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What’s so special about the Vanguard Australian Shares Index ETF (ASX: VAS)? It’s no secret that ASX exchange-traded funds (ETFs) have ballooned in popularity over the last decade or two. When the ETF vehicle came to the ASX, the only funds available were index funds, covering broad-based indexes like the S&P/ASX 200 Index (ASX: XJO). But in 2021, you can find an ETF on the ASX that covers almost anything. There are now ETFs that track gold, bank shares, mining shares, crude oil futures or the stock market of South Korea.

But one ETF is the undisputed king of the ASX ETF hill. That would be this Vanguard Australian Shares ETF. Recent research from Stockspot found that this VAS ETF remains at the top of the ASX ETF pile in terms of both size and fund inflows. VAS currently has $8.5 billion in funds under management, and, according to Stockspot, managed to attract almost $3.6 billion in net fund inflows in the 12 months to 31 March 2021. Both of those metrics beat out every other ASX ETF.

So why do ASX investors like the Vanguard Australian Share Index ETF so much? There might be a few reasons:

Why is VAS so popular on the ASX?

Simplicity

Unlike the flashy, thematic ETFs we touched on above, VAS is your typical old-school index fund. It does have a twist though. Instead of tracking the ASX 200 like most other ASX index funds, VAS instead tracks the S&P/ASX 300 Index (ASX: XKO).

This index included the 200 shares on the ASX 200, but also adds another 100 smaller cap shares. It’s the only ASX index fund to do so. This increases the diversification of VAS compared to other ASX 200 index funds, whilst reducing the heavy concentration towards ASX banks and miners that the ASX 200 is so infamous for.

We’ve also looked at the small but still present performance gap between the ASX 200 and the ASX 300 before on the Fool. This might well further add to the attractiveness of VAS for ASX investors.

Cost

This Vanguard ETF currently charges a management fee of 0.1% per annum. That figure represents a theoretical cost of $10 per year for every $10,000 invested.

This isn’t the lowest fee ETF on the ASX, or even the lowest fee from a fund tracking ASX shares. The BetaShares Australia 200 ETF (ASX: A200) for example, charges 0.07% per annum. But 0.1% is still vastly cheaper than what your typical managed fund or active ETF will charge. And even if some investors might quibble about whether to pay $7 or $10 for every $10,000 invested, a 0.1% fee is evidently low enough for Vanguard’s customers.

The ‘Vanguard effect’

Vanguard is a US-based fund manager, but one with a global reputation. It has one of the most trusted names in finance, mostly due to the philosophies and reputation of its late founder Jack Bogle. Bogle founded Vanguard back in the 1970s, and ever since its inception, kept Vanguard as a not-for-profit company.

So instead of taking the cream off the top of its revenues, Vanguard is able to cycle that excess cash back into lower and lower fees for its products. This has lead to a very powerful brand advantage that extends across all Vanguard products.

When Mr Bogle died in 2019, the great investor Warren Buffett said he had done more for the average investor than possibly anyone else on the planet. It’s that high praise that epitomises Vangaurd’s appeal.

Performance

The Vanguard Australian Shares Index ETF has returned 28.46% over the past 12 months, and has averaged 11.2% per annum over the past 5 years, and 9.72% per annum since its inception in 2009.

Now while those performance figures might not impress some thrill-seeking investors out there, the reality is that it almost perfectly reflects the performance of the entire Australian share market over more than a decade. Robust, inflation-smashing returns.

For many investors who might just follow a ‘buy and hold’ strategy using this Vanguard ETF, it has certainly delivered far more than what leaving the cash in the bank would have yielded.

The post Here are 4 reasons why the Vanguard Australian Shares Index EFT (ASX:VAS) is the most popular ASX ETF appeared first on The Motley Fool Australia.

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• Investors are now buying more index ETFs than ASX shares

Motley Fool contributor Sebastian Bowen 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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The Myer Holdings Ltd (ASX: MYR) share price is gaining today as Premier Investments Limited (ASX: PMV) sends in its lawyers.

