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Is it a good idea to stay invested in an ASX share after its share price goes on a strong run?

I think the decision to sell is a much harder choice than buying. Buying is usually pretty easy – you just pick an investment you think could do well over the long-term.

But selling is a lot harder. When is the right time to sell something? It may be a simpler thought process when something has gone wrong – when your investment thesis is broken you should probably move on.

What about when a share performs really strongly over a relatively short period of time? Should you lock in those gains? Should you buy low and then “sell high”?

We’ve seen a number of digital ASX shares perform really strongly after the COVID-19 impacts. Businesses like Kogan.com Ltd (ASX: KGN), Temple & Webster Group Ltd (ASX: TPW), Redbubble Ltd (ASX: RBL), Nextdc Ltd (ASX: NXT), Data#3 Limited (ASX: DTL), Megaport Ltd (ASX: MP1) and so on have done great.

I don’t think we’re on the verge of a dot com crash with these types of businesses. They are all generating real growth of customer activity and revenue growth.

Here are three big reasons why I think you should keep holding these types of big winners:

Tax

I don’t think enough investors give much thought about tax with their investment decisions.

If you’ve done really well with an investment and go to sell it, you’re likely going to have to pay tax if you crystallise that gain. The higher your marginal tax rate, the more you would have to pay in tax if you sold a winner from your portfolio.

For tax reasons alone, I think it makes sense to let your winners keep running.

We all need to pay our taxes, but I don’t think you should cause any capital gains tax events if you can help it, as it would reduce your portfolio balance and hamper the compounding of your wealth.

Winners keep winning

Think about some of the best sports players or sports teams. Think about the best musicians, actors or investors. They may not be perfect every single year, but they have a habit of producing and outperforming most years over the long-term.

I think you can see similar things with businesses. Companies with strong management, a strong product or service, a strong brand – they tend to keep on winning.

Think about businesses like Altium Limited (ASX: ALU), REA Group Limited (ASX: REA), Goodman Group (ASX: GMG), Pro Medicus Limited (ASX: PME), CSL Limited (ASX: CSL), Magellan Financial Group Ltd (ASX: MFG) and so on. It’s these types of ASX shares that have strong long-term visions and keep executing their strategies very effectively.

Why would you want to sell one of the best businesses on the ASX out of your portfolio?

The smaller, digital businesses that I named earlier – ones like Redbubble – still have long-term growth potential. It could be a big mistake to think that FY21 is going to be the last year of exceptional growth. Compounding profit growth can be a great wealth-builder for our portfolios.

If you did decide to sell, you could have another major difficulty.

Where else will you invest?

It’s hard to find a winner. The odds of choosing another winner, at the right time/price (after paying tax), make it even harder to hop from one successful investment to another.

How many wonderful opportunities are there on the share market right now? It’s hard with many of the most promising growth shares now priced fairly highly.

If you still think your underlying business has good long-term profit growth potential, then I think it’s worth holding onto winners. The low interest rate environment has pushed up a lot of asset prices. The alternatives to (ASX) shares don’t look good to me. I’d stick with the best ASX shares and ignore short-term worries.

More reading

• ASX 200 rises, Pro Medicus (ASX:PME) wins another global contract
• 3 exciting ASX growth shares to buy for stellar long term returns
• The Redbubble (ASX:RBL) share price rocketed 25% higher today: Is it a buy?
• Why Bank of Queensland, BHP, Pro Medicus, & Redbubble shares are charging higher
• ASX 200 up 0.9%: Big four banks rise, Pro Medicus jumps, miners charging higher

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Are you looking for a source of income in this low interest rate environment? Then I think the ASX dividend shares listed below could be the ones to buy.

Both look well-positioned to continue paying their dividends as normal over the coming years despite the pandemic.

Here’s why I think they are among the best on offer on the ASX and in the buy zone today:

BWP Trust (ASX: BWP)

BWP is a real estate investment trust (REIT) that invests in and manages commercial assets. These assets are predominantly leased to home improvement giant, Bunnings Warehouse. I think this is a great tenant to have, especially with tax cuts and government stimulus likely to support solid sales growth for Bunnings in the years ahead.

