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As an ASX 200 bank stock, National Australia Bank Ltd (ASX: NAB) shares have always been sought out by income investors. NAB, like most of its banking peers, has been paying out generous dividends to its shareholders for decades. As such, it’s often a go-to stock for passive income seekers on the ASX.

Looking at NAB stock today, you can see that the bank offers a pretty compelling trailing dividend yield of 5.23%. That comes fully franked as well (as is typical of NAB’s dividends). So right off the bat, income investors might be pretty pleased with what they see from NAB shares in February 2024.

Yes, NAB has a starting dividend yield of 5.23% today. However, if you’re thinking about buying NAB shares today, consider this. If you picked up NAB shares around eight months ago, your dividend yield would have been far higher.

How much higher? Well, around 21%. NAB stock might be trading with a yield of 5.23% today. But back in early June 2023, investors were looking at a starting yield of 6.65%.

Why has the dividend yield on NAB shares collapsed for new buyers?

You might be wondering how that is possible. After all, 2023 was a great year for NAB income investors, with the bank increasing its annual dividends per share to $1.67, up from $1.51 per share in 2022.

However, a dividend yield is a function of two different inputs, and only one of them is the actual dividends per share that a company pays. The other is the company’s share price. And the NAB share price’s recent performance explains why its dividend yield has dropped by more than 20% over the past eight months.

Today, the NAB share price is riding relatively high at $32.06 at the time of writing. That’s only a whisker away from the bank’s current 52-week high of $32.60 that we saw last week.

Yet back in early June, NAB hit a new 52-week low of just $25.10 a share. For starters, this means that NAB shares have appreciated by almost 30% over the past eight months. But it has also meant that NAB’s dividend yield has plunged by a similar amount.

If NAB doles out $1.61 in dividends per share and its share price is at $25.10, then the dividend yield will come out at 6.65%. However, if the bank rises to $32.06 a share (which it has), and that raw dividend per share amount hasn’t changed, then NAB’s new dividend yield would be 5.23%. Which is the metric we are seeing today.

So NAB shareholders have been victims of their own success to a certain degree. Due to the company’s sharp rise in valuation, anyone buying NAB today is getting a rougher deal in dividend terms than they were eight months ago.

But for anyone who did buy eight months ago, you’d still be sitting on a 6.65% yield (assuming NAB keeps forking out income at least at the same rate going forward).

The post Buying NAB shares? Here’s why your dividend yield is down 20% in 8 months appeared first on The Motley Fool Australia.

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More reading

• Got $15,000? How I’d invest for a bulletproof ASX passive-income portfolio
• Breaking! NAB shares (and CBA) just hit a new 52-week high
• How much would I need to invest in NAB shares now for $1,000 a month in passive income?
• I’m buying cheap ASX shares to build my wealth in 2024 and beyond
• Lifetime income: 3 ASX dividend stocks I’m planning to never sell

Motley Fool contributor Sebastian Bowen has positions in National Australia Bank. 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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In afternoon trade, the S&P/ASX 200 Index (ASX: XJO) is on course to start the week with a sizeable decline. At the time of writing, the benchmark index is down 0.85% to 7,634.3 points.

Four ASX shares that are falling more than most today are listed below. Here’s why they are dropping:

Core Lithium Ltd (ASX: CXO)

The Core Lithium share price is down 5% to 18.5 cents. This follows broad weakness in the lithium industry again on Monday. It’s also worth noting that last week, Goldman Sachs put a sell rating and 14 cents price target on its shares.

Fletcher Building Ltd (ASX: FBU)

The Fletcher Building share price is down 7.5% to $3.95. This follows the release of an update on the New Zealand International Convention Centre and Hobson Street Hotel project (NZICC) and the Wellington International Airport Carpark project (WIAL Carpark). In respect to the former, the company has determined that it will make an additional provision on NZICC of NZ$165 million.

Silver Lake Resources Ltd (ASX: SLR)

The Silver Lake share price is down 13% to $1.10. Investors have not responded positively to news that the gold miner is merging with Red 5 Ltd (ASX: RED). Under the terms of the transaction, Red 5 will acquire 100% of the shares in Silver Lake and each Silver Lake shareholder will receive 3.434 Red 5 shares for every share held.

Silver Mines Ltd (ASX: SVL)

The Silver Mines share price is down 20% to 13.5 cents. This follows the completion of a placement to raise $8 million before costs. The company raised the funds at a 19.2% discount of 13.5 cents per new share. This will be used to support the development of the Bowdens Silver Project.