Shares in Myer have shot up 6.9% as the close of trade nears, and are currently trading at 46.5 cents apiece.

Meanwhile, the Premier Investments share price is down 2.5%, sitting at $26.89. That’s lower than the broader market. The S&P/ASX 200 Index (ASX: XJO) is down 1.4% right now.

The movements follow Premier’s announcement that it’s called on its lawyers to retrieve the Myer shareholder register ahead of its plans to call an extraordinary general meeting.

Let’s take a look at why investors are driving the Myer share price higher today.

Quick refresher

The Myer share price gained a whopping 14% on Tuesday after reports emerged that Solomon Lew, the chair and largest shareholder of Premier Investments, was buying up shares in Myer through the investment company.

Lew already held 10% of Myer’s outstanding shares. He has now increased that holding to more than 15%.

Yesterday, Myer responded to Lew’s increased holding, offering up the possibility – though, not a guarantee – of a seat on the retail monolith’s board.

The latest news

Today, the niceties have gone out the window.

Premier released a 105-word statement on Myer, in which it detailed its plan for a shareholder vote on the company’s management. Premier said:

In Premier’s view, Myer’s three remaining non-executive directors should for once put its shareholders first and resign immediately. Any other action would be futile, and costly for Myer shareholders who have endured enough.

According to reporting by the Australian Financial Review (AFR), Lew believes the Myer non-executive directors have destroyed $760 million of shareholder value.

Additionally, the billionaire retailer pointed to the numerous leadership changes Myer has undergone since 2017 as one of the reasons for the losses.

Myer reported earnings before interest, tax, depreciation, and amortisation (EBITDA) of $206.2 million for the 2016 financial year. In the 2019 financial year, its EBITDA was $160.1 million. And in the 2020 financial year, its EBITDA was $93.5 million.

The Myer share price fell 76% between the release of its 2016 full-year report and its 2020 full-year report.

Myer share price snapshot

The Myer share price has gained around 55% year to date – helped along by a 20% increase which appears to be brought about by news of Premier’s increased investment.

Myer shares have also gained more than 121% since this time last year.

The retailer has a market capitalisation of around $357 million, with approximately 818 million shares outstanding.

The post Myer (ASX:MYR) share price jumps 7% as investor calls its lawyers appeared first on The Motley Fool Australia.

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• Why Humm, Premier Investments, Western Areas, & Zip shares are sinking
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• Why the Myer (ASX:MYR) share price is up 9% today

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 owns shares of and has recommended Premier Investments 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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The Westpac Banking Corp (ASX: WBC) share price is under pressure on Friday.

In afternoon trade, the banking giant’s shares are down 1% to $25.28.

Is the weakness in the Westpac share price a buying opportunity?

One leading broker that believes the weakness in the Westpac share price is a buying opportunity is Morgans.

This morning the broker has updated its forecasts, resulting in its analysts retaining their add rating and $29.50 price target.

Based on the latest Westpac share price, this implies potential upside of almost 17% over the next 12 months. And with Morgans forecasting a dividend yield of 4.5% over the same period, this potential return stretches beyond 21%.

What did the broker say?

Morgans has updated its forecasts to reflect the sale of its Westpac Life New Zealand business and potential fraud provisions relating to Forum Finance.

While this has resulted in a 2% reduction in its FY 2021 earnings estimates, its longer term forecasts are not materially impacted.

Morgans said: “WBC has also said that it has a potential exposure of ~$200m after tax to Forum Finance, with the extent of any loss dependent on the outcome of its investigations and recovery actions underway.

”We understand that the recovery process may play out over a prolonged period, and we therefore expect WBC to raise an individually assessed provision of ~$290m for the full exposure to Forum Finance in 2H21F. However, we see potential for this provision to be partially written back over time,” it added.