I believe this puts BWP in a position to collect rent as normal in the coming years and grow its income and distribution at a consistent rate for the foreseeable future. Based on the current BWP share price, I estimate that it offers investors a forward 4.4% yield. I think this is very attractive in the current environment.

Rural Funds Group (ASX: RFF)

Another option for investors to consider buying is Rural Funds. It is an agriculture-focused property company which owns a collection of high quality properties across Australia. These properties are leased to some of the biggest players in the industry on long term leases which include rental increases.

In light of this, barring some extraordinary events, I believe Rural Funds is perfectly positioned to continue growing its rental income and distribution at a solid rate over the next decade. In FY 2021, the company plans to increase its distribution by 4% to 11.28 cents per share. Based on the latest Rural Funds share price, this equates to a generous 4.7% yield.

More reading

• 2 of the best ASX dividend shares you can buy today
• Westpac (ASX:WBC) tips RBA cash rate cut in November
• How to replace your entire wage with ASX dividend shares
• Say goodbye to low interest rates and buy these ASX dividend shares
• Buy these ASX dividend shares to smash low interest rates

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

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On Thursday the S&P/ASX 200 Index (ASX: XJO) was back on form again and pushed higher. The benchmark index climbed 0.5% to 6,210.3 points.

Will the market be able to build on this on Friday? Here are five things to watch:

ASX 200 futures pointing lower.

The ASX 200 is expected to edge lower on Friday after a soft night of trade on Wall Street. According to the latest SPI futures, the benchmark index is poised to open the day 2 points lower this morning. In late trade in the United States the Dow Jones is down 0.05%, the S&P 500 is 0.15% lower, and the Nasdaq is down 0.4%.

Rio Tinto update.

The Rio Tinto Limited (ASX: RIO) share price will be on watch on Friday when it releases its first quarter update. According to a note out of Goldman Sachs, its analysts expect Rio Tinto to report iron ore shipments of 83.3Mt and copper production of 91kt. This will be a quarter on quarter decline of 4% and 32%, respectively.

Gold price edges higher.

Gold miners such as Evolution Mining Ltd (ASX: EVN) and Saracen Mineral Holdings Limited (ASX: SAR) could have a positive day after the gold price edged higher. According to CNBC, the spot gold price is up 0.1% to US$1,909.60 an ounce.

GUD trading update

The GUD Holdings Limited (ASX: GUD) share price could be on the rise today after the products company released a positive trading update. That update revealed that its strong sales performance has continued across both Auto and Water divisions. This led to GUD reporting a 14% increase in first quarter group sales. No guidance has been given for the first half or full year. Goldman Sachs was pleased with this update and retained its buy rating and lifted its price target to $14.75.

Oil prices drop lower.

Energy producers such as Oil Search Limited (ASX: OSH) and Santos Ltd (ASX: STO) could have a tough finish to the week after oil prices dropped lower. According to Bloomberg, the WTI crude oil price is down 0.3% to US$40.93 a barrel and the Brent crude oil price is down 0.5% to US$43.08 a barrel. Traders were selling oil amid concerns that lockdowns would hurt demand.

More reading

• ASX 200 rises, Pro Medicus (ASX:PME) wins another global contract
• Bank of Queensland (ASX:BOQ) among the latest buy ideas from brokers
• Looking to invest in ASX real estate shares? Read this first
• ASX 200 up 0.9%: Big four banks rise, Pro Medicus jumps, miners charging higher
• 5 things to watch on the ASX 200 on Thursday

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

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The Alumina Limited (ASX: AWC) share price is trading higher after the company announced a strong quarterly report. It comes as the miner trades close to its 52-week low of $1.30.

On today’s news, the Alumina share price closed 1.77% higher at a price of $1.44.

