Tag: Motley Fool

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

Full self-driving is here (kind of), and Tesla (NASDAQ: TSLA) stock is up 3.4% as of 10:55 a.m. EDT.

On midnight Friday, the electric vehicle pioneer began sending out over-the-air software updates upgrading thousands of Tesla owners who had paid in advance for Full Self Driving (FSD) capability to version 9 of the beta feature.

So what

It’s been a long wait. CEO Elon Musk has been promising that Tesla would roll out version 9 since 2018, immediately creating “over a million cars” with essentially autonomous driving capability — so it’s clear why this news has investors excited. Early reviewers of the new software report that “driving visualization” [has received] a massive improvement,” while the verdict on “actual driving behavior” is not yet in.

And many Tesla owners may have to wait a bit longer to take FSD for a spin.

As industry site Electrek reports, the new version of the software relies on Tesla Vision for its guidance, driving based on camera readings rather than a mix of cameras and radar. The company is warning, however, that the software “may do the wrong thing at the worst time,” and that drivers using the feature “must always keep your hands on the wheel and pay extra attention on the road.” While monitoring how the software performs in the real world, therefore, Tesla is limiting the rollout to just “early limited access Beta” distribution — meaning not everyone who has paid for FSD will get it immediately.

Now what

What does it mean for investors? Elon Musk has finally delivered on his promise. As is often the case, he took a bit longer to deliver than initially promised — but as is often also the case, he did eventually deliver.

Now, we need to see if this version was worth the wait. The better the autonomous driving software turns out to be, the more willing folks — who have hesitated up till now to pay $10,000 to buy it — will become. And that will mean more money in Tesla’s pocket, and more profits for Tesla shareholders.

Indeed, if rumors that Tesla is planning to raise the price on FSD to $14,000 turn out to be true, the arrival of FSD could be just the thing needed to keep Tesla’s stock price moving higher.

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

The post Why Tesla stock took off on Monday appeared first on The Motley Fool Australia.

More reading

• As markets fall, here’s how a Tesla death cross might actually matter
• Why Tesla stock crashed and burned again on Wednesday
• Australia’s favourite international shares? Tesla (NASDAQ:TSLA) tops the list
• ASX investors were buying DiDi and Virgin Galactic shares last week
• Could Tesla build 1 million vehicles this year?

Rich Smith has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and has recommended Tesla. 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 Bruce Jackson.

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

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The arrival of COVID-19 last year saw many dividend-paying ASX shares reduce their payouts.

Most ASX companies, if they pay a dividend at all, hand out once or twice a year. Very occasionally you might see a stock pay a dividend quarterly.

So 2020 was an unpleasant time for income investors who may be relying on these irregular payments to pay living expenses. If they copped a less-than-expected amount one time, they might’ve had to wait months for another contribution.

When some companies, like the big banks, increased their dividends again this year, those punters will have breathed a sigh of relief.

But did you know there is one ASX stock that’s been paying out dividends every month?

This ASX small-cap is as reliable as the moon

Stocks for accounting and taxation firm Kelly Partners Group Holdings Ltd (ASX: KPG) have been a star performer recently.

The North Sydney company’s share price zoomed up 38% over June, going from $2.46 to $3.40. It closed Monday at $3.20.

Kelly Partners was the Cyan C2G Fund’s best performer of the month.

“We have been long-term investors in the business — since IPO in June 2017 — and believe the stock has been fundamentally undervalued for some time,” Cyan portfolio manager Dean Fergie said in a memo to clients.

“However we’re not entirely sure what has prompted the timing of this recent price spike other than some rumoured offshore buying.”

According to Fergie, Kelly Partners has “a solid business model” playing in an industry that’s very stable and reliable.

But there could be another reason for the recent popularity.

“[It] is one of the only ASX listed companies — to our knowledge at least — that pays a monthly dividend,” said Fergie.

“In an era of almost zero interest rates, this is obviously an attractive investment feature that may well have helped support the recent price activity.”

And indeed, The Motley Fool’s stock profile page confirms Kelly Partners has paid a dividend every month starting last December.

It paid out quarterly prior to that.

It gets better

What’s more, last week the accounting firm announced it would increase the monthly amount.

“We are pleased to announce from July 2021 the company will increase its monthly dividends from 0.33c per share to 0.36c per share, representing an increase of 10%,” its statement to the ASX read.