The post Why Core Lithium, Fletcher Building, Silver Lake, and Silver Mines shares are sinking appeared first on The Motley Fool Australia.

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More reading

• Guess which ASX gold shares are sinking after announcing a ~$2.3b merger
• These are the 10 most shorted ASX shares
• Top ASX dividend shares to buy in February 2024
• 5 ASX mining shares with projects being spruiked by the Australian Federal Government
• Have Core Lithium shares finally reached a bottom now?

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 positions in and has recommended Goldman Sachs Group. 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 S&P/ASX 200 Index (ASX: XJO) is well into the red on Monday.

After closing up 1.5% to notch a new all-time high 7,699.4 points on Friday, the benchmark index is down 1.1% in early afternoon trade today.

The ASX 200 is sliding today amid ongoing weakness in China’s stock markets. The CSI 300 Index (SHA: 000300) dropped 6.3% in January and closed at a loss again on Friday.

That now sees China’s benchmark stock market index down more than 17% over six months and sitting right at five-year lows.

The sell-off in Chinese stocks looks to be driven by ongoing weakness in the nation’s critical real estate sector along with broader economic malaise and increasing concerns over potential conflicts with the West.

So, should ASX 200 investors be worried about contagion from the Chinese market spreading Down Under?

Is the ASX 200 vulnerable to the sell-off in Chinese stocks?

The best answer I can give you to that question is no. At least, not yet.

While the ASX 200 and global stock markets are increasingly interconnected, there are reasons to be hopeful that the rout in Chinese stocks may be nearing its conclusion. Barring the unlikely outbreak of any significant conflict with Western powers, that is.

Over the weekend the China Securities Regulatory Commission (CSRC) reported on moves to reduce volatility in the markets. As Bloomberg reports, that includes guiding more medium and long-term funds into the CSI 300.

The CSRC will also target insider trading and “malicious” short selling.

And in good news for other international stock markets like the ASX 200, while Chinese stocks have been tanking, Chinese investors have been investing record amounts into markets outside the middle kingdom.

Bloomberg data showed inflows into Chinese exchange-traded funds (ETFs) tracking foreign benchmarks (excluding Hong Kong) hit US$2 billion (AU$3.1 billion) in January.

Helping drive the S&P 500 Index (INDEXSP: .INX) to a new all-time high, US$1.1 billion of those funds went into US stocks. Japanese stocks were the second biggest beneficiary of the cash outflows with US$204 million.

As for the ASX 200, Australian shares will make up some part of the US$667 million that went into the “other’ category.

Commenting on the billions of dollars flowing into international shares via China’s onshore ETFs, Peng Hong, fund manager at Shenzhen Zhichang Fund Management, said (quoted by Bloomberg):

Investors are voting with their feet. Chasing these funds at a high premium is risky, but it’s choosing the lesser of two evils. US stocks could see a correction taking you to ankle-deep in losses, but if you bottom fish onshore stocks, you are likely to be neck-deep.

The post Should ASX 200 investors be worried about the China stock market rout? appeared first on The Motley Fool Australia.

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More reading

• Why Atlantic Lithium, Johns Lyng, Pro Medicus, and WiseTech shares are rising today
• Leading brokers name 3 ASX shares to buy today
• Stocks on the rocks: Why the ASX 200 is backtracking from record highs today
• Guess which ASX tech share is rocketing 30% on Monday
• Why is the BHP share price starting the week with a whimper?

Motley Fool contributor Bernd Struben 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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With so many shares to choose from on the ASX, it can be difficult to decide which ones to buy. The good news is that brokers across the country are doing a lot of the hard work for you.

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

Chalice Mining Ltd (ASX: CHN)

According to a note out of Macquarie, its analysts have retained their outperform rating on this mineral exploration company’s shares with a slashed price target of $2.00. The broker has reduced its valuation markedly to factor in future capital raisings. Nevertheless, Macquarie continues to see significant value in its shares and recommends them as a buy at current levels. The Chalice Mining share price is trading at 90 cents on Monday.

Nufarm Ltd (ASX: NUF)

A note out of Bell Potter reveals that its analysts have retained their buy rating on the agricultural chemicals company’s shares with an improved price target of $6.35. The broker is feeling positive about the company’s outlook following its annual general meeting update and recent rainfall across Australia. In addition, Bell Potter highlights that its shares are trading on lower multiples than its global peers. The Nufarm share price is fetching $5.56 this afternoon.