“We have reduced our FY21F cash EPS by 2% as a result of the higher credit impairment charge stemming from the Forum Finance exposure. We have not materially changed our cash EPS forecasts for the outer years,” Morgans concluded.

The post Is the Westpac (ASX:WBC) share price in the buy zone? appeared first on The Motley Fool Australia.

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Motley Fool contributor James Mickleboro owns shares of Westpac Banking Corporation. 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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The Orocobre Limited (ASX: ORE) share price is in the red today following the lithium miner’s trading update to the ASX.

During late afternoon trade, Orocobre shares are sinking 2.07% lower to $6.61. At one point, the company’s shares reached as low as $6.48.

What did Orocobre announce?

Orocobre shares are being sold off today as investors weigh up the company’s mixed performance report.

According to its release, Orocobre advised that production for the June 2021 quarter stood at 3,300 tonnes of lithium carbonate. Pleasingly, 66% of the extracted lithium carbonate was converted into battery grade lithium carbonate. This is a significant increase from the 21% achieved in the prior corresponding period (June 2020 quarter).

The company’s flagship Olaroz Lithium Facility in Argentina recorded sales of 2,549 tonnes of lithium carbonate. The price paid per tonne for the product averaged at US$8,476. This is the Free on Board (FOB) price which excludes insurance and freight charges.

The lithium prices received jumped 45% when compared to the previous quarter of March 2021. Furthermore, over the last 9 months, lithium prices have surged by 170%.

While the company highlighted the good news, inventory levels during the June quarter amplified due to COVID-19 transport delays. In addition, the requirement to hold safety stock for the Prime Planet Energy and Solutions (PPES) contract in Japan also halted the movement of product.

Orocobre revealed that the full details of its June quarter performance will be released on 22 July.

Orocobre share price review

Over the past year, Orocobre shares have surged by more than 150%, and are close to 50% higher in 2021. The company’s share price is near its 52-week high of $7.28 reached in May following Orocobre and Galaxy Resources Limited (ASX: GXY) $4 billion merger proposition.

At the time of writing, Orocobre has a market capitalisation of roughly $2.2 billion, with approximately 344 million shares outstanding.

The post Orocobre (ASX:ORE) share price falters on trading update. Here’s why. appeared first on The Motley Fool Australia.

More reading

• ASX lithium shares could get boost from Macquarie (ASX:MQG) upgrade
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• Meet the best performing ASX 200 shares of FY21. Are yours on the list?

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 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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The oOh!Media Ltd (ASX: OML) share price is having a red day. At the time of writing, shares in the advertising and communications company are swapping hands for $1.65, down 2.37%. The S&P/ASX 200 Index (ASX: XJO), for comparison, is 1.32% lower.

Despite the company not releasing any market sensitive updates in months, there are a couple of big news items that might be affecting the oOh!Media share price today.

Let’s take a closer look.

oOh!Media selling Junkee

The Sydney Morning Herald (SMH) is reporting the ASX-listed company will sell its online youth publication, Junkee Media, by the end of this year.

oOh!Media chief executive Cathy O’Connor is quoted in the paper as saying the sale will help the company focus on its core business of outdoor advertising.

“We’ve been proud owners of Junkee but the online publishing side of it is not core to… us,” Ms O’Connor told SMH.

“Digital publishing needs to contemplate new things — does it leverage… things like audio, go after video strategies — and as the CEO of oOh!Media, I just feel that those things that Junkee rightly should contemplate are not core to our strategy.”

oOh!Media bought an 85% interest in Junkee for $11.1 million, back in 2016. Ms O’Connor would not speculate on a potential price she would like to see for the sale. This may be one reason driving the oOh!Media share price today.

Sydney’s COVID restriction could be extended even further

In the 24 hours up to 8pm last night, NSW recorded its highest ever daily infections of 44 coronavirus cases – 34 of which were infectious in the community.