“Total dividends paid in relation to FY22 is expected to increase from 5.32 cents per share in FY21 to 5.85cps. The company has grown its dividends by 10% per annum for the fifth straight year.”

Kelly Partners’ yield currently stands at 1.45%.

The firm employs more than 250 people who service more than 8,000 small-to-medium business clients.

The post This ASX share up 38% last month pays MONTHLY dividends appeared first on The Motley Fool Australia.

More reading

• 3 excellent ASX shares for growth investors in July
• Up 12% in a month, is there more to come from the Afterpay (ASX:APT) share price?
• Is your money safe in Telstra (ASX:TLS) shares right now?
• 3 reasons why the Pushpay (ASX:PPH) share price might be a buy
• What this leading broker thinks about Afterpay (ASX:APT) and Zip (ASX:Z1P) shares in July

Motley Fool contributor Tony Yoo 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 Bruce Jackson.

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With so many growth shares to choose from on the Australian share market, it can be hard to decide which ones to buy over others.

To narrow things down, I have picked out three options that are highly rated to consider:

Altium Limited (ASX: ALU)

The first growth share to look at is Altium. It is a leading printed circuit board (PCB) design software provider. As PCBs are found inside almost all electronic devices, this means Altium is exposed to the explosion of electronic devices globally. This bodes well for its future growth, especially given its clear leadership position in the industry. Credit Suisse remains very positive on the company. The broker currently has an outperform rating and $42.00 price target on its shares.

BetaShares Asia Technology Tigers ETF (ASX: ASIA)

Another option to consider is this ETF which gives investors access to a group of highly promising growth shares in the Asian market. By buying the BetaShares Asia Technology Tigers ETF, investors will be buying a slice of 50 outstanding tech companies that are leading Asia’s technological revolution. Among the companies included in the fund are the likes of Alibaba, JD.com, Pinduoduo, Samsung, Taiwan Semiconductor, & Tencent.

ELMO Software Ltd (ASX: ELO)

A final growth share to look at is ELMO. It is a HR and payroll platform provider that has been growing at a consistently strong rate for years. This has been driven largely by the shift to the cloud, which is underpinning strong demand for its high quality software in the ANZ and UK markets. In addition to this, the company has made a number of bolt-on acquisitions that strengthen its offering and create cross- and up-selling opportunities. This leaves it well-placed to continue winning a share of its significant market opportunity over the next decade. Shaw & Partners is a fan of ELMO. It currently has a buy rating and $9.00 price target on its shares.

The post 3 excellent ASX shares for growth investors in July appeared first on The Motley Fool Australia.

More reading

• Here’s how some of the top ASX SaaS shares performed in FY21
• Expert says more ASX shares to follow Sydney Airport (ASX:SYD) takeover trend
• 3 excellent ETFs for ASX investors in July
• 2 excellent ASX tech shares named as buys
• 3 stellar ASX growth shares that are highly rated

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. owns shares of and has recommended Altium and Elmo Software. The Motley Fool Australia owns shares of and has recommended Altium, BetaShares Asia Technology Tigers ETF, and Elmo Software. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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The Afterpay Ltd (ASX: APT) share price has gone up more than 10% over the last month. What’s going to happen next to the buy now, pay later business?

The 2021 calendar year has been a volatile period so far for the business. In February 2021 it rose to around $160. By the middle of May 2021 it had fallen 47% to $84.50. But it has actually risen around 40% from that low.

The latest business insight investors have received was the FY21 third quarter update.

Third quarter of FY21

Afterpay likes to regularly tell the market how much it is growing.

In the third quarter it said that it was delivering a strong operating performance across all regions with underlying sales, up 104% compared to the prior corresponding period. On a constant currency basis, underlying sales were 123% higher than the third quarter of FY20. The Australian dollar has strengthened compared to 2020.

Growth was particularly strong in the countries of the US and the UK, where underlying sales were up 211% and 277% respectively on a local currency basis.

Based on the FY21 third quarter performance, North America is now the largest contributor to underlying sales and outperformed the seasonally strong FY21 second quarter on a local currency basis (which includes Christmas).

The Afterpay share price is down 6% since releasing its FY21 third quarter numbers.

The month of March 2021 exceeded December 2020 and delivered the second highest monthly underlying sales ever recorded, with the US becoming the first region to record more than $1 billion of underlying sales in a single month.