WiseTech Global Ltd (ASX: WTC)

Analysts at Morgan Stanley have retained their overweight rating and $85.00 price target on this logistics solutions company’s shares. The broker believes that the company’s results this month will be worth watching very closely. If WiseTech beats the market’s expectation of 30% revenue growth, it suspects that its shares could jump. Though, it also warns that softer revenue growth could mean the opposite for its shares. The WiseTech share price is trading at $76.17 today.

The post Leading brokers name 3 ASX shares to buy today appeared first on The Motley Fool Australia.

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More reading

• These are the 10 most shorted ASX shares
• Why AGL, Arcadium Lithium, Chalice Mining, and Nickel Industries shares are falling
• Here are the top 10 ASX 200 shares today
• These are the 10 most shorted ASX shares
• Are ASX growth shares back? How these fundies delivered over 20% upside in 2023

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 positions in and has recommended Macquarie Group and WiseTech Global. The Motley Fool Australia has positions in and has recommended Macquarie Group and WiseTech Global. 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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Pro Medicus Limited (ASX: PME) shares have continued their positive run on Monday despite the market weakness.

In morning trade, the ASX 200 healthcare share has climbed over 3% to hit an all-time high of $108.67.

Why is this ASX 200 healthcare share charging higher?

Investors have been buying the company’s shares after it announced the launch of the “groundbreaking” Visage Ease VP for the new Apple Inc (NASDAQ: AAPL) product, the Apple Vision Pro.

Apple Vision Pro is the tech behemoth’s newly released spatial computer that blends digital content and apps into your physical space. It lets users navigate using their eyes, hands, and voice.

According to the release, Visage Ease VP has been designed to take advantage of the unique capabilities of Apple Vision Pro. It supports immersive, spatial experiences for diagnostic imaging and multimedia.

The company notes that Visage Ease VP includes all the proven functionality of Visage Ease, plus the exciting addition of Visage’s powerful cinematic rendering engine for stunning volume-rendered images in immersive space.

In addition, anywhere, on-the-go access with Visage Ease VP has additional flexibility with virtual screens at more than 4K resolution for each eye, independence from environmental lighting restrictions, and the ability to interact with imaging seamlessly in the user’s physical space.

Management also notes that Visage Ease VP uses the natural and intuitive input of eyes, hands, and voice navigation “to provide an end-user imaging experience that’s unlike any other application.”

The ASX 200 healthcare share already has a user testing out the technology. It notes that UC San Diego Health, a tier 1 academic medical centre and Visage customer, is the first health system to pilot the technology.

Dr. Paul Murphy from UC San Diego Health commented:

The visualization of three-dimensional medical imaging in immersive space creates exciting opportunities to improve patient care. Technology that allows for sophisticated eye motion and gesture controls for reviewing 2D and 3D medical imaging could potentially help in efficient tumor board reviews and create collaborative spaces in healthcare.

The post Apple Vision Pro and an ASX 200 healthcare share hitting all-time highs appeared first on The Motley Fool Australia.

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More reading

• Top 5 most profitable ASX large-cap shares of 2023
• Are ASX growth shares back? How these fundies delivered over 20% upside in 2023
• Could buying this ASX growth stock at $2.17 be like investing in Apple in 2014?
• I’m buying cheap ASX shares to build my wealth in 2024 and beyond
• Here’s how the ASX 200 market sectors stacked up this week

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 positions in and has recommended Apple and Pro Medicus. The Motley Fool Australia has recommended Apple and Pro Medicus. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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It has been a very rewarding time to be an ASX share investor over the last several months. Several market sectors have seen gains to the point where some companies may have become too expensive. But I think there are still some great share market buying opportunities.

As a general rule, we don’t want to invest when a particular company is trading at a euphoric price. However, it’s also worth keeping in mind that solid businesses that are growing have a good chance of delivering appealing capital returns over time – don’t give up on a good business just because its share price is higher today than in October 2023.

Shares in the two ASX stocks below have already enjoyed significant lifts, and I think they can keep rising over the long term.  

Pacific Current Group Ltd (ASX: PAC)

Pacific Current describes itself as a “global multi-boutique asset management business committed to partnering with exceptional investment managers”. The ASX share combines capital, offering uniquely-tailored economic structures, with strategic business development to help businesses grow.

Since 1 December 2023, the Pacific Current share price is up 21%. But I don’t think this is going to be the all-time peak.

Its biggest investment is in the fund manager GQG Partners Ltd (ASX: GQG), which is growing funds under management (FUM) strongly and paying large dividends to Pacific Current.