Premier Gladys Berejiklian signalled in her daily press conference that these numbers could mean Sydney’s lockdown could extend beyond its already delayed end date of next Friday.

Motley Fool Australia has previously reported on how lockdowns may have affected the oOh!Media share price.

In its most recent half-yearly report, revenue and earnings before interest, taxes, depreciation, and amortisation (EBITDA) fell by 34% and 55% respectively. The company attributed the steep fall to the effect of lockdowns and the pandemic at-large.

oOh!Media share price snapshot

Over the past 12 months, the oOh!Media share price has increased 83%. It has, however, still not fully recovered from the March 2020 COVID market crash.

On the first trading day of january last year, shares in the company closed at $3.07. Today’s share price is still 46% below this level.

oOh!Media has a market capitalisation of $986 million.

The post The oOh!Media (ASX:OML) share price is falling today. Here’s why appeared first on The Motley Fool Australia.

More reading

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• COVID-19 lockdown hits oOh!Media (ASX:OML) share price

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 oOh!Media Ltd. 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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ASX Software-as-a-Service (SaaS) shares have become an area of intense and red hot interest over the past few years. And fair enough too. Scaling a business through a SaaS earnings model can be a very lucrative exercise indeed. We have seen this in action with some of the performances of the ASX’s most well known SaaS shares.

Take Xero Limited (ASX: XRO) for instance. Investors can largely thank Xero’s SaaS model, which allows Xero to develop its cloud-based accounting software as almost a ‘one-off cost’ and then on-sell it via a cloud subscription at almost no extra cost per additional customer. It’s this model which has largely allowed the Xero share price to rise from around $17 five years ago to the $132 it’s going for today.

So even though we now know the potential of a successful SaaS model, it’s worth a look to see how this sub-sector of the ASX fared over the 2021 financial year that has just ended. As your about to see, just having a SaaS model isn’t necessarily a ticket to instant success:

How some of the most popular ASX SaaS shares have performed in FY21:

ASX SaaS share	FY2021 share price performance	Market capitalisation
Pro Medicus Limited (ASX: PME)	125.7%	$5.85 billion
Xero Limited (ASX: XRO)	65%	$19.7 billion
WiseTech Global Ltd (ASX: WTC)	65%	$9.8 billion
Whispir Ltd (ASX: WSP)	21.4%	$319.2 million
Altium Limited (ASX: ALU)	13.8%	$4.88 billion
TechnologyOne Ltd (ASX: TNE)	5.8%	$2.92 billion
Nearmap Ltd (ASX: NEA)	(17.3%)	$965.5 million
Pushpay Holdings Ltd (ASX: PPH)	(19.2%)	$1.71billion
ELMO Software Ltd (ASX: ELO)	(40.5%)	$395.3 million

As you can see, healthcare SaaS company Pro Medicus was one of the best performing SaaS companies on the ASX over FY21, managing to put on a 125.7% gain over FY2021. Pro Medicus is a company that sells medical diagnostic imaging software. It has benefited from several developments over FY21.

In mid-May, Pro Medicus announced a The University of Vermont Health Network contract that is scheduled to last for 8 years. This contract will see Pro Medicus’ Visage 7 Enterprise Imaging Platform deployed across 6 hospitals operated by the University, locking in a lucrative revenue stream. Additionally, the company also announced in June that it had signed another long-term contract, this one with the US healthcare provider Mayo Clinic.

Xero and WiseTech SaaS their way to growth

The aforementioned Xero is also close to the top of this list, with a FY21 performance of 65%. It was raw growth numbers that seemed to be working in Xero’s favour last financial year.

Xero gave investors its full-year earnings for the 12 months to 31 March a few months ago. The company reported that revenues grew by 18%, subscriber numbers were up by 20% and earnings before interest, tax, depreciation and amortisation (EBITDA) rose by 39%. As you might expect, investors were clearly impressed by this SaaS company’s model continuing to execute well.