Global active customers went up by 75% year on year to 14.6 million, with North America and the UK reaching 9.3 million and 1.8 million active customers respectively. Active merchants increased by 77% to 85,800.

The older cohorts of customers continue to shop more. The top 10% of global customers, on average, now transact 33 times per year. In the US it’s 23 times per year, in the UK it’s 29 times per year and in ANZ it is 62 times per year.

Underlying sales from the global ‘Afterpay Day’ sale increased 117% on the same period last year and was 36% higher than the August 2020 ‘Afterpay Day’ sale.

Merchants with over $1.5 billion of total addressable online sales were live, integrating or signed in the EU, at the time of the announcement, after the completion of the Pagantis acquisition and launch of Clearpay across Spain, France and Italy in March 2021.

The business also said that merchant revenue margins remained firm and gross losses continued to remain below historical rates. Net transaction losses also remained low.

Is the Afterpay share price a buy?

There are very different opinions on the buy now, pay later businesses.

Citi has a neutral rating on the buy now, pay later business with a price target of $125.

Morgan Stanley thinks that Afterpay shares are a buy, with a price target of $145.

However, UBS has a sell rating on the Afterpay share price, with a price target of just $42. That suggest a possible decline of over 60% over the next 12 months if UBS is right.

The post Up 12% in a month, is there more to come from the Afterpay (ASX:APT) share price? appeared first on The Motley Fool Australia.

More reading

• What this leading broker thinks about Afterpay (ASX:APT) and Zip (ASX:Z1P) shares in July
• These 3 ASX 20 shares are up more than 60% in a year
• ‘That hurts’: Fund manager reveals his 35-bagger ‘failure’
• ASX 200 Weekly Wrap: COVID wobbles ASX as shares retreat
• 5 things to watch on the ASX 200 on Monday

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. owns shares of and has recommended AFTERPAY T FPO. The Motley Fool Australia owns shares of and has recommended AFTERPAY T FPO. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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Is your money safe with Telstra Corporation Ltd (ASX: TLS) shares right now? The Telstra share price has certainly been a good performer of late. At yesterday’s closing share price of $3.73, Telstra is now up 23.9% year to date in 2021 so far, and almost 40% above its 52-week low of $2.66 which we saw back in October last year. Those returns don’t include Telstra’s generous 16 cents per share annual dividend either.

But after such a robust performance over the past few months, is your money still safe with Telstra, given the company is trading fairly close to its current 52-week high of $3.79?

Well, let’s look at what has been driving the Telstra share price to these new heights lately first. Fears that Telstra would have to cut its cherished dividend were partly behind the company’s slump last year. The ongoing commitment the telco’s management has shown to preserving this dividend at the current level seems to have not gone unnoticed by investors.

When Telstra all but committed to holding its dividend at 16 cents per share over 2021 in October last year, it seemed to put investors’ fears to rest, seeing as Telstra rose more than 8% over the subsequent month.

But more recently, it has been the talk of asset sales that have given Telstra another boost. Late last month, the telco announced that it had sold 49% of its InfraCo Towers business to a group of institutional investors, headed by none other than the Future Fund.

This has further boosted sentiment around Telstra, evidenced by the fact that the telco is up almost 4% since this announcement.

But what about Telstra shares at their current level. Is there further to climb?

Is your money safe in Telstra shares today?

One broker who thinks money is safe in Telstra right now is investment bank Goldman Sachs. Goldman currently has a ‘buy’ rating on Telstra shares, and a 12-month share price target of $4.20.

For this rating, Goldman notes that pricing competition in the Telstra-dominated mobile market is loosening. Further, Goldman expects Telstra to “meaningfully” grow its average revenue per user (ARPU) across FY21-23, helped by expected price increases in FY22. It’s also pleased about Telstra’s ongoing 5G rollout.

If Goldman’s target does come to pass, investors would enjoy a potential gain of 12.6% on Telstra’s last share price (not including dividend returns either).

The post Is your money safe in Telstra (ASX:TLS) shares right now? appeared first on The Motley Fool Australia.

More reading

• Why Telstra (ASX:TLS) and this dividend share could be buys
• ASX 200 Weekly Wrap: COVID wobbles ASX as shares retreat
• 2 high yield ASX dividend shares that could be buys
• These 3 ASX 200 shares were the most heavily traded today
• The Telstra (ASX:TLS) share price is now up 24% so far in 2021

Motley Fool contributor Sebastian Bowen owns shares of Telstra Corporation 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 owns shares of and has recommended Telstra Corporation Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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There are quite a few different reasons why the Pushpay Holdings Ltd (ASX: PPH) share price might be attractive to investors.

