, Samsung and JD.com have plenty of growth potential. Technology is an exciting industry in Asia just like it is in Australia and the US.

China alone has a population of well over 1 billion, that’s a lot of potential customers or users. Asia is a very big addressable market for businesses that have a good service or product. 

Looking at the sector allocation, there are three sectors that have an allocation of more than 20% according to BetaShares. They are: ‘internet and direct marketing retail’, ‘interactive media and services’ and ‘semiconductors’.

Some of the other sectors include ‘technology hardware, storage and peripherals’, ‘interactive home entertainment’, ‘IT consulting and other services’, ‘electronic manufacturing services’ and other allocations that are smaller than 1%.

There is obviously a big exposure to China with this ETF, which may be a positive or a negative depending on your preferences. China makes up 52.8% of the portfolio, Taiwan is allocated the 21.9%, South Korea has an 18.3% allocation, India is allocated 6.5%, Hong Kong has a 0.3% weighting and ‘other’ is 0.2%.

BetaShares Asia Technology Tigers ETF has performed well after fees. Since inception in September 2018 it has returned 17.6% per annum. I think the fees are reasonable at 0.67% per annum.

At the end of May 2020 it had an underlying price/earnings ratio of under 22x. Not bad for how much potential growth there is. 

Betashares FTSE 100 ETF (ASX: F100)

I believe the UK share market is another place that Aussie investors could look at. Despite the rivalries, I think there are a lot of similarities between our two countries and the listed businesses. That makes me more comfortable about investing indirectly in UK shares with Betashares FTSE 100 ETF.

Within this ETF’s top holdings are shares that most readers would be aware of. Even if you don’t know the name of the holding company you probably know the brand or products they sell. Some of the largest holdings are: Astrazeneca, GlaxoSmithKline, HSBC, British American Tobacco, Diageo, BP, Royal Dutch Shell, Rio Tinto, Unilever, Reckitt Benckiser, BHP, Vodafone, National Grid and the London Stock Exchange Group.

It has been a tough time for UK shares over the past four years with Brexit, trade wars and now the COVID-19 pandemic. But I think UK shares now represent compelling value.

At the end of May 2020 the ETF had an underlying price/earnings ratio of under 19x and a trailing dividend yield of 5.8%.

The current operating costs of this ETF is 0.45% per annum, which isn’t bad for the global exposure offered from many of the big UK shares.

Currency fluctuations between the Australian dollar and UK pound could have short-term effects on returns. But in UK pound terms, I think UK shares could perform quite strongly from here once the worst of the COVID-19 impacts has passed.

Foolish takeaway

I like both of these ETFs for the international diversification they offer and the potential growth. I’d prefer to invest in the Asian technology ETF because of the advantages that software businesses bring, but there are Chinese risks that could become problematic. The UK share market would probably be a safer bet – the big dividend yield is an attractive bonus.

More reading

• If I won the lottery I’d buy these 6 ASX shares
• These ASX shares are the best way to invest overseas
• Where to invest $500 into ASX shares right now
• 3 ASX growth shares that could generate strong long term returns
• ASX shares could be the best way to grow your wealth in 2020

Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended BetaShares Asia Technology Tigers 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 I don’t normally buy ETFs, but I would buy these 2 appeared first on Motley Fool Australia.

from Motley Fool Australia https://ift.tt/3fB3jbZ

The S&P/ASX 200 Index (Index:^AXJO) is clawing back from earlier losses but there are some ASX stocks that are underperforming after getting slugged with a broker downgrade.

The top 200 stock benchmark jumped 0.5% in the last hour of trade after dipping into the red earlier this afternoon.

But not all shares are keeping their head above water.

Potential earnings disappointer

The Iluka Resources Limited (ASX: ILU) share price tumbled 3% to $8.56 at the time of writing after JP Morgan cut its recommendation on the mineral sands miner to “neutral” from “overweight”.

The broker believes there’s a real risk management could disappoint when it hands in its full year profit report card in August.

“With no company update since it withdrew guidance and reduced zircon production settings from 280kt to 170kt, there remains plenty of risk around the outlook for ILU, in our view,” said JP Morgan.

“Our recent call with minerals sands experts, TZMI, confirmed the weakness in pigment, TiO2 feedstock and zircon markets is likely to keep prices under pressure until late CY21.”

The broker’s 12-month price target on Iluka is $8.90 a share.

