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The S&P/ASX 200 Index (ASX: XJO) went up by 1.1% to 6,102 points today. It was a strong day for most of the share market.

Among the top performers in the ASX 200 was buy now, pay later operator Zip Co Ltd (ASX: Z1P) which jumped 8% after updates from its competitors:

Sezzle Inc (ASX: SZL)

Sezzle reported a strong set of numbers in its update in the quarter for the three months to 30 September 2020.

The BNPL operator reported underlying merchants sales (UMS) increased 231.5% year on year to US$228 million, up 21.4% quarter on quarter.

Merchant fees as a percentage improved to 5.8%, up from 5.6% from at June 2020 and 5.2% from 30 September 2019. Rising margins is a good sign for Sezzle.

Active consumers rose 178.1% year on year to 1.79 million (and was up 21.5% quarter on quarter) and active merchants rose by 178.3% year on year (and grew 29.7% quarter on quarter).

One of the most pleasing aspects of the BNPL company’s update was that its active consumer repeat usage grew to 89%, which meant that repeat usage has increased for 21 straight months. This is an important part of lowering loss rates and improving the net transaction margin. Sezzle now has an annual run rate of almost US$1 billion.

The Sezzle share price went up by 3.6% today, though it was above $8.70 earlier in the day.

Splitit Ltd (ASX: SPT)

Splitit is another high-growth BNPL operator and it reported a strong set of growth numbers.

It said that merchant sales volume (MSV) grew by 214% year on year to US$70.9 million. This helped gross revenue soar 318% to US$2.4 million.

Total merchants jumped 117% year on year to 1,400 and total shoppers grew 97% year on year to 362,000.

Splitit said that self-onboarding is now live in the US, it added over $3 billion of addressable online merchant sales in the third quarter of FY20 and it has expanded into the professional services vertical in the US and Australia.

The Splitit share price ended 4.7% lower, though it was up earlier in the day.  

CSL Limited (ASX: CSL)

ASX 200 business CSL announced that its subsidiary, Seqirus, has signed a final agreement with the Commonwealth of Australia for the supply of 51 million doses of the University of Queensland COVID-19 vaccine candidate called V451, if clinical trials are successful.

The agreement includes and up-front financial commitment from the government to support the clinical and technical development activities that CSL will need to carry out in order to progress V451.

CSL said that the large-scale phase 2b/3 clinical study for V451 is almost ready which will evaluate efficacy, immunogenicity and safety in adults aged 18 years and above. The first subject is expected to be enrolled in December 2020 with the goal of completing recruitment by March 2021.

The ASX 200 share said it’s committed to demonstrating the vaccine is safe and effective prior to availability in the market. However, CSL isn’t able to calculate the financial impact to the company relating to the vaccines.

The CSL share price went up 2.4%.

Netwealth Group Ltd (ASX: NWL)

The Netwealth share price jumped by 8.8% today after announcing its quarterly update for the three months to 30 September 2020.

Funds under administration (FUA) was $34 billion at 30 September 2020, up 8% for the quarter, which included positive market movements of $0.6 billion. FUA net inflows was $1.9 billion for the quarter, an increase of 25.4% for the quarter.

The ASX 200 share’s funds under management (FUM) was $8.1 billion at 30 September 2020. FUM net inflows for the quarter was $0.8 billion, including managed account net inflows for the quarter of $0.7 billion. The managed account balance was $6.5 billion at 30 September 2020, an increase of $3.4 billion compared to the prior corresponding period.

More reading

• Which ASX ETFs offer the most diversification?
• Look through short-term unpredictability for long-term ASX share price gains
• Why Downer, ELMO, Netwealth, & Sezzle shares are storming higher today
• BNPL ASX shares are running hot today
• ASX 200 up 0.8%: Big four banks higher, CSL rises on vaccine update, Zip rockets

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 CSL Ltd. and ZIPCOLTD FPO. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. recommends Sezzle Inc. The Motley Fool Australia owns shares of Netwealth. The Motley Fool Australia has recommended Sezzle Inc. 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 AVZ Minerals Ltd (ASX: AVZ) share price went through the roof today, gaining 20% by 3pm when trading in the shares was halted at the company’s request.