What is Pushpay?

Pushpay is a technology business that enables US churches to manage their church, connect with their community and process electronic donations.

It also has a business that it acquired called Church Community Builder which offers increased functionality for churches.

Here are three key reasons why Pushpay could be a business to consider:

In-demand service

The world is going increasingly digital. Pushpay is a key business that is helping US churches to go electronic.

At 31 March 2021, Pushpay had over 11,000 customers. Some of them are using the donor management system, some are using the church management system and some use both.

ChurchStaq is the combined offering of both the Pushpay services and Church Community Builder where everything can be accessed through the single service.

With its giving and donor management service it can engage new donors, increase recurring giving, remove barriers to generosity and it offers various forms of donation including web, mobile, text and cash/check.

The ‘My Church App’ allows increased participation, access to church media, targeted communication, groups and calendar and “pre-check”.

ChurchStaq’s church management system is “comprehensive”, it also allows for groups, events, check-in, service planning and prices. There are also giving dashboards and analytics.

Having a strong offering allows Pushpay to attract and retain clients. It has plans to search for other acquisitions that may broaden its current proposition and add significant value to the current business at a quicker pace than what could be achieved organically.

Operating leverage

There are a number of financial measures that show that Pushpay is achieving operating leverage.

In FY21, Pushpay’s operating revenue went up by 40% to US$179.1 million. It reported that its gross profit margin increased by three percentage points for FY21 from 65% to 68%.

Total operating expenses only increased by 9%. As a percentage of operating revenue, total operating expenses improved by 11 percentage points from 47% to 36%.

Pushpay explains that it adopted “best-in-class” software tools and scalable process early in its development. Combined with “strong financial discipline”, these investments will allow significant operating leverage to be achieved as revenue grows.

Net profit in FY21 increased by 95% to US$31.2 million and operating cashflow went up 145% to US$57.6 million.

Pushpay says it expects significant operating leverage to accrue as operating revenue continues to increase, while growth in total operating expenses remains low.

Growth plans

Pushpay has embarked on serving the Catholic segment. It’s focused on establishing relationships and increasing engagement with key stakeholders. In FY22, Pushpay is expecting to invest between US$6 million to US$8 million.

The company expects the benefits from the Catholic segment to be realised over the course of the next financial years.

It has set of goal of market share of more than 25% of the Catholic church management system and donor management system over the next five years.

Pushpay pointed out that the Catholic church is closely associated with many education providers and non-profit organisations, which presents further opportunities within the US and other international jurisdictions.

The company has previously stated that international growth to regions like South America and South East Asia.

What is the Pushpay share price valuation?

According to Commsec, Pushpay shares are valued at 30x FY22’s estimated earnings.

The post 3 reasons why the Pushpay (ASX:PPH) share price might be a buy appeared first on The Motley Fool Australia.

More reading

• Here’s how some of the top ASX SaaS shares performed in FY21
• 2 high-quality ASX tech shares that could be buys
• Here are the 5 worst performing ASX 200 tech shares from FY21
• Why the Pushpay (ASX:PPH) share price is under pressure
• 2 impressive ASX shares that could be buys in July 2021

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. owns shares of and has recommended PUSHPAY FPO NZX. The Motley Fool Australia owns shares of and has recommended PUSHPAY FPO NZX. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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The Zip Co Ltd (ASX: Z1P) share price was out of form on Monday.

The buy now pay later (BNPL) provider’s shares dropped 1% to $8.23.

Why did the Zip share price drop?

The weakness in the Zip share price on Monday appears to have been driven by the release of a mixed broker note out of Citi.

Although the broker has retained its buy rating on the company’s shares, it has cut its price target down by 6% to $10.25. It made the move to reflect a weaker than expected performance in June.

Nevertheless, based on the current Zip share price, this downgraded price target still implies potential upside of almost 25% over the next 12 months.

What did Citi say?

According to the note, the broker’s industry research shows that most BNPL players achieved improvements in website visits and app downloads in June.

However, it estimates that Zip’s key QuadPay business had a relatively subdued month, with website visits falling 4% month on month and app downloads increasing by a modest 3%. Citi expects this to lead to new customer additions of 600,000 during the fourth quarter.

