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This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

On May 20, the S&P 500 index fell into bear market territory. A bear market is defined as a period when stock values fall 20% or more from a recent high.

This is the first time in over two years that stocks have fallen so sharply. The last decline of this nature happened in March 2020, on the heels of the COVID-19 outbreak. 

Of course, a bear market can be an unsettling thing, even if you’re a seasoned investor. But here’s why you don’t need to start panicking.

1. Bear markets aren’t that unusual

Since World War II, there have been 17 bear or near-bear markets, according to a Morningstar report. That’s not a particularly large number, but it’s also not a small number. So if you’re new to investing, you can rest assured that this sort of thing has happened before.

2. Bear markets don’t always last that long

On average, bear markets last about a year. But that doesn’t always happen. The bear market investors endured in early 2020 was fairly short-lived, and stocks managed to more than recover their value before the end of the year.

Granted, without a crystal ball, it’s impossible to predict how long a given bear market will last. But while the idea of stocks being down for a year might seem terrifying, the reality is that you really only stand to get hurt by a bear market if you liquidate stocks at a loss. If you leave your portfolio alone, you may not lose a dime during a bear market.

3. The stock market has a long history of recovering from bear markets

It’s definitely unsettling to see your portfolio value tank. But it’s important to remember that the stock market has a long history of recovering from downturns. Not only that, but some of the market’s strongest periods of performance have happened on the heels of a bear market.

4. Bear markets can spell opportunity for long-term investors

During a bear market, stock values decline significantly. That’s a bad thing if you’re looking to liquidate stocks. But if you’re looking to buy stocks, it’s actually a good thing.

While timing the market isn’t a recommended investing strategy, buying stocks during a bear market could prove to be quite lucrative. Of course, you don’t want to just buy any old stocks. Rather, focus on the same quality businesses you were buying before market conditions took a turn for the worse (unless there’s a specific reason to stay away from those stocks).

Another good option during a downturn? Invest in the broad market by buying shares of an S&P 500 ETF. That’s an easy way to take guesswork out of the equation at a time when you may be rattled and not in the best position to make analytical decisions.

Try to keep your cool

A bear market can be scary, but the key is to not act impulsively when stock values are down. Instead, find ways to stay calm, whether it’s diving into a hobby or devoting more time to exercise and self-care. At the same time, consider adding to your portfolio when stocks are down to set yourself up for some solid returns down the line. 

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

The post US stocks just hit bear market territory, but here’s why you don’t need to worry appeared first on The Motley Fool Australia.

More reading

• Incitec Pivot share price fizzles despite half-year earnings increasing tenfold
• Why is the BrainChip share price rocketing 15% higher today?
• What’s happening with the Newcrest share price on Monday?
• BetMakers share price climbs on multi-year agreement
• Why the IGO share price is rallying on Monday

The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

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The Incitec Pivot Ltd (ASX: IPL) share price is trading down on Monday morning after the fertiliser and explosives manufacturer reported a record first-half profit for the six months ending 31 March 2022.

In the first session of the week, Incitec Pivot shares are fetching $3.69. However, shares opened nearly 7.5% higher at $4.02 amid the cracking half-year result. For comparison, the S&P/ASX 200 Index (ASX: XJO) is up 0.23% as investors react to the Federal election outcome.

Incitec Pivot share price on fire on explosive half-year result

• Revenue up 48% compared to prior corresponding period to $2,548 million
• Record half-year net profit after tax (NPAT) of $384 million, up 955%
• Earnings per share (EPS) jumped from 1.9 cents to 19.8 cents
• Interim 100% franked dividend to increase tenfold from 1 cent to 10 cents per share
• Intention to split Incitec Pivot into two separate ASX-listed companies

What happened during the first half?

The most recent half-year was lucrative for both fertiliser and explosive business segments. Unsurprisingly, investors are reacting with an increased hunger for Incitec Pivot shares today.

There were a couple of key factors ultimately assisting Incitec to the standout result that it has posted today. According to the company, improved commodity pricing and beneficial foreign exchange rates aided in the result.

Additionally, earnings before interest and tax (EBIT) in the American explosive segment operating as Dyno Nobel Americas improved by 221% to $252 million. Similarly, Incitec’s Fertilisers Asia Pacific division experienced a 237% increase in its EBIT, reaching $257 million.

What did management say?