More work needed

Another stock to be hit with a downgrade is the Healius Ltd (ASX: HLS) share price. Shares in the medical services group fell 0.8% to $3.08 as Morgans downgraded its rating on the stock to “hold” from “add”.

The move stands in contrast with Credit Suisse’s decision to upgrade the stock to “outperform” yesterday following the group’s announcement that it was selling its medical centres for $500 million.

The deal sounds fair to Morgans and the broker noted that the outlook for Healius’ remaining pathology and diagnostic services divisions is getting better.

“While the operating environment is improving, we believe the transition to a specialist diagnostic and day hospital operator is far from complete, with areas of risk including: GP referrals (c25% of revenue for Pathology and Imaging); cost base optimisation; roll off of government funding; and growth initiatives with supportive capex/opex requirements,” said Morgans.

“We believe there is more work to be done before the platform provides significant clinical, operational and financial benefits to support future growth.”

Morgans price target on Healius is $2.96 a share.

More reading

• What a record rebound in oil demand in 2021 means for ASX energy stocks
• Top brokers name 3 ASX 200 shares to buy today
• ASX 200 down 0.1%: Carsales update impresses, a2 Milk surges higher
• Is $1,000 invested in AGL Energy shares a smart investment?
• 3 reasons to buy ASX 200 shares right now

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

The post The latest ASX 200 shares to be downgraded by leading brokers appeared first on Motley Fool Australia.

from Motley Fool Australia https://ift.tt/3eaQqFx

The Xero Limited (ASX: XRO) share price, like basically all other ASX shares, was hit during the early phase of the coronavirus pandemic. However, unlike some other Australian tech shares such WiseTech Global Ltd (ASX: WTC) and Altium Limited (ASX: ALU), it has since regained nearly all of those share price losses.

Over the past 12 months, the Xero share price has risen from $59.09 to now be trading $88.36. The upward trajectory in the Xero share price began in early 2017 when it was below $20. Since then Xero shares have really taken off.

Xero delivered strong recent financial results for the FY 2020 financial year. However, it did warn of uncertainty regarding the impact of the coronavirus pandemic.

So, are Xero shares an attractive buy right now?

Strong recent financial performance

Xero managed to deliver another very strong set of numbers for the 12 months ending 31 March 2020. Revenue increased by 30% to NZ$718.2 million, driven by a 2% increase in average revenue per user. Overall subscribers also grew strongly. They increased by 26% to reach 2.285 million.

Equally important was that Xero’s gross margin market continues to increase. It expanded by 1.6% to a very appealing 85.2%.

Earnings before interest, tax, depreciation and amortisation (EBITDA) grew strongly by 52% to reach NZ$139.17 million. Xero also managed to achieve a full-year net profit for the first time in its history.

All regions grew strongly. This includes its main Australian, UK, North American operations as well as other regions including Singapore, Malaysia and South Africa.

Xero is also fast gaining industry recognition. For example, it was recently recognized as a leader in technology research by IDC’s Vendor Assessment study for 2020. The study covered vendors in the worldwide SaaS and Cloud-Enabled Small Business Finance and Accounting applications markets for 2020.

Are Xero shares a good long-term buy?

The impact of the coronavirus pandemic on Xero up to the end of March seemed modest. However, Xero is yet to update the market on its more recent performance. While there is likely to be some recent impact, more favourable market conditions are looking more likely in the months ahead. Business confidence in Australia and New Zealand is now improving. This should see Xero’s growth getting back to more normal levels.

Despite its share price no longer being ‘technically’ cheap, I believe that Xero still has a significant potential to grow further over the next decade. I, therefore, think it is worthy of adding to your share portfolio. In particular, Xero is moving beyond just being a cloud accounting platform. Small businesses are now turning towards Xero to manage their entire business, not just their finances.

More reading

• This is why the Altium share price could be a buy right now
• How to become wealthy by investing $1,000 into ASX shares
• 3 ASX shares to buy and hold for the next decade
• Coles shares and 2 other ASX 200 companies to buy in the current market
• Is the Altium share price the steal of the century?

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

The post Why I think Xero shares are a great long-term buy appeared first on Motley Fool Australia.

from Motley Fool Australia https://ift.tt/30OxQz9

If you’re currently in the process of building a retirement portfolio, then you might want to take a look at the shares listed below.