In addition to this, the broker is expecting Zip’s costs to increase and has lowered its cash earnings estimates notably to reflect this.

What about Afterpay?

Citi still prefers Zip over Afterpay Ltd (ASX: APT).

The note reveals that the broker has retained its neutral rating and trimmed its price target on Afterpay’s shares to $125.00.

While Afterpay had a comparatively stronger month in June, with app downloads increasing 12%, Citi has warned that this may not be from new users.

The broker suspects that a good number of these downloads could be from existing customers that have been encouraged to download the app via in-app promotions. As a result, the broker has lowered its US active customer forecast to 10.5 million at the end of FY 2021.

So with the Afterpay share price trading at $118.64, it hasn’t seen enough to warrant a change to its neutral rating at this point.

The post What this leading broker thinks about Afterpay (ASX:APT) and Zip (ASX:Z1P) shares in July appeared first on The Motley Fool Australia.

More reading

• These 3 ASX 20 shares are up more than 60% in a year
• These are the 10 most shorted shares on the ASX
• ‘That hurts’: Fund manager reveals his 35-bagger ‘failure’
• ASX 200 Weekly Wrap: COVID wobbles ASX as shares retreat
• 5 things to watch on the ASX 200 on Monday

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. owns shares of and has recommended AFTERPAY T FPO and ZIPCOLTD FPO. The Motley Fool Australia owns shares of and has recommended AFTERPAY T FPO. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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An old investment adage says people find losing money much more painful than the joy they get from earning the same amount.

This explains why almost everyone — retail and professional — ends up making a massive basic mistake on their way to investment wisdom.

Say you bought Nuix Ltd (ASX: NXL) shares in January when they were flying at $11. What a great company with a great product — the future’s looking good!

Then you see the stock plunge to $6 in February after a downgrade to their financial forecasts.

What do you do? You’ve lost almost half your money.

Many novices, and even some veterans, will buy more shares. The stock is cheap now — buy low, they think.

For God’s sake, don’t double down on a loser

But as Cyan Investment Management portfolio manager Dean Fergie reminds us, doubling down on your mistakes is never a good idea.

“One thing that is completely non-negotiable is we do not throw good money after bad,” he told this week’s Ask A Fund Manager.

“We don’t prop up businesses that aren’t going well because we think the price has got too cheap… We will let other people do that. We never follow any business that’s going down. We never keep topping up.”

Fergie admitted psychologically people can’t help putting more money into their losers. The loss pains them and they get sucked into thinking that’s the way to recover.

“It’s an emotionally difficult thing to do, because it’s like, ‘Oh, I’m going to prove the market’s got this wrong’ — but it’s just silly.”

Copping a loss is not the end of the world

Exiting when a company is clearly failing and the original investment thesis doesn’t hold is a wise move, not an admission of failure.

If you double down, you’ll expose even more of your money to losses.

Fergie told The Motley Fool that losses are part of the experience.

“The thing with long-only investing is that it’s an asymmetrical outcome. You can’t lose more than 100%, but you can make much more than 100%,” he said.

“So you don’t even have to get 50% of your calls right. You just got to make sure that the ones you get wrong, you don’t double down on and keep throwing good money after bad. And the ones that go well, you let those profits run.”

For the record, if you doubled down on Nuix in February at $6, you would have lost even more. The stock was trading at $2.67 at the close of trade on Monday.

The post Whatever you do, NEVER make this mistake appeared first on The Motley Fool Australia.

More reading

• What’s with the Nuix (ASX:NXL) share price today?
• The Nuix (ASX:NXL) share price grew 9% today. So what happened?
• 3 companies that broke their way into the ASX 200 in FY21
• The one thing ASX IPO losers have in common
• ASX 200 Weekly Wrap: ASX finishes FY21 on a high

Motley Fool contributor Tony Yoo has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has recommended Nuix Pty Ltd. 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 Bruce Jackson.

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The Westpac Banking Corp (ASX: WBC) share price has been steadily climbing in 2021. Shares in the big four bank are up almost 32% year to date, and one leading fundie is bullish on their future prospects.

Why this leading fundie likes the Westpac share price

The leading fundie in question is Yarra Capital Management. The group’s May 2021 update for its Yarra Australian Equities Fund contained some upbeat commentary on Westpac.