Commenting on the stellar result, Incitec Pivot’s managing director and CEO Jeanne Johns said:

Our record first half result reflects the quality of our two category-leading businesses and our sharp focus on executing in a high demand, highly disrupted market. Our team has done an excellent job navigating operational complexity to deliver for our customers.

Johns added:

Dyno Nobel’s Americas and Asia Pacific teams delivered solid volume growth, with margins continuing
to reflect our high-value technology. The acquisition of Titanobel gives us additional expertise and
people capability to serve select high-quality markets and customers in Europe and Africa, with growth
being driven by technology and a focus on future-facing minerals

What’s next?

The big future news for the Incitec Pivot share price is the proposed separation of the company. Announced alongside its results this morning, the company intends to create two separate ASX-listed companies — Dyno Nobel and Incitec Pivot Fertilisers.

Notably, the decision follows a strategic review that found declining synergies in ammonia manufacturing as explosives and fertiliser customers hold more unique solution requirements. In addition, management believes the separation will enable shareholders to best capture future value in each area.

When it comes to costs, current estimates outline an expected $80 million to $105 million in one-off costs. Meanwhile, a further $25 million to $35 million per annum in ongoing costs are forecast.

The company will be targeting the official separation of the two businesses in the first half of 2023.

Incitec Pivot share price snapshot

Since March 2020 crash, the Incitec Pivot share price has steadily climbed higher. In March this year, shares in the company reclaimed their pre-pandemic level, surpassing $3.65.

For shareholders, Incitec has been a winner so far this year. On a year-to-date basis, the company’s share price is up 13.9%. Whereas, the ASX 200 index is 3.41% in the red — which means Incitec has outperformed by 17.3%.

The post Incitec Pivot share price fizzles despite half-year earnings increasing tenfold appeared first on The Motley Fool Australia.

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Motley Fool contributor Mitchell Lawler has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. 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 BrainChip Holdings Ltd (ASX: BRN) share price is starting the week very strongly.

In morning trade, the artificial intelligence (AI) technology company’s shares are up 15% to $1.35.

Why is the BrainChip share price charging higher?

Today’s gain by the BrainChip share price appears to have been driven by a press release relating to the company’s acceptance into a partner program.

According to the release, the company has been accepted into the Arm AI Partner Program. This is an ecosystem of hardware and software specialists enabling developers to deliver the next generation of AI solutions.

Arm is one of the biggest names in AI. It is a UK-based semiconductor company that designs the components of processors for others to ultimately build.

Earlier this year, tech giant Nvidia attempted to acquire Arm for US$40 billion before the deal ultimately collapsed due to regulatory issues.

Arm AI Partner Program

The release explains that Arm’s extensive AI ecosystem simplifies AI deployment by providing best-in-class tools, algorithms, and applications to customers worldwide.

It also creates and nurtures strategic alliances that “empower” its ecosystem to drive innovation, provides technical support and resources, and helps partners reach developers and decision-makers within their target markets.

Mohamed Awad, vice president of IoT and Embedded at Arm, said: “As part of the Arm AI Partner Program, BrainChip will further enable developers to meet the need for high-performance and ultra-low power edge AI inference, unlocking new opportunities for innovation.”

However, it might be a little soon to get overly excited. BrainChip is certainly not the only edge AI-focused company in the program. This serves as a reminder that there’s still a long road ahead for BrainChip and no guarantee of success despite what its $2 billion+ market capitalisation might indicate.

The post Why is the BrainChip share price rocketing 15% higher today? appeared first on The Motley Fool Australia.

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Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. 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 Newcrest Mining Ltd (ASX: NCM) share price edged higher in early trade, up 0.3% to $25.58.

It follows the report of a new project management agreement for the S&P/ASX 200 Index (ASX: XJO) gold-mining giant.

Newcrest share price higher on new management agreement

The Newcrest share price started Monday in the green after the miner reported its wholly-owned subsidiary – Newcrest Operations – will take over management of its farm-in agreement with Antipa Minerals Ltd (ASX: AZY) on the Wilki Project, located in Western Australia.

In November Newcrest completed its initial commitment of the agreement, having spent $6 million on exploration activities at the site. Antipa, meanwhile, has finalised the project’s current program of works.

The next stage required for Newcrest to earn a 51% interest in the joint venture (JV) is spending another $10 million on exploration before March 2025. The miner has commenced the next stage of exploration.

Newcrest can then earn a 75% interest in the JV if it spends an additional $44 million on exploration activities by March 2028.

What did management say?