Other fund managers include Astarte, Avante, Banner Oak, Carlisle, Cordillera, Pennybacker, Proterra and Victory Park.

Growth of Pacific Current’s FUM can lead to rising management fees. The improving investment environment is good news for natural FUM growth, and I think investors are more likely to want to put new money into fund managers’ hands.

In the three months to December 2023, Pacific advised that its aggregate FUM rose 5.6% in Australian dollar terms. Excluding GQG, FUM increased 4.5% for US dollar-denominated fund managers.

Pacific Current’s ownership-adjusted FUM – adjusted for how much it owns of each business – rose from US$14.3 billion to US$15.3 billion.

In that quarterly update, the ASX share said its boutiques had made “strong progress” towards its projection of between A$2 billion to A$5 billion of gross new commitments, excluding GQG, in FY24, with A$2.6 billion of commitments already secured in the first half.

Xero Ltd (ASX: XRO)

I think Xero is one of the strongest ASX tech shares and an exciting ASX growth share.

It’s already a very large ASX share, but the accounting software company has a lot more profit growth to come, in my opinion.

Over the last decade, it has been investing heavily for long-term growth. It’s now letting its profit margins improve while still investing a very healthy amount for more growth.

Xero’s underlying profitability could come shining through in the next few results, I’m expecting big increases in percentage terms of the net profit after tax (NPAT) and cash flow.

The HY24 result showed operating revenue growth of 21% to NZ$800 million, and the adjusted earnings before interest, tax, depreciation and amortisation (EBITDA) grew a lot quicker – it increased 65% to NZ$204.5 million.

With the ASX share’s gross profit margin now sitting at 87.5%, ongoing subscriber growth and an increasing average revenue per user (ARPU), I think there’s a great chance of further longer-term price growth and potential Xero share price gains, despite the 39% rise over the last 12 months.

The post 2 soaring ASX shares I’d buy now with no hesitation appeared first on The Motley Fool Australia.

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More reading

• Goldman Sachs says Telstra and these 6 ASX shares are buys
• 3 roaring ASX shares I’d hold for the next 20 years
• These ASX 200 blue chip shares can rise 30% to ~50%
• Are ASX growth shares back? How these fundies delivered over 20% upside in 2023
• Here’s how I’m targeting a generous ASX passive income in retirement!

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 Xero. The Motley Fool Australia has positions in and has recommended Xero. 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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CSL Ltd (ASX: CSL) shares are in the red today.

Shares in the S&P/ASX 200 Index (ASX: XJO) biotech stock closed on Friday trading for $299.79. In morning trade on Monday, shares are swapping hands for $296.90, down 1%.

For some context, the ASX 200 is also down 1% at this same time.

Despite that dip, that still sees the stock up 28% since 30 October.

And it makes CSL the third largest company listed on the ASX, with a market cap just shy of $145 billion.

But it’s not the big surge in CSL shares that’s brought the biotechnology giant under regulatory scrutiny in the United Kingdom. Or, at least, not directly.

What’s happening with CSL shares in the UK?

As you may be aware, CSL’s three operating segments are CSL Behring, CSL Vifor, and its Seqirus businesses.

CSL Vifor is a global leader in iron deficiency and iron deficiency anaemia therapies. The company acquired Vifor Pharma for US$11.7 billion in 2022 in a deal that boosted CSL shares once completed.

At its capital markets day presentation in October management noted, “CSL Vifor will continue to grow its leading iron franchise through market expansion and life cycle management.”

CSL’s iron-deficiency treatment is known as Ferinject.

But in possible headwinds for CSL shares, Vifor has run into a potentially sticky patch in the UK, where some four million people suffer from iron deficiency anaemia.

As Reuters reports, the UK’s Competition and Markets Authority (CMA) launched an investigation last Wednesday into whether Vifor Pharma disparaged a competing iron-deficiency treatment produced by its competitor Pharmacosmos to benefit Ferinject.

CMA will investigate whether the company impinged on Pharmacosmo’s business by making misleading claims to medical professionals about the safety and efficacy of Monofer, Pharmacosmos’s competing treatment.

CSL has not yet responded to the allegations.

But if the CMA finds the company did engage in anti-competitive practices, CSL shares could come under pressure amid a potentially sizeable fine and the accompanying reputational damage.

The post Up 28% since October, why are CSL shares attracting regulator scrutiny? appeared first on The Motley Fool Australia.

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More reading

• 3 ASX blue-chip stocks I think every Aussie should own
• Brokers name 3 ASX shares to buy now
• 2 world-class ASX 50 shares to buy for your portfolio
• Are CSL shares set for an earnings boost?
• Are ASX blue-chip shares actually safe investments?