Gains for the Westpac share price were sighted as a key contributor to the fund’s 2.40% 1-month return to 31 May 2021. According to the release, Westpac outperformed after a strong first half result and announcing an “ambitious cost-out program”. The bank unveiled a plan to target an $8 billion cost base by FY2024 in a bid to boost efficiency compared to a $10.2 billion cost base right now.

Westpac management is looking to slash its costs by exiting non-core businesses, increasing digitisation for customers and simplifying its organisational and operating structure. Yarra Capital remains overweight in its position and is hoping for more Westpac share price gains in 2021.

Yarra Capital described the cost-cutting plan as “challenging” and said that “achieving even half of it will be a reasonable outcome”.

The overweight position is based on the fund’s belief that earnings and post-COVID dividends will be better than expected. Yarra Capital is also expecting bad debt expenses to be close to zero over the next 18 months.

The Westpac share price has certainly been a strong performer in the year so far. After a tough 2020 marred with scandals and managing the COVID-19 pandemic, shares in the Aussie bank have rebounded strongly.

Westpac shares closed 0.6% higher on Monday with a $93.6 billion market capitalisation and a 3.5% dividend yield.

The post Why this leading fundie is bullish on the Westpac (ASX:WBC) share price appeared first on The Motley Fool Australia.

More reading

• Why the Commonwealth Bank (ASX:CBA) share price is beating the ASX 200
• ASX 200 Weekly Wrap: COVID wobbles ASX as shares retreat
• Is the Westpac (ASX:WBC) share price in the buy zone?
• Brokers name 3 ASX shares to buy today
• The Westpac (ASX:WBC) share price is up 30% in 2021

Motley Fool contributor Ken Hall 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 Bruce Jackson.

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iShares S&P 500 ETF (ASX: IVV) might be a really good investment to think about for the long-term.

It’s an exchange-traded fund (ETF) which is focused on the American share market, with businesses from both the New York Stock Exchange and the NASDAQ.

There a few different reasons why it could be an interesting idea to consider:

iShares S&P 500 ETF has very low fees

Out of all of the options that ASX investors can choose from, the iShares S&P 500 ETF is one of the lowest costing ETFs out there.

Management fees can detract a substantial amount away from an investor’s long-term returns cumulatively after a few years. The higher the fees, the more investors are handing over to the investment manager and losing from their portfolio value each year.

It has an annual management fee of 0.04% per annum. Compared to a fund manager that charges 1% per annum (or more), iShares S&P 500 ETF charges next to nothing for this investment.

That means that almost all of the fund’s returns stay in the investor’s hands as net returns.

Diversification

Diversification can be an important part of lowering risk over time from shares, or any investment.

iShares S&P 500 ETF ticks the diversification box in several ways.

It has an underlying total of 500 holdings, if you hadn’t guessed already.

Those businesses are spread across a number of different economic sectors. The following industries had a weighting of more than 5% at 30 June 2021: information technology (27.45%), healthcare (12.99%), consumer discretionary (12.28%), financials (11.22%), communication (11.16%), industrials (8.47%) and consumer staples (5.81%).

iShares S&P 500 ETF has more than 27% invested in nine businesses in its portfolio: Apple Inc (5.90%), Microsoft Corp (5.60%), Amazon.com Inc (4.05%), Alphabet (3.98%), Facebook Inc (2.29%), Berkshire Hathaway Inc (1.45%), Tesla Inc (1.44%), Nvidia Corp (1.37%), JPMorgan Chase & Co (1.29%).

Whilst all of these businesses are listed in the US, many of the businesses in the S&P 500 generate earnings from across the world. For example, Apple smartphones are sold in a lot of countries around the world. Microsoft’s office products are used all over the world. And so on.

Historical returns

Past performance is not a reliable indicator of future performance, as the disclosure goes.

The iShares S&P 500 ETF has been producing double digit returns over the longer-term. Over the last three years, it has made returns of 17.6% per annum. In the last five years it has made an average of 17.2% per annum.

Even in the COVID-19-affected calendar year of 2020, the fund saw a net return of 7.5% over the 12 months.

The post 3 reasons why the iShares S&P 500 ETF (ASX:IVV) could be a great investment appeared first on The Motley Fool Australia.

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• 2 high quality ETFs for ASX investors
• 3 ASX ETFs that could give investors easy exposure to the US markets

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 iShares Trust – iShares Core S&P 500 ETF. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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