Commenting on Newcrest’s decision to assume management of the Wilki Project, Antipa managing director Roger Mason said:

With our other major partners, Rio Tinto and IGO, already operating our Citadel JV and Paterson Farm-in Projects, respectively, this allows Antipa to dedicate its focus to the rapid advancement of our 100%-owned Minyari Dome Project.

The recent substantial resource upgrade at Minyari, to 1.8 million ounces of gold, readily demonstrates why we are now targeting a stand-alone mining and processing operation at Minyari via the usual evaluation studies.

While the Newcrest share price initially rose 0.3% on the news, Antipa shares gained 4.65%.

Newcrest will take over management of the operations of the Wilki Project on 1 July.

Newcrest share price snapshot

The Newcrest share price has gained 4.5% so far in 2022. By comparison, the ASX 200 is down 5.6% year to date.

The post What’s happening with the Newcrest share price on Monday? appeared first on The Motley Fool Australia.

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The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. 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 BetMakers Technology Group Ltd (ASX: BET) share price is edging ahead on Monday morning.

At the time of writing, shares in the betting technology company are up 2.91%, trading at 53 cents.

What did BetMakers announce?

Investors are rallying up the BetMakers share price after the company was selected as the new tote provider in Norway.

In its release, BetMakers advised its Global Tote division has secured a 10-year deal with Norsk Rikstoto.

Founded in 1982, Norsk Rikstoto is the sole purveyor of betting on horse racing in Norway.

Under the agreement, Global Tote will become the new tote technology and services provider for the Nordic country. This will replace Norsk Rikstoto’s current pari-mutuel betting solution.

As such, Global Tote will deliver its software-as-a-solution (SaaS) for integration with Norsk Rikstoto’s web, mobile and terminal platforms.

The system will be hosted from Global Tote’s AWS computing environment with operations serviced from its centres in Europe and the United States.

Features as well as key software customisations are expected to be in line with local betting and regulatory requirements.

Both parties will work closely together to better position Norsk Rikstoto and develop Norway racing as a global wagering product. This includes expanding international opportunities and increasing revenue by importing or exporting content for wagering customers in their respective markets.

What did management say?

BetMakers CEO Todd Buckingham touched on the milestone agreement, saying:

BetMakers, through its Global Tote division, is delighted to broaden its engagement with Norsk Rikstoto to deliver a new betting system that both parties believe will allow Norsk Rikstoto to leverage its investment in existing web, mobile and terminal platforms while also expanding its system capabilities and increasing access to new markets and new content through international commingling.

Further to this new Norway deal expanding Global Tote’s footprint in Europe, we are particularly proud of the fact that, as a Company, BetMakers now provides key tote betting services to three of the four Nordic countries that offer betting on racing. Global Tote is the chosen national tote services provider of the Nordics in Denmark, Finland and Norway.

Global Tote is also the national tote technology service provider in Turkey, and supports key racetracks across Spain, Cyprus, Ireland and the United Kingdom.

About the BetMakers share price

Despite today’s gains, the BetMakers share price has fallen by almost 65% over the last 12 months.

When looking at the year to date, its shares are down roughly 33%.

Based on valuation grounds, BetMakers has a market capitalisation of roughly $465.28 million.

The post BetMakers share price climbs on multi-year agreement appeared first on The Motley Fool Australia.

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Motley Fool contributor Aaron Teboneras has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Betmakers Technology Group Ltd. The Motley Fool Australia has recommended Betmakers Technology Group Ltd. 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 IGO Ltd (ASX: IGO) share price is running higher for the second consecutive day, seemingly getting a boost from a broker upgrade.

Shares in the nickel and lithium miner added 3.85% to reach a two-week high of $12.11 in early trade. In comparison, the S&P/ASX 200 Index (ASX: XJO) is up 0.24% at the time of writing.

The IGO share price gain today is on top of Friday’s 5.1% surge after the company announced its first and consistent production of battery-grade lithium hydroxide from the Kwinana Lithium Hydroxide Refinery in Western Australia.

IGO share price boosted by de-risking milestone

The news significantly de-risks the project, according to UBS. The broker took the opportunity to upgrade IGO shares to buy.

It also helps that the IGO share price is looking even better value after it fell around 20% in the last month.

Another positive is that IGO is getting closer to acquiring Western Areas Ltd (ASX: WSA).

Biggest valuation driver

The Kwinana Refinery is a joint venture (JV) between IGO and its Chinese partner Tianqi Lithium Corporation. This JV accounts for around 75% of UBS’ valuation on the ASX miner and it includes IGO’s indirect 25% ownership in the Greenbushes mining asset.