The same could be said for SaaS logistics solutions company WiseTech Global. WiseTech also managed a 65% gain for FY21. This was spurred by the company’s half-year earnings report for FY21 that WiseTech divulged back in February. This highlighted revenue growth of 16% and EBITDA rising by a very pleasing 43%.

Communications platform provider Whispir was another SaaS share that had a relatively successful FY21. Again, it was strong growth that seemed to encourage Whispir investors. The company’s April quarterly update was emblematic of this. Whispir reported that annualised recurring revenues grew by 20.3% over the 3 months to 31 March 2021, compared to the previous year’s quarter.

SaaS doesn’t always equal success

However, it’s worth noting that not all SaaS shares soared over FY21. Some clear losers are obvious in the table above, namely Nearmap, Pushpay and ELMO Software.

Pushpay was an interesting case. Even though it delivered seemingly impressive numbers in its annual earnings report back in May, investors have not given it a very nice run at all in FY21. That was despite revenues jumping by 40% and earnings by a whopping 133%.

Turning to Nearmap, and revelations last month that it would be facing legal proceedings for alleged patent infringement really seemed to derail this company’s share price performance for FY21. It’s worth noting that Nearmap has assured investors that the company’s business remains unaffected and that it is defending these allegations vigorously.

And finally, let’s take a look at the SaaS FY21 wooden spooner in ELMO Software. ELMO did deliver some impressive numbers with its half-year earnings back in February. The company told investors that its revenues grew by almost 30% in the 6 months to 31 December 2020, helped by user numbers climbing 95.7% over the prior corresponding period.

However, as my Fool colleague Frank covered last month, ELMO has also been heavily diluting its share count over FY21, with a $90 million capital raise program that was held over May. This might at least be partially behind its poor share price performance over FY21.

Foolish takeaway

As we’ve seen with some of these ASX SaaS companies, a software-as-a-Service model can be a very efficient path for companies to grow their revenues and earnings. However, it doesn’t always work out as planned. SaaS companies can succeed, but they usually need more than just the SaaS model to do so.

The post Here’s how some of the top ASX SaaS shares performed in FY21 appeared first on The Motley Fool Australia.

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Motley Fool contributor Sebastian Bowen 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, Elmo Software, Nearmap Ltd., PUSHPAY FPO NZX, Pro Medicus Ltd., Whispir Ltd, WiseTech Global, and Xero. The Motley Fool Australia owns shares of and has recommended Altium, Elmo Software, Nearmap Ltd., PUSHPAY FPO NZX, Pro Medicus Ltd., WiseTech Global, and Xero. The Motley Fool Australia has recommended Whispir Ltd. 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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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.

Stocks keep heading higher, but anyone who’s been in the market for more than just the past few weeks knows that the market doesn’t move upward forever. Sooner or later the downticks will come, and corrections sometimes cascade into outright crashes.

Where should your money be when the going gets tough? My largest investment is Netflix (NASDAQ: NFLX). It’s held up well in previous market setbacks, and I think the leading premium streaming service has what it takes to weather the storm the next time the market crashes.

Streaming along

Netflix probably isn’t on your short list of all-weather stocks, and that’s fair. To hold up in good times and bad times, you want shares of companies like discount department stores, auto-parts retailers, and essential utilities. However, in a way, Netflix is a little bit of all of those things.

It’s a mass-market discounter in entertainment, offering quality video entertainment at a fraction of cable and satellite television plans. Netflix won’t provide you with wiper blades or motor oil, but its healthy flow of trending content will keep your engine running in social situations. And after the past year and change of sheltering in place…good luck convincing folks that streaming video isn’t an essential utility.

Even if you don’t buy Netflix as the answer to every question, the math bears out its resiliency. Netflix was one of the handful of stocks to move higher in 2008, climbing 12% that year. Keep in mind that this was during the subprime lending crisis, a global financial calamity that resulted in the S&P 500 cratering 38% the same year.