I believe they are great options for investors looking for a combination of growth and income. They are as follows:

Coles Group Ltd (ASX: COL)

The first share I would consider for a retirement portfolio is Coles. I think the supermarket giant would be a great fit due to its defensive earnings, strong market position, and its refreshed strategy. This strategy is aiming to deliver $1 billion in cumulative savings by FY 2023 through efficiencies and the use of automation. Combined with expansions and its long track record of same store sales growth, I expect Coles to deliver solid earnings and dividend growth over the next decade.

Ramsay Health Care Limited (ASX: RHC)

I think Ramsay Health Care would be a good option for a retirement portfolio. While I expect its growth over the short term to be challenging, I believe its long term outlook is very positive. This is due to its world class network of private hospitals and their exposure to the growing demand for healthcare services. In addition to this, Ramsay has a penchant for making earnings accretive acquisitions and I wouldn’t be surprised if it were lining up more at present. Overall, I believe it can deliver strong total returns for investors over the long term.

Rural Funds Group (ASX: RFF)

Another option to consider is this real estate investment trust (REIT). It has a focus on agricultural assets and owns a wide range of properties across several different industries. This includes cattle, wine, and almond production. Given the quality of its assets, its use of rental indexation, and its ultra-long tenancy agreements, I believe the company is well-positioned to deliver solid income growth over the next decade and beyond. This bodes well for its distributions, which management is aiming to grow by at least 4% per annum over the long term. This could make it a top option for a retirement portfolio.

More reading

• 3 exciting small cap ASX healthcare shares to watch
• 2 ASX healthcare shares to buy for long-term growth
• 3 fantastic ASX 200 shares to buy right now
• Coles shares and 2 other ASX 200 companies to buy in the current market
• Ramsay Health Care and 1 other ASX share I would buy for both growth and income

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended RURALFUNDS STAPLED. The Motley Fool Australia owns shares of COLESGROUP DEF SET. The Motley Fool Australia has recommended Ramsay Health Care 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.

The post 3 high quality ASX shares to bolster your retirement portfolio appeared first on Motley Fool Australia.

from Motley Fool Australia https://ift.tt/30PiRVG

The Altium Limited (ASX: ALU) share price dropped sharply by more than 40% during the initial phase of the coronavirus pandemic from mid-February to mid-March. Since then its share price has regained just over half of those losses.

Altium has continued to perform reasonably well from a business perspective throughout the crisis, despite some short-term challenges.

Is the Altium share price a buy right now?

What is compelling about Altium’s business model?

Altium designs software which enables engineers to produce printed circuit boards for a broad range of electronic devices. These include everything from computers to cars and a growing range of devices that make up the ‘Internet of Things’.

Altium’s software tightly integrates into its customers’ systems and processes. This results in high customer switching costs. It also helps to lift Altium’s pricing power and recurring subscription revenue. In addition, Altium benefits from high product margins and operating leverage.

I feel that all of these factors make Altium an attractive share to invest in.

How has Altium performed recently?

In a May update, Altium informed the market that it may not reach its aspirational goal of US$200 million in total revenue during FY 2020. Altium still anticipates headwinds up to the end of June. Ongoing lockdown restrictions due to COVID-19 are having an impact in particular in the United States and Western Europe.

The company has also recently experienced challenges to sales, particularly at the smaller end of its target market. This includes signs of distress amongst some start-ups and other smaller customers.

However, on a positive note, the wider electronics industry appears to be holding up relatively well during the pandemic. Engineers have been utilising the excess time and capacity due to the slowdown in manufacturing to become more active in prototype designs. This trend is definitely benefiting Altium.

Altium continues to accelerate the rollout of its new Altium 365 cloud platform. It also reported that it remains in a strong financial position with a current cash balance in excess of US$77 million.

Is the Altium share price in the buy zone right now?

With Altium’s share price down significantly from pre-coronavirus levels, I think that this provides investors with a reasonably good buying opportunity. I believe that any further challenges that Altium may face are well factored into its current share price. In fact, I feel that the market may have over-exaggerated Altium’s current issues.

Altium’s long-term growth prospects continue to look attractive. The growing number of smart connected devices is likely to lead to continued demand for Altium’s products over the next decade.