The next step is a four- to six-month qualification period with its four off-take partners as production from Kwinana increases.

Risk factors to consider

But it isn’t all good news. Additional capital will be needed to expand the project and it costs three times more to build capacity in Western Australia compared to China.

Further, the broker thinks volumes might disappoint given the disappointing track record of Kwinana. This drags on UBS’ valuation on the IGO share price, although the volume issue is partially offset by the broker’s above-market commodity price forecast.

UBS commented:

The growth and earnings potential from Greenbushes was becoming clearer, but the Kwinana downstream had been perceived as a risk given its history.

We maintain our structurally bullish view on lithium and nickel in the medium and long term, looking through potential short-term volatility…. We reduce our PT [price target] to A$12.15/sh on lower realised spodumene prices but upgrade to Buy on a lower share price.

How is the IGO share price performing?

The IGO share price has gained close to 65% over the past year while the S&P/ASX 200 Index is up 1.4%.

It isn’t only IGO that has outperformed on the back of surging lithium prices. The Allkem Ltd (ASX: AKE) share price and Pilbara Minerals Ltd (ASX: PLS) share price have both more than doubled over the same period.

The post Why the IGO share price is rallying on Monday appeared first on The Motley Fool Australia.

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• 5 things to watch on the ASX 200 on Monday
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Motley Fool contributor Brendon Lau has positions in Independence Group NL and Orocobre Limited. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. 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 Elders Ltd (ASX: ELD) share price has come flying out of the gates on Monday morning.

In early trade, the agribusiness company’s shares jumped 9% to a multi-year high of $14.98.

Elders share price jumps amid strong first-half profit growth

• Sales revenue up 38% to $1,514.8 million
• Earnings before interest and tax (EBIT) up 80% to $132.8 million
• Net profit after tax up 34% to $91.2 million
• Interim dividend increased 40% to 28 cents per share

What happened during the first half?

For the six months ended 31 March, Elders reported a 38% increase in revenue to $1,514.8 million.

This was driven by growth across all product areas and geographies. The star of the show, though, was the Rural Products business, which reported a 47% jump in sales to $312.9 million. This reflects strong demand for fertiliser and crop protection products following favourable seasonal conditions across key cropping regions.

As for earnings, the company delivered an 80% jump in EBIT to $132.8 million and 34% increase in net profit after tax to $91.2 million. This was underpinned by its strong sales growth and the early success of its Eight Point Plan.

This strong profit growth allowed the Elders board to declare a 30% franked 28 cents per share interim dividend, which is up 40% year on year.

How does this compare to expectations?

As you might have guessed from the Elders share price performance today, this result outperformed expectations.

According to a note out of Goldman Sachs, its analysts were expecting Elders to report a 13% increase in sales revenue to $1,245.2 million and a 27% lift in EBIT to $93.7 million.

Elders has smashed both estimates with its sales revenue of $1,514.8 million and EBIT of $132.8 million.

Outlook

In light of the company’s performance during the first half and strong start to the second half, management has upgraded its earnings guidance for FY 2022.

Instead of underlying EBIT growth of 20% to 30%, it is now forecasting EBIT growth of 30% to 40% for the 12 months.

Managing Director and Chief Executive Officer, Mark Allison, said:

The strong first half performance has continued in April and we now expect to deliver full year 2022 Underlying EBIT in the range of 30% to 40% above full year 2021 Underlying EBIT. This expectation replaces the guidance we gave to the market on 14 March 2022.

Though, the company warned that its guidance could be impacted by potential supply chain disruptions as a result of COVID-19 and geopolitical events, unexpected changes to seasonal conditions and severe weather events, and unexpected changes in commodity prices.

The post Elders share price jumps 9% on stellar first-half profit growth appeared first on The Motley Fool Australia.

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Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has recommended Elders Limited. 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 lifted after the company offered to buy MyDeal.com.au Ltd (ASX: MYD) on Friday.

But could the S&P/ASX 200 Index (ASX: XJO) company’s latest attempt to get onto the online marketplace scene put the Woolworths share price in the ‘buy’ zone?

Is Woolworths a buy after MyDeal offer?

Brokers are sceptical of Woolworths latest acquisition attempt despite the company’s share price trading in the green following its announcement.

The supermarket giant has offered to buy an 80% stake in MyDeal for around $218 million – or $1.05 per share. The proposal values the business at $271.8 million.