What Alumina does

Alumina owns 40% each of the Alcoa Worldwide Alumina and Chemicals (AWAC) entities. This forms part of the Alcoa Corp (NYSE: AA) business. The company is engaged in investing in bauxite mining, alumina refining and selected aluminum smelting operations.

Alumina has developed a reputation for being an exceptional dividend distributer. However, with the headwinds brought on by COVID-19, shares in the mining company have been on a downward trend. The company is in the S&P/ASX 200 Index (ASX: XJO) with a market capitalisation of more than $4.1 billion.

Why did the Alumina share price rise?

Alumina’s share price increased on the back of strong quarterly results. The company saw strong growth in its aluminium segment of earnings before interest, taxes, depreciation and amortisation (EBITDA) which was up 35% to a total of $119 million. In contrast, bauxite earnings fell to $124 million, lower due to the appreciation of the Australian dollar.

In terms of the company’s production levels, the results saw little change. Both the mining and refining business saw changes of 0.1 mega tonnes. The refining business increased in volume whereas mining decreased.

Despite the good news for shareholders, net distributions fell. Distributions in Q3 were lower as Q2 had benefitted from the flow-on effect of higher margins earlier in the year. This, combined with Alumina’s payment to the Australian Tax Office, reduced available cash for distribution. As such Alumina’s net distributions were $46.3 million.

What did management say?

Commenting on the results, Alumina Limited CEO Mike Ferraro said:

Building on last quarter’s record daily alumina production, the current AWAC system produced a record total production for the quarter, driven by increased plant stability. The joint venture continues to focus on the safety of AWAC employees and the wider communities.

The alumina price is currently $274/t amid continuing signs of a promising economic recovery in China and higher LME aluminium prices. However, COVID case numbers in many countries have started to increase again and the economic impact of the continuing pandemic remains unclear.

The Alumina share price finished the day 1.77% higher at $1.44. However, the share has had a challenging year to date, falling 38%.

More reading

• Top brokers name 3 ASX dividend shares to buy today
• Meet the ASX 200 stock with a dividend yield that’ll hit ~14% in FY22

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

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I think there are some high-quality exchange traded funds (ETFs) that could make good investments for any portfolio.

There are plenty of ETFs out there. But I think country-specific ones like Vanguard Australian Shares Index ETF (ASX: VAS) miss out on other great global businesses. The industry-specific ones like Betashares Global Cybersecurity ETF (ASX: HACK) are good if you find ones that give exposure to the right industry.

But the below two ETFs offer almost everything you could want in my opinion:

Betashares Global Quality Leaders ETF (ASX: QLTY)

As the name may suggest, this ETF looks to give Aussies exposure to global, quality businesses.

What does ‘quality’ mean? To make it into this ETF’s holdings it has to rank on return on equity (ROE), debt to capital, cashflow generation ability and earnings stability.

This combination of useful factors combines into a very strong portfolio in my opinion.

It owns 150 quality businesses from across the world. Just under a third of them are IT businesses, with just over a quarter being healthcare. Other investments are in the sectors of industrials, communication services, consumer discretionary, financials and consumer staples.

Whilst almost two thirds are headquartered in the US, it’s important to remember that many of those American companies generate earnings from right across the world. Other countries with an allocation of more than 2.5% are: Japan, Switzerland, Denmark and France.

I’m sure you want to know what some of the biggest positions are, here are the largest 10: Keyence, Nvidia, Intel, Nike, Novo Nordisk, Texas Instruments, Apple, Adobe, Intuit and Intuitive Surgical.

This ETF has an annual management fee of 0.35% per annum. It has performed really well for investors since inception in November 2018, returning 19.6% per annum after fees.

BetaShares Global Sustainability Leaders ETF (ASX: ETHI)

Many investors may think that investing in ‘ethical’ businesses may mean that you’re sacrificing returns. But that isn’t the case with this ETF.

Since inception in January 2017, BetaShares Global Sustainability Leaders ETF has delivered returns of 20.9% per annum. That’s after the annual management fees of 0.59% per annum, which is very cheap compared to active managers who give access to an ‘ethical’ investment style.