Motley Fool contributor Bernd Struben 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 CSL. The Motley Fool Australia has recommended CSL. 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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Metcash Limited (ASX: MTS) shares will be out of action again on Monday.

That’s because the wholesaler has just asked for its shares to remain suspended until Wednesday.

What’s going on with Metcash shares?

Metcash requested that its shares remain offline so that it can undertake a $325 million capital raising.

According to the release, the company aims to raise the funds via a $300 million fully underwritten institutional placement and a $25 million non-underwritten share purchase plan.

The placement is being undertaken at $3.35 per Metcash share, which represents an 8% discount to its last close price.

Why is Metcash raising funds?

The proceeds from the capital raising, along with its existing cash and debt facilities, will be used to acquire three strategically aligned businesses that deliver further diversification and resilience, and an even stronger growth trajectory.

The main acquisition will be Superior Food for an enterprise value of up to $412.3 million. It is a leading Australian foodservice distribution business. Management believes it is a logical extension of Metcash’s Food strategy and will enhance its core Food wholesale and distribution capabilities.

Superior Food has a large network of ~600 suppliers with a product range comprising ~15,000 SKUs. Products are delivered to ~20,000 customers across a diverse range of markets including quick service restaurants, corporate caterers, cafés, restaurants and hotels.

The total acquisition price implies 9.0x FY 2024 estimated underlying EBITDA before annualised synergies and 6.9x including annualised synergies of ~$14 million.

Another acquisition the company is making is Bianco Construction Supplies for an enterprise value of $82.2 million. It is a construction and industrial supplies business servicing the South Australia and Northern Territory trade market.

The third acquisition is Alpine Truss, which is one of the largest Frame & Truss operators in Australia. Metcash has agreed a deal valued at $64 million for the business.

The good news for shareholders, and potentially Metcash shares when they return to action, is that the transactions are expected to be earnings accretive. Management estimates that they will be mid-single digit earnings per share accretive on a pro-forma October 2023 last-twelve-month basis including synergies. In addition, they are expected to be accretive to Metcash’s margins.

Metcash CEO, Doug Jones, said:

Metcash is the logical owner of Superior Food, and the acquisition cements our position as the largest wholesaler and distributor of food to independent businesses in Australia. Superior Food provides a compelling opportunity to expand in an attractive and adjacent growth market through an industry leading player with an established national platform for future growth. The combination of the two businesses unlocks diversification benefits, procurement savings, range expansion and extends our purpose of Championing Successful Independents.

The post Metcash shares paused for $325m capital raising to fund Superior Food acquisition appeared first on The Motley Fool Australia.

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More reading

• 5 things to watch on the ASX 200 on Monday
• ‘Attractive’: 2 ASX 200 shares to buy right now from the boom sector for 2024
• Top ASX dividend shares to buy in February 2024
• Guess which ASX 200 stock is halted on $500m acquisition talks
• Top tier ASX income stocks I’d consider buying in January!

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ASX defensive shares are a good place to look for investment opportunities in the current economic environment. While interest rates may be lowered this year, there still is uncertainty about whether there’s going to be a downturn or not. So, I’m going to tell you about Propel Funeral Partners Ltd (ASX: PFP).

Extremely defensive earnings

There’s a saying that there are only two things certain in life – death and taxes. We can’t invest in the Australian Taxation Office (ATO), but we can invest in this funeral provider.

Sadly, a certain number of people are going to die each year. This means there’s a fairly consistent amount of demand annually.

Propel is a funeral operator in Australia and New Zealand with a market capitalisation of more than $600 million. It is the second biggest funeral provider in the Australia and New Zealand region.

The company has increased its market share in Australia from around 1% in 2015 to approximately 8% in 2022. It has a sizeable market share which is steadily growing thanks to its organic growth and a steady flow of acquisitions. At the company’s AGM, it advised it had committed $121 million to acquisitions over the past 12 months.

Growth tailwinds

If a company is able to grow revenue, even in a downturn, then I think it can claim to be a relatively defensive ASX share. FY23 saw Propel’s revenue increase by 16%, even though the 2023 financial year didn’t exactly see a recession.

According to the Australian Bureau of Statistics (ABS), death volumes are expected to increase by 2.4% per annum from 2023 to 2030 and 2.5% per annum from 2030 to 2040.

If Propel can maintain (or grow) its market share, then it should experience an increasing number of funerals as the years go by, though it won’t necessarily go up every single year.