More reading

• Why I think Xero shares are a great long-term buy
• How to become wealthy by investing $1,000 into ASX shares
• 3 ASX shares to buy and hold for the next decade
• Is the Altium share price the steal of the century?
• The most explosive ASX tech shares you can buy today

Phil Harpur owns shares of Altium. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Altium. 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 This is why the Altium share price could be a buy right now appeared first on Motley Fool Australia.

from Motley Fool Australia https://ift.tt/37J5Azq

If I had $500 to invest into my first ASX shares I’d pick one of the two ideas in this article.

Investing in ASX shares is one of the best ways to grow your wealth in my opinion. But it can be difficult to know where to start.

There are thousands of different things you can invest in on the ASX. You could pick an exchange-traded fund (ETF), a managed fund, a listed investment company (LIC) or go straight for individual shares.

I think diversification is important for beginner investors. If you invested your first $500 into Commonwealth Bank of Australia (ASX: CBA) shares then 100% of your portfolio would be in one share.

It could be a wise idea to choose an investment that provides good diversification straight away. Some investments give exposure to a portfolio with the one pick. That’s one of the main reasons why LICs are so attractive.

With that in mind, here are two ASX shares I’d happily buy with my first $500:

Share 1: MFF Capital Investments Ltd (ASX: MFF)

MFF Capital is a great LIC run by Chris Mackay, the co-founder of Magellan Financial Group Ltd (ASX: MFG).

It aims to invest in great businesses listed internationally. Not many ASX shares would count among the best businesses in the world.

It’s invested in shares like Visa and Mastercard. Those two global payment businesses actually make up around a third of the portfolio. I think they have good growth runways with the shift away from physical cash payments to online shopping and contactless payments.

MFF Capital has been a solid ASX share over the past five years. The MFF Capital share price has risen by 54% since June 2015 despite the big selloff caused by COVID-19.

I think MFF Capital is worth owning because it has a diversified portfolio. Some of its other investments include Home Depot, CVS Health, Microsoft and some international banks.

At the end of May 2020 MFF Capital’s portfolio was 46.4% net cash. That means it’s well protected if the market were to fall again. It also means it has a good cash pile to buy beaten-up shares if that opportunity comes.

Share 2: Future Generation Global Invstmnt Co Ltd (ASX: FGG)

Future Generation Global is another overseas-focused LIC. The ASX share invested in a range of funds that invest in overseas shares. The fund managers of those funds work for free so that Future Generation Global can donate 1% of its net assets per year to youth mental health charities.

Some of the fund managers it’s invested with include Magellan, Cooper Investors, Marsico Capital Management, Caledonia and Munro Partners. Each fund manager’s fund comes with its own portfolio of shares. So Future Generation Global’s underlying portfolio is very diversified.

At the end of May 2020, Future Generation Global’s gross investment performance was showing a clear outperformance of the MSCI AC World Index (AUD). Over the past three years, Future Generation Global’s 10.9% per annum portfolio performance outperformed the index by 1.7% per annum. Over the prior six months the index declined 4.2% whilst the Future Generation Global portfolio returned 1.2%.

If you’re looking to buy the shares at a good price then you’re in luck. The May 2020 net tangible assets (NTA) per share was almost $1.48, which compares to today’s share price of $1.16. That’s a 22% discount, which is very large considering the regular outperformance.

Foolish takeaway

I really like both of these ASX shares for the global exposure they provide, the quality investors involved and the attractive valuation on offer. At the current prices it’s hard to pick a favourite, I’d really like to buy both.

More reading

• Got $20,000? These are the ASX shares I’d buy during COVID-19
• Is this the start of a second COVID-19 share market crash?
• These ASX shares are the best way to invest overseas
• 3 ASX shares to buy for the big shift to contactless payments
• How to become a millionaire before your parents with ASX shares

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

The post I’d invest my first $500 into 1 of these 2 ASX shares appeared first on Motley Fool Australia.

from Motley Fool Australia https://ift.tt/3hAW4Tq

Currently, most Australian bank accounts are paying less than 2% interest. It’s really not much and it will be hard to get rich on bank interest. ASX 200 dividend shares, on the other hand, come with a number of advantages.

Why buying ASX 200 dividend shares is a better option 

Firstly, dividend shares usually come at least partly franked. This means some or all of the taxes you need to pay on those dividends are already paid for you. Bank interest, on the other hand, does not come with franking credits so the whole amount is counted as taxable income.

Additionally, dividend shares can offer a higher return than bank interest. Currently, there are a number of ASX 200 shares yielding between 3% and 6%, or higher. These returns could help you to build wealth much faster than relying on minimal bank interest.