The problem with investing ethically is that everyone has different thoughts of what counts as ethical. Some people may be fine with junk food but not gambling. Alcohol may be okay for some investors, but not oil or coal companies.

I think this ETF provides a strong level of ethical screening, whilst providing it for an attractively low price.

BetaShares Global Sustainability Leaders ETF excludes things like gambling, tobacco, armaments, uranium and nuclear energy, alcohol, junk food, pornography, human rights and supply chain concerns and so on.

It particularly aims to invest in businesses that are ‘climate leaders’, meaning ones that are carbon efficient. That means they’re in the top third of their respective industry or are otherwise good performers in relation to scope 4 carbon emissions.

Which businesses pass this pretty stringent list of criteria? These are the top 10 holdings: Apple, Nvidia, Mastercard, Home Depot, Visa, Adobe, Tesla, PayPal, Netflix and Toyota.

Almost 40% of the ETF is invested in IT businesses, so it has a high allocation to a high-growth, high-margin sector. Healthcare is the second biggest allocation with a 15% position.

About 28% of the ETF isn’t invested in US-listed businesses, so it offers substantial global diversification for Aussies. It owns 200 businesses overall. 

I think this shows that ethical investing can generate really strong investment returns if you’re invested in really good businesses.

Foolish takeaway

I’d be happy to buy both of these ETFs for my portfolio. I think both of them can keep performing over the long-term.

But I’m also looking at other ASX share opportunities at the moment.

More reading

• I don’t normally buy ETFs, but I would buy these 2
• How to replace your entire wage with ASX dividend shares
• Top ASX growth shares to buy in October 2020
• 3 ASX shares that I’d invest $1,000 into EVERY month
• 2 top ETFs that would be good investments in any portfolio

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

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The Medusa Mining Limited (ASX: MML) share price has climbed today following the release of its quarterly update.

At the time of writing, the mining outfit’s shares are up 1.85% to 82 cents. In contrast, the All Ordinaries Index (ASX: XAO) is up 0.6% to 6,424 points.

Medusa is an Australian-based gold producer focused on growth in the Asia Pacific region. The company is currently operating in the Philippines, with its flagship project at the Co-O underground mine.

How did Medusa perform?

For the period ending September 30, Medusa reported a strong performance, eclipsing previous quarterly results.

Gold production increased 29% to 28,363 ounces at an average head grade of 7.56 grams per tonne (g/t). In the prior quarter, gold production stood at 21,947 ounces mined with an average head grade of 6.59 g/t of gold.

Medusa sold gold at an average realised price of US$1,927 per ounce, a slight jump of 10% due to the rising spot price of gold.

Operating cash costs reduced 12% to US$615 per ounce. All-in sustaining costs (royalties and local business taxes) came in at US$1,079 per ounce.

Total underground development of 8,887 meters was reached for the quarter, a 10% increase on the June period.

Underground resource drilling expanded to 10,986 meters, with reserve drilling at levels 4, 9 and 10 totalling 5,762 meters from 10 holes. High-grade results returned from multiple strikes including 24.8 g/t of gold with a 2.3-meter intercept.

Total cash and cash equivalents on metal account at the quarter end increased by 37% to US$64.7 million, with no long-term debt.

Medusa’s annual general meeting is scheduled for 29 October. Executive director Raul Villanueva has advised he will be not standing for re-election to the board.

FY21 guidance

For the current financial year, Medusa expects to have a production guidance between 90,000 ounces and 95,000 ounces of gold. All-in sustaining costs are anticipated to average around US$1,200 to US$1,250 per ounce of gold produced.

The company said that the strong September quarter result had put it marginally ahead of plan in production and costs.

Is the Medusa share price a buy?

The Medusa share price has taken shareholders on a rollercoaster ride over the last five years. The miner’s shares have reached lows of 28 cents and recent multi-year highs of $1.06, representing a cyclical trend.

As the company is reliant on the rising spot price of gold to become profitable, I think investors may prefer to look to more established businesses for gold exposure. 