In FY23, the business saw a funeral volume of 18,029, an increase of 9% year over year.

Appealing factors for profit and dividend growth

Not only is the number of funerals growing, but the company is increasing its profitability.

Propel is achieving a steady increase in average revenue per funeral – this increased by 6% in FY23, and it has grown at a compound annual growth rate (CAGR) of around 3% since FY14.

If the business can increase its profit, this could lead to a growing dividend and a rising Propel share price over time.

As I mentioned, FY23 saw revenue rise 16%, while the operating net profit after tax (NPAT) increased 17.9% to $20.9 million.

In the first quarter of FY24, the company saw the average revenue per funeral increased by a further 4.3% year over year to $168.5 million.

In FY24, Propel expects to report revenue of between $200 million to $220 million — an increase of between 18.7% to 30.5%.

Valuation

The ASX defensive share is currently valued at 30x FY24’s estimated earnings, according to the forecast on Commsec, with more growth expected in FY25 and FY26, putting it at 24x FY26’s estimated earnings.

The post Is this the most defensive ASX share money can buy? appeared first on The Motley Fool Australia.

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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 no position in any of the stocks mentioned. The Motley Fool Australia has recommended Propel Funeral Partners. 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 love looking at ASX-listed exchange-traded funds (ETFs) which offer both diversification and a good investment strategy that can lead to good returns.

I believe that the international share market is full of opportunities – the ASX only accounts for 2% of the global share market

It’s easy in hindsight to say which ASX ETFs are good picks. But, in my opinion, the ones that have done very well could continue to do well, despite the strong performance over the past year.

VanEck MSCI International Quality ETF (ASX: QUAL)

The QUAL ETF unit price has risen by around 33% over the past year, outperforming the S&P/ASX 200 Index (ASX: XJO) which only rose by 2%.

The idea is that it’s invested in the world’s highest-quality companies which rank well on key fundamentals including a high return on equity (ROE), earnings stability and low financial leverage.

It’s invested in around 300 of these quality companies from across the world, with good allocations to countries like Switzerland, the UK, Japan, Denmark and a few more. The biggest weighting is to the US, which has an allocation of 74%.     

A year ago, QUAL ETF’s portfolio was suffering (in valuation terms) from the fear surrounding interest rates and valuation. Confidence has come soaring back and the ongoing earnings strength has been reassuring.

Past performance is not a guarantee of future performance, but since its inception in October 2014, the QUAL ETF has delivered an average return per annum of around 15%. I think it’s capable of producing net returns of more than 10% per annum over the long term because of its focus on quality metrics.

Betashares Global Cybersecurity ETF (ASX: HACK)  

The HACK ETF unit price has climbed by 44% over the last year, which is a very strong rise for an ASX ETF with no leverage (debt).

In my eyes, this is one of the strongest ETFs around and it’s exposed to a strong tailwind.

Cybersecurity is a very integral industry because of the important nature of what it protects – government data, online banking, e-commerce, internal business data, and so on.

We’ve seen a number of large Australian businesses hit by cyber attacks in recent times including Optus, Medibank Private Ltd (ASX: MPL) and IPH Ltd (ASX: IPH). Hopefully, lots of other companies have upgraded their protection so they’re not the next ones to be hit. Even small businesses and households can be vulnerable to cyber attacks as well.

There’s not a lot of diversification with this portfolio – there are only around 30 names, and they’re all focused on cybersecurity. But, I think that’s a good thing. With more digital adoption by the world, there’s an ever-growing need to have adequate protection.

According to Statista, the size of the global cybersecurity market is projected to grow by 92% in the seven years between 2023 to 2030. I think this can continue to drive the profitability of the HACK ETF’s global holdings higher, and this can lead to solid investment returns.

Although past performance is not a guarantee of future returns, the HACK ETF has delivered an average return per annum of 17% since inception in August 2016.

The post 2 ASX ETFs I wish I’d bought for my portfolio appeared first on The Motley Fool Australia.

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More reading

• Buy these fantastic ASX ETFs for passive income and growth
• Looking for growth? I’d buy these 2 ASX ETFs
• How I’d create investment cash flow in retirement from ASX ETFs
• 5 excellent ASX ETFs to buy when the market reopens
• Could AI be a boon for this ASX ETF?

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 BetaShares Global Cybersecurity ETF. The Motley Fool Australia has positions in and has recommended BetaShares Global Cybersecurity ETF. The Motley Fool Australia has recommended IPH. 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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