Netflix has staying power because no one can spend as much on content as it can, given its global audience of more than 200 million paying subscribers. Netflix also has pricing power. It has increased its monthly rates five times since 2014 — a total 75% increase over that period — and its audience is always larger by the time the next hike rolls around.

Consistency is what weathers a crash. Netflix shines on that front: It has rattled off 18 consecutive years of double-digit revenue growth.

Netflix is mortal, of course. It has fallen short of its own guidance, usually about once a year. The stock itself has slipped when new streaming services launch — even if its stellar long-term track record shows that there’s room for more than one ruler in this niche. Remember the Qwikster fiasco? The big takeaway in sizing up the company’s miscues and stock-price drops is that it always finds a way to bounce back.

The best thing about Netflix is that it might just be scratching the surface. Netflix is still not allowing advertising on its popular streaming platform, a market that one analyst estimates to be a $14 billion opportunity. And it’s just dipping its feet into the infinity pool of merchandising.

As Netflix transforms itself into a broader media stock than just the basic cable of streaming services, it may become vulnerable. Maybe it won’t be as resilient. However, right now all of those possibilities look like chances to build incremental revenue. If you’re still worried about a market crash coming sooner rather than later, you can do a lot worse than warming up to Netflix.

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

The post Worried about another crash? Buy Netflix appeared first on The Motley Fool Australia.

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Rick Munarriz owns shares of Netflix. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and has recommended Netflix. The Motley Fool Australia has recommended Netflix. 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 Perenti Global Ltd (ASX: PRN) share price is climbing today after the diversified mining company announced a contract update for the Savannah Nickel Project.

At the time of writing, Perenti shares are up 4.76% trading at 77 cents. It’s worth noting that the company’s share price has accelerated by more than 10% this week.

What did Perenti announce?

Investors are driving up the Perenti share price following the company’s latest positive release to the ASX.

In its statement, Perenti revealed its subsidiary, Barminco has finalised a contract with nickel producer, Panoramic Resources Ltd (ASX: PAN). The deal will see Barminco provide development and production works at the Savannah Nickel Project in the Kimberley region of Western Australia.

Barminco, wholly-owned by Perenti, is one of the world’s largest hard rock underground mining services companies.

The finalised contract is valued at around $280 million over a four-year period.

Under the original initial Letter of Intent in April, Barminco began mobilisation efforts and early mining works ahead of schedule. As a result, the company expects development and production works to increase over the next 6 months. It hopes to achieve the full amount of revenue possible by the third quarter of FY22.

Perenti managing director and CEO Mark Norwell welcomed the partnership, saying:

We look forward to working together with the team at Panoramic to develop what we all expect will be Australia’s next long-life nickel producing mine.

Despite the challenging labour market conditions in Western Australia, we have been successful in mobilising a labour force of approximately 110 highly skilled underground employees. We expect this to increase to 170 as the project ramps-up. Securing this labour force has enabled us to commence early works ahead of schedule. We look forward to providing a safe and efficient service while delivering value and certainty for Panoramic.

Perenti share price summary

While the good news has led Perenti shares higher today, over the last 12 months, its shares are down 33%. For this year alone, the company’s share price is down almost 44% following the release of its disappointing business update in May.

Perenti commands a market capitalisation of about $537 million, with over 704 million shares on its registry.

The post Here’s why the Perenti (ASX:PRN) share price is travelling higher today appeared first on The Motley Fool Australia.

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• These ASX shares just sank to 52-week lows
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• 5 things to watch on the ASX 200 on Tuesday

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 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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July has not been very kind to the Insurance Australia Group Ltd (ASX: IAG) share price.

The pain hasn’t stopped today either. At the time of writing, shares in IAG have tumbled more than 2.3% in today’s trading session.

Despite a weak start to the month, the IAG share price is still around 4% higher since the start of the year.

Let’s take a look at why the IAG price has come under pressure recently.