Woolworths’ offer represents a 62.8% premium on the MyDeal share price’s previous undisturbed close. Perhaps unsurprisingly, stock in the online marketplace rocketed nearly 56% on Friday.

Woolworths’ intent to snap up MyDeal might remind readers of Wesfarmers Ltd (ASX: WES)’s 2019 acquisition of Catch.com.au. It might also raise eyebrows after the supermarket giants’ unsuccessful attempt to integrate EziBuy into its Big W brand. After acquiring EziBuy in 2013, Woolies offloaded it in 2017.

What are the experts saying?

Barrenjoey analyst Tom Kierath is reportedly perplexed about the proposed transaction.

He questioned why Woolworths would pay such a premium for MyDeal. Particularly as the online marketplace suffered a $5.8 million loss last financial year, The Age reports.

If [MyDeal] didn’t make money through the COVID period, will it ever?

Barrenjoey’s Tom Kierath, as quoted by The Age.

The analyst also noted the supermarket giant has previously struggled to make profits in non-food businesses. It has racked up notable failures in Dick Smith and Masters.

Morgans analyst Alex Lu is also reportedly sceptical. Lu noted the transaction comes as many Australians worry about the cost of living – which could dampen demand for general merchandise – according to the newspaper.

Meanwhile, Citi is reportedly drawing parellels between Woolworths’ bid for MyDeal and its EziBuy flop.

“Both businesses are not market leaders and we are also concerned that visibility on MyDeal’s performance will be low once consolidated as EziBuy’s was previously,” The Australian quoted Citi analyst Adrian Lemme as saying.

The broker has a $40.30 price target and a ‘buy’ rating on Woolworths shares.

Woolworths share price snapshot

The Woolworths share price has struggled through 2022 so far.

It has tumbled 8.1% year to date. Meanwhile, the ASX 200 has slumped 5.8%.

In early trading on Monday, shares in the supermarket giant are up 0.11% at $35.39.

However, the company and the index have recorded respective gains of 0.3% and 1.4% over the last 12 months.

The post Is the Woolworths share price a buy following the latest acquisition or a no deal? appeared first on The Motley Fool Australia.

More reading

• 5 things to watch on the ASX 200 on Monday
• Woolworths share price lifts following $218m online marketplace deal
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• Here’s why the MyDeal share price is rocketing 56% today
• Woolworths share price in focus on MyDeal acquisition proposal

Motley Fool contributor Brooke Cooper has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has positions in and has recommended Wesfarmers Limited. 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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This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

What happened

Earlier this month, the Terra (CRYPTO: LUNA) blockchain effectively collapsed. The breakdown started when stablecoin TerraUSD (CRYPTO: UST) lost its peg to the U.S. dollar and the built-in arbitrage mechanism failed to resolve the problem. At that point, panicked investors started selling Luna and TerraUSD hand over fist.

However, Terraform Labs founder Do Kwon has a plan to revive the broken blockchain, and optimism surrounding that plan has both coins soaring today. As of 3:00 pm ET, Luna and UST were up 62% and 25%, respectively, in the last 24 hours.

So what

Kwon discussed his revival plan for Terra in a recent blog post. Specifically, the blockchain will be forked to create a new chain, but the new chain will not include the UST stablecoin. Kwon’s plan also outlines the creation of 1 billion new Luna coins, which will be distributed among developers alongside pre- and post-crash holders of Luna and UST.

The voting period is still open, but the proposal has already surpassed the threshold for adoption, and the fork is set to take place on May 27. At that time, the old chain and cryptocurrency will be known as Terra Classic and Luna Classic, while the new chain and cryptocurrency will be known as Terra and Luna. Of course, Kwon’s proposal does not guarantee that investors will recoup all crash-related losses. The market will have to decide what the new Luna coin is worth.

Now what

Terra was once a thriving ecosystem of decentralized finance (DeFi) services. Anchor (CRYPTO: ANC) was the crown jewel, a lending protocol that paid 20% interest on UST deposits. But the platform included a number of other noteworthy applications. The Mirror protocol allowed investors to trade synthetic assets, and the Chai payments app had over 2 million users in South Korea.

After the blockchain’s collapse, the future of the Terra ecosystem is questionable at best. The relationship between UST and Luna was the primary source of value. DeFi products like Anchor were designed to drive demand for UST, and Luna was designed to absorb stablecoin price volatility. To that end, Luna was supposed to become more valuable as demand for UST increased. Instead, the opposite happened and investors lost over $40 billion.