Further, dividend shares offer another advantage, capital appreciation. As the companies that you are invested in grow, you can expect to see the share price rise over the long term. While this does not provide an immediate result if you buy for dividends, you can sell the shares later and usually see an additional return in the form of capital appreciation. 

Sound convincing? Check out the ASX 200 dividend share options below and see whether they fit your portfolio preferences.

BHP Group Ltd (ASX: BHP)

The BHP share price is $36.25 at the time of writing. BHP has proven itself over the years as a solid payer of dividends to shareholders. In 2010, BHP paid dividends of 87 cents per share. Fast forward to 2019 and BHP paid dividends of $1.33. That’s an increase of 52.87% in dividends in less than 10 years. Currently, BHP sits on a trailing fully franked dividend yield of 6.05%.

Currently, BHP produces iron ore, coal, copper, nickel and petroleum. It does this from high-quality assets in Australia, the UK, North America, South America, Africa and the Caribbean. It currently has a number of projects under development and has, as announced so far, continued these despite the recent coronavirus pandemic.

Brickworks Limited (ASX: BKW)

The Brickworks share price is $15.40 at the time of writing. Brickworks has been listed on the ASX since 1962 and its origins date back to 1934. It has grown or maintained its dividend every year since 1976.  Despite the effects of several recessions and other market turmoil over the last 44 years, Brickworks has an outstanding track record of paying dividends to shareholders. Currently, Brickworks trades on a fully franked dividend yield of 3.96%. In 2010, Brickworks paid dividends of 40 cents. Last year, however, the company paid dividends of 57 cents. This equates to an increase of 42.5% over the period. 

Brickworks is a building materials, construction and investment group with exposure to the residential and commercial property markets in Australia and the US. According to a recent announcement, Brickworks is currently Australia’s largest brick manufacturer with a market position in every state. It also produces masonry, roofing, walling and flooring products. Brickworks also has a $710 million stake in a joint venture property trust with Goodman Group (ASX: GMG). This generates a rental income of 6% per year and last year provided a capital appreciation of 11%. Additionally, Brickworks has a 39.4% share in investment house Washington H. Soul Pattinson and Co. Ltd (ASX: SOL) worth $1.8 billion. In turn, this company owns a 44.1% stake in Brickworks. 

Transurban Group (ASX: TCL)

At the time of writing, the Transurban share price is $14.83. Transurban listed on the ASX in 1996 and was founded to build the Citylink toll road in Melbourne. Transurban has paid a dividend every year since 2002. In 2010, Transurban paid 25 cents in dividends. Going forward to 2019, Transurban paid a dividend of 61 cents. This was an increase of 144%. Transurban trades on a fully franked trailing dividend yield of 4.12%.

Transurban has a stake in 18 toll roads, tunnels and bridges in Australia, the US and Canada. This gives it a diversified income with the company receiving tolls from sources in 3 different countries. Transurban has continued its expansion projects during the coronavirus shutdowns. It currently has 3 projects underway with 2 set to be completed in 2021 and one set to be completed in 2023. These projects will deliver new revenue streams as operating rights on existing toll roads begin to age. Additionally, Transurban is currently pursuing more opportunities in Australia and the US. 

Foolish takeaway

With bank interest low at present, investors can realise other opportunities to earn income such as through ASX 200 dividend shares. Additionally, this income can come with franking credits and can provide the potential for capital appreciation. While some may see bank deposits as a safe bet, with returns of less than 2% it is likely that their capital will get swallowed up by inflation. The high-quality ASX shares identified could provide ongoing dividends higher than bank interest. These can be coupled with long-term capital gains. This writer thinks you should forget bank interest and invest in high-quality dividend shares instead. 

More reading

• ASX 200 down 0.1%: Carsales update impresses, a2 Milk surges higher
• Why I would buy CSL and these ASX blue chip shares
• 2 unloved ASX shares that could stage a big turnaround
• 3 fantastic ASX 200 shares to buy right now
• 2 ASX blue chip shares I think every portfolio should hold

Motley Fool contributor Chris Chitty has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Brickworks. The Motley Fool Australia owns shares of Transurban 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.

The post Forget bank interest, try these ASX 200 dividend shares! appeared first on Motley Fool Australia.

from Motley Fool Australia https://ift.tt/2C7ntfk