Why has the IAG share price stumbled in July?

Since the start of July, the IAG share price has tumbled more than 4.5% to date.

The most recent catalyst that could explain the weakness in the Iag share price can be traced back to earlier this week.

On Monday IAG announced its aggregate reinsurance cover for FY22.

IAG noted that the structure of its main catastrophe reinsurance program remains unchanged.

The FY22 aggregate cover provides protection of $350 million in excess of $400 million. In addition, individual qualifying events will be capped at $200 million in excess of $50 million per event.

Snapshot of the IAG share price

IAG is the parent company of a general insurance group with operations in Australia and New Zealand. The Group’s businesses underwrite over $12 billion of premium per annum, selling insurance under many leading brands, including NRMA Insurance, CGU and SGIO.

As noted previously, the IAG share price remains slightly positive for 2021.

Shares in the insurance giant came under pressure in mid-June, following flooding events in Victoria. IAG noted that the company received more than 4,300 claims relating to floods in the Gippsland region.

For FY21, IAG’s net costs for natural disasters are approximately $660 million, having budgeted for only $658 million in natural disaster claims at the beginning of the financial year.

The floods in Victoria were the third major claim this year following the previous floods in Sydney, and Cyclone Seroja in Western Australia.

Earlier this year, IAG reported a 33.1% increase in insurance profit of $667 million. The company cited a $100 million benefit from lower motor claim frequency, largely due to COVID-19 induced lockdowns in Victoria.

Overall the company recorded a loss of $460 million, largely due to claims by businesses under IAG’s business interruption insurance policies.

IAG was also on the receiving end of a lost landmark court case in NSW last year, which sought to exclude pandemic lockdowns from business interruption policies.

The post It’s been a tough month for the IAG (ASX:IAG) share price so far appeared first on The Motley Fool Australia.

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Motley Fool contributor Nikhil Gangaram 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 owns shares of and has recommended Insurance Australia Group 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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The Iluka Resources Ltd (ASX: ILU) share price has moved through today’s session firmly in the red, slipping further out of the money as the day progresses.

At the time of writing, Iluka shares are exchanging hands at $8.45, having come off the intraday high of $8.72 soon after the market open.

With no market sensitive information released on the company today, let’s take a closer look at what could be driving the mineral producer’s price action today.

Brokers – effects of Rio Tinto’s force majeure

According to research conducted on 7 July by analysts Chris Perrella and Richard Bourke of Bloomberg LP, titanium oxide producers such as Iluka may “face higher ore input costs in the near term due to Rio Tinto (ASX: RIO)’s force majeure on 30 June“, for its Bay Minerals project.

This comes as similar reports from investment bank JP Morgan advocating that higher market prices for mineral sands may be needed to offset these input costs.

The report states:

…we [JP Morgan] need to run 26% higher [mineral sands] prices versus our base case forecasts over the next 2.5 years to reach the 12% uplift in the ILU share price achieved today.

Consequently, both reports agree on the point that operations in South Africa actually “represent almost 30% of high-grade titanium oxide feedstock ore outside of China”.

Therefore, both teams of analysts believe the cost of production in the industry will increase due to the forces of supply and demand, negatively impacting Iluka’s bottom line.

Iluka shares have slipped 2.2% into the red since the release of this research, having jumped 10% on the day of Rio’s announcement.

Iluka share price snapshot

The Iluka share price has spent this year to date well into the green, posting a return of 30% at the time of writing, outpacing the S&P / ASX 200 Index (ASX: XJO)’s return of 10% on the nose.

The Iluka share price has also outpaced the broad index on a single year basis, posting a return of 82% versus 22% at the time of writing.

At the current price, Iluka has a market capitalisation of $3.65 billion and trades at a price-to-earnings ratio of 35.

The post Why the Iluka (ASX:ILU) share price is down today appeared first on The Motley Fool Australia.

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The author Zach Bristow has no positions 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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