Even if the new blockchain earns the trust of the crypto community, Terra won’t be the same without its native stablecoin. For that reason, I think this is a “watch and wait” situation. Terra may regain its former glory, or it may fade into the background of the crypto industry. 

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

The post Why Terra (Luna) just clawed back some losses appeared first on The Motley Fool Australia.

More reading

• Why the IGO share price is rallying on Monday
• Elders share price jumps 9% on stellar first-half profit growth
• Is the Woolworths share price a buy following the latest acquisition or a no deal?
• Why I think it’s a good time to buy the Vanguard MSCI Index International Shares ETF (VGS)
• Potential buys from experts: 2 compelling ASX shares

The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia owns and has recommended Luna. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips. 

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

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After all of this volatility, I think now is a good time to buy the Vanguard MSCI Index International Shares ETF (ASX: VGS).

Inflation and central bank interest rate rises are getting a lot of investor attention right now. It could be a good time to consider a diversified, low-cost exchange-traded fund (ETF).

Amid all of the uncertainty, the global share market has been falling. The VGS ETF has fallen by 16% since the start of the year, including the effect of the decline of the Australian dollar.

What is the Vanguard MSCI Index International Shares ETF?

This ETF is about providing access to invest in many of the world’s largest companies.

It’s invested in businesses across the world. Geographically, it is diverse.

The United States, Japan, the United Kingdom, Canada, France, Switzerland, Germany, the Netherlands, Sweden, Hong Kong, Denmark, Spain and Italy each has an allocation of at least 0.5%

There is a total of almost 1,500 holdings in the ETF, so it looks very diversified in my opinion.

I’d also like to point out that it’s diversified across different sectors. There are five sectors that have a double-digit weighting in the portfolio – IT (22.1%), healthcare (13.4%), financials (13.1%), consumer discretionary (11.2%) and consumer staples (7.8%).

So that’s what the ETF is about. But why is it attractive? Here are some key points that I like about it.

Low fees

One of the main positives about the Vanguard MSCI Index International Shares ETF is that it has an annual management fee of 0.18%, which is low and attractive to me.

When the management fee is low, it means more of the net returns are left in the portfolio for investors. That can mean stronger compounding over the longer term.

The fund provider Vanguard aims to provide its investment funds for investors as cheap as it can. There are no performance fees with this ETF either.

Strong holdings

While it does have a large number of positions, the companies with the largest weightings are some of the strongest in the world.

I think one of the attractive features of the VGS ETF is that it has a good allocation to quality businesses. At the end of April 2022, these are some of the biggest positions in the portfolio: Apple, Microsoft, Alphabet, Amazon, Johnson & Johnson, Nvidia and Berkshire Hathaway.

Prior to the recent decline in the last few months, the VGS ETF had produced solid returns in my opinion. Past performance is not a reliable indicator of future performance, but even after the drop, the Vanguard International Shares ETF returned an average of 11.4% per annum in the five years to April 2022, according to Vanguard.

I think the quality of the ETF can also be seen with the return on equity (ROE) ratio of 18.3%, according to Vanguard.

Foolish takeaway

I think that the VGS ETF looks more attractive after this decline. It’s full of good companies which are now, as a whole, cheaper. If I were looking to buy it, this could be a good time.

The post Why I think it’s a good time to buy the Vanguard MSCI Index International Shares ETF (VGS) appeared first on The Motley Fool Australia.

More reading

• 3 top ETFs for ASX investors to buy now
• VGS: Were you better off buying the S&P 500 ETF?
• 3 fantastic ETFs for ASX investors to buy this week
• How diversified is the Vanguard International Shares ETF?
• Here are 2 top ETFs for ASX investors to buy next week

John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Alphabet (A shares), Amazon, Apple, Berkshire Hathaway (B shares), Microsoft, Nvidia, and Vanguard MSCI Index International Shares ETF. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has recommended Alphabet (C shares) and Johnson & Johnson and has recommended the following options: long January 2023 $200 calls on Berkshire Hathaway (B shares), long March 2023 $120 calls on Apple, short January 2023 $200 puts on Berkshire Hathaway (B shares), short January 2023 $265 calls on Berkshire Hathaway (B shares), and short March 2023 $130 calls on Apple. The Motley Fool Australia has recommended Alphabet (A shares), Alphabet (C shares), Amazon, Apple, Berkshire Hathaway (B shares), Nvidia, and Vanguard MSCI Index International Shares ETF. 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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