More reading

• Why the Aspen (ASX:APZ) share price is charging higher?
• Here’s why the Clean TeQ (ASX:CLQ) share price has surged 10% today
• The Michael Hill (ASX:MHJ) share price has rocketed 11% today. Here’s why.
• The iSelect (ASX:ISU) share price was on the move today. Here’s why.
• Why the Spirit (ASX:ST1) share price is shooting the lights out today

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

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The S&P/ASX 200 Index (ASX: XJO) went up by 0.5% today to 6,210 points.

Here are some of the highlights from the ASX today:

Pro Medicus Ltd (ASX: PME)

Imaging healthcare business Pro Medicus announced a European contract win today.

It said that its German subsidiary has signed a 7-year, AU$10 million contract with Munich-based Ludwig-Maximilians-Universitat (LMU Klinikum), which is one of the largest university hospitals in Europe.

This contract will see the company’s Visage 7 technology implemented across all of LMU’s Klinikum’s radiology and subspeciality imaging departments replacing existing legacy PACS systems with a single centralized instance of the Visage 7 platform. Visage is also used in the hospital’s state of the art operating theatre suite for HD video documentation and point-of-care ultrasound archival and viewing.

The implementation is scheduled to commence in December 2020.

Pro Medicus CEO Dr Sam Hupert said: “Traditionally, large European teaching hospitals like LMU Klinikum have standardised on IT platforms for large, multinational imaging equipment vendors making this a difficult market to penetrate. So this is a very significant milestone for us in this highly competitive market.”

The Pro Medicus share price rose 7.6%. It was one of the best performers in the ASX 200 today.

Eagers Automotive Ltd (ASX: APE)

Today, the car dealership business announced a trading update for the nine months ending 30 September 2020.

It said that it has recorded an underlying operating profit before tax from continuing operations of $96.6 million, which represents an increase of 45.4% from the prior corresponding period.

Management said that in the Australian states and territories not currently locked down, vehicle sales have rebounded strongly from historical lows experienced during April and May.

However, whilst demand is high, supply constraints have caused global manufacturer closures during the June quarter, meaning lower vehicle deliveries to customers.

The reduced inventory position combined with cost cuts after the AHG merger, and in response to COVID-19, have led to the strong underlying trading performance.

The AP Eagers share price went up by 6%. It was another of today’s strongest performers in the ASX 200.

Whitehaven Coal Ltd (ASX: WHC)

Coal miner Whitehaven delivered its September 2020 update today.

It said that it saw strong sales in the quarter ending 30 September 2020, with total managed coal sales of 6Mt, up 13% on the prior corresponding period. Managed run-of-mine production was 4.5Mt, up 4% on the prior corresponding period. The company attributed this pleasing update to demand from Asian customers

One highlight from the quarter was that on 12 August 2020, the NSW Independent Planning Commission approved the Vickery Extension Project to operate up to a 10Mt per annum open cut metallurgic and thermal coal mine.

As part of the update, the company refined its FY21 guidance unit cost range to be between AU$69 per tonne to AU$72 per tonne.

Whitehaven CEO and managing director Paul Flynn said: “Operationally, we have continued the June quarters’ momentum by delivering on-plan mining performance of coal and overburden across all operations laying a solid foundation to much improved operational results.

“In a more capital constrained environment we continue to cautiously progress our development projects and implement a range of business improvement measures to drive cost reductions.”

The Whitehaven share price grew by 12.1% today. It was among the best ASX 200 performers.

Redbubble Ltd (ASX: RBL)

Online artist marketplace business Redbubble reported a strong set of numbers for the first quarter of FY21.

Redbubble reported that its marketplace revenue jumped by 116% to $147.5 million. This boosted gross profit by 149% to $64.5 million.

The company generated EBIT of $22.1 million. Operating cash inflow was $27.1 million, up from $10.2 million in the prior year.

Redbubble finished the quarter with a cash balance of $85.4 million.

The CEO of Redbubble, Martin Hosking, said: “The strategic priority for the group now is to ensure we extend the market leadership we have established. We intent to invest in the customer experience to improve loyalty and retention and ensure long-term higher levels of growth. The company has the resources to undertake the anticipated investments and the margin structure to ensure it can do so while remaining profitable.”

The Redbubble share price grew by 8.1% today. 

More reading

• Bank of Queensland (ASX:BOQ) among the latest buy ideas from brokers
• The Redbubble (ASX:RBL) share price rocketed 25% higher today: Is it a buy?
• Why the Eagers Automotive (ASX:APE) share price is zooming 9% higher
• Looking to invest in ASX real estate shares? Read this first
• Why Bank of Queensland, BHP, Pro Medicus, & Redbubble shares are charging higher

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

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When you first start investing, you might look for high risk, high reward growth shares.

After all, if things don’t go to plan, you have plenty of time to recover.

But when you’re in retirement, I think it is best to focus on income and capital preservation.

With that in mind, below I have picked out two shares which I think are safe options for retirees to buy right now. They are as follows:

Coles Group Ltd (ASX: COL)

The first option to consider for a retirement portfolio is this supermarket giant. I’m a big fan of Coles due to its solid growth prospects, refreshed strategy, its generous dividend policy, and its defensive qualities. The latter was on display for all to see with its strong performance in FY 2020 despite the pandemic.

For the 12 months ended 30 June 2020, Coles delivered a 6.9% increase in sales to $37.4 billion and a 7.1% lift in net profit after tax to $951 million. It also revealed that its same store sales growth had been strong early in the financial year. And while its growth is likely to moderate a touch once the pandemic passes, I remain confident that it is still well-positioned to grow its earnings and dividend at a solid rate long into the future. For this reason, I think it could be a fantastic option for retirees today. 

Telstra Corporation Ltd (ASX: TLS)

Another option for a retirement portfolio could be Telstra. While Telstra has been a terrible investment for retirees over the last few years, I believe the tide is finally turning and a return to growth could be on the horizon in the near future. This is due to its strong market position, rampant cost cutting, the easing NBN headwind, and the arrival of 5G.

In respect to the latter, I expect the upcoming release of the new iPhone to kickstart its adoption in Australia. This should be a big boost to Telstra’s all-important mobile revenues. Another positive is that the Telstra board has recently advised that it will do all that it can to maintain its 16 cents per share fully franked dividend. Based on the current Telstra share price, this represents a generous 5.6% yield.

More reading

• Is the Coles (ASX:COL) share price set for a big Santa Rally?
• 2 blockbuster blue chip ASX shares to buy
• Top brokers name 3 ASX shares to buy today
• Could this small cap ASX telco become the next Telstra (ASX:TLS) share price? 
• Why it’s always a good time to buy blue chip ASX shares

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

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The Bank of Queensland Limited (ASX: BOQ) share price rallied today after two brokers upgraded the stock. But it’s not the only ASX stock to get boosted to a “buy” today.

The BOQ share price extended yesterday’s gain by 2.5% to $6.90 ahead of the close when the S&P/ASX 200 Index (Index:^AXJO) gained 0.7%.

The bank jumped by over 5% on Wednesday after it posted a pleasing full year result. This prompted Credit Suisse to lift its recommendation on the stock to “outperform” from “neutral” as it increased its 12-month price target to $7.60 from $5.50 a share.

Cost control and margins prompt broker upgrade

The broker was impressed with the bank’s strong cost control in a tough environment and the 3 basis point uplift in its second-half net interest margin (NIM).

Management also managed to deliver a CET1 ratio of 9.78%. This is ahead of its cash buffer target range of 9% to 9.5%.

“With this result, we now see the downside to be limited with a COVID‐19 provision conservatively set together with good execution of strategy delivering underlying profit growth,” said the broker.

Downside risks limited

But Credit Suisse isn’t the only broker upgrading the stock. Morgans changed its recommendation to “add” from “hold” as the bank’s cash earnings of $225 million was 4% ahead of its expectations.

“While we have not materially changed our credit impairment charge forecasts for FY21F and FY22F, and despite our forecasts being more optimistic than FactSet consensus, we believe our forecasts are starting to look conservative in light of emerging data,” said Morgans.

The broker’s 12-month price target on the stock increased to $7.20 from $5.50 a share.

Challenger upgraded due to better than expected quarterly

Meanwhile, the Challenger Ltd (ASX: CGF) share price also benefitted from a broker upgrade today.

Bell Potter upped its rating on the annuity products company to “buy” from “hold” following its September quarterly update.

“We do this due to the strong sales figures in its Life business in addition to the robust net-flows it’s seeing on the Funds Management side,” said the broker.

“CGF flagged improving margin through a more attractive asset allocation and the capital position remains higher than target ratios.”

Blowing past estimates

The group’s sale of life insurance was more than twice Bell Potter’s estimate of $100 million for the quarter.

Its fixed-Term annuities (ex MS&AD) sales of $634 million also blew past the broker’s $330 million estimate.

Bell Potter increased its price target on Challenger to $4.70 from $4.20 a share.

The CGF share price jumped 2.6% on Thursday to $4.40.

More reading

• Looking to invest in ASX real estate shares? Read this first
• Top brokers name 3 ASX shares to sell today
• Why Bank of Queensland, BHP, Pro Medicus, & Redbubble shares are charging higher
• ASX 200 up 0.9%: Big four banks rise, Pro Medicus jumps, miners charging higher
• 5 things to watch on the ASX 200 on Thursday

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

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There are two broad schools of thought when it comes to seeking out responsible investments on the ASX. By ‘responsible’, we mean shares that place a high value on their environmental, social and governance (ESG) policies. Also known as the ‘triple bottom line’.

The first is that you should invest in shares which you believe will deliver you the absolute highest returns, regardless of ESG considerations. Then, if you so choose, you can use some of those gains to support your favoured environmental or social causes.

The second is to seek out shares that are actively pursuing ESG policies. Ideally then, your investment can not only return capital gains but your money can also have a positive impact on the world around you. Hence, you’ll also hear this referred to as ‘impact investing’.

We’ll leave it to you to decide how to balance the two choices. But according to this morning’s press release from the Responsible Investment Association Australasia (RIAA), ESG investment is booming.

Hitting new heights

In 2018, professionally managed responsible investments in Australia totalled $980 billion. Today that figure is $1.15 trillion, representing growth of 17%. RIAA notes that 37% of all professionally managed investments are now managed using one or more responsible investment approaches.

And it looks like this trend has a lot more growth ahead of it.

Michelle Lacey is the Head of Core Client Group, Australia, AXA Investment Managers. According to Lace:

RIAA’s research shows Australian investors would like to increase their allocation towards impact investments more than fivefold over the next five years, so we believe this should be a particular area of attention for financial advisers.

This rapid growth is also seeing an increasing range of ESG investment options opening up, says Yo Takatsuki, Head of ESG Research and Active Ownership at AXA IM.

Takatsuki adds:

Funds that have been established to target specific social and environmental objectives, often called impact funds, are becoming far more ambitious in their investment goals. They are attracting sophisticated investors who expect very clear and detailed reporting, both quantitative and qualitative.

With that in mind, the Association urges financial planners and managers to be familiar with ESG investments, pointing to their free Financial Adviser Guide to Responsible Investment publication.

And ESG investing doesn’t mean you’re sacrificing share price gains for a healthy conscience.

Quite the contrary, according to Simon O’Connor, Chief Executive Officer of RIAA. He says:

The rapid growth in responsible investment has been driven by client demand and strong investment outcomes, with clear evidence that responsible investments deliver stronger risk-adjusted returns.

There you have it.

Maybe you can have your cake and eat it too, investing responsibly on the ASX and reaping big share price gains.

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

The post Responsible ‘ESG’ share investing is booming on the ASX. Here’s what you need to know appeared first on Motley Fool Australia.

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