Today’s run higher is enough to put AVZ’s share price up 56% since 2 January. By comparison, the All Ordinaries (INDEXASX: XAO) is down 7%.

AVZ’s share price reached a 2020 high of 10 cents per share on 21 February before falling 50% through to 17 February during the COVID driven market rout. At the time of the trading halt, shares were worth 7.8 cents.

What does AVZ Minerals do?

AVZ Minerals is a mineral exploration company with a primary focus on lithium. The company states that its Manono Project may be one of the largest lithium-rich LCT (lithium, caesium, tantalum) pegmatite deposits in the world. Manono is located in the Democratic Republic of Congo (DRC).

What next for AVZ’s share price after the trading halt?

AVZ requested the trading halt this afternoon as it prepares an announcement in response to the ASX price query it received as well as an operation update announcement.

There is no market information available about what AVZ’s pending operation update may detail. Judging by the sharp run higher in the share price today the company may have some good news to share. Whether or not that warrants today’s share price surge remains to be seen.

Longer-term the company finds itself in a good space, provided its Manono project proves successful.

The global demand for lithium, a highly conductive metal, is forecast to grow strongly over the next decade as the transition to electric vehicles and battery storage for energy grids accelerates.

Another tailwind for Australian critical mineral miners came courtesy of US President Donald Trump.

Last week Trump took the historically extraordinary step of greenlighting US government investments into critical minerals projects in Australia. This comes as Trump continues to work to move the US away from its reliance on Chinese sources.

There’s no indication that AVZ Minerals is already a direct recipient of any US funding. But the AVZ share price will certainly be one to watch when the company releases its operation update and response to the ASX, expected either tomorrow or before market open on Monday.

More reading

• ASX 200 rises 1% again, Zip (ASX:Z1P) soars 8%
• What’s driving the PayGroup (ASX:PYG) share price higher today
• Why the 4DMedical (ASX:4DX) share price is reaching new highs
• Should you fear the federal government’s $1 trillion debt bomb?
• Here’s why the Karoon Energy (ASX:KAR) share price is up 22% this week

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.

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The PayGroup Ltd (ASX: PYG) share price is higher today following the release of its H1 FY21 trading update.

The update sent the PayGroup share price storming up to a 60 cent high in opening trade, before dropping to settle at 56 cents, up 3.7% at the time of writing. In comparison, the All Ordinaries Index (ASX: XAO) is up 0.9% to 6,294 points.

Let’s take a look at PayGroup and its performance for the first-half of the financial year.

What does PayGroup do?

Headquartered in Melbourne, PayGroup provides payroll and human capital management solutions. The company operates in 11 countries, servicing more than 995 client entities and processing more than 5 million payslips per annum.

For the period ending September 30, PayGroup announced that it had achieved record contract growth for H1 FY21. The result was $5.4 million in contract wins, up 93% on the prior corresponding period, and 98% of its entire FY20 total contract value.

The company advised that COVID-19 has provided structural tailwinds, drawing new businesses to help digitise their payroll systems. PayGroup added 80 new contracts which included existing client upsells and new customers.

Growth areas

PayGroup’s treasury services segment continued its strong growth trajectory since product launch in Q2 FY20. For the period, total treasury services rose by 279% for the first-half of the year.

In H2 FY21, the company plans to launch its ‘Accessing Wages Earned’ module. The new platform will allow employees to access their accrued wages before payday, and will join PayGroup’s financial wellness program. The addition is anticipated to further drive revenue momentum, particularly in the current climate.

The company’s global partner program expanded during H1 FY21, servicing more than 39 countries. PayGroup’s increased presence seeks to capitalise on the addressable market to cross-sell its human capital management and payroll services.

Company outlook

PayGroup managing director Mark Samlal welcomed the result, saying:

We’re very pleased with the performance that we have achieved in the last six months, despite the challenging environment. We are continuing to follow the government protocols in each of our regions with respect to operating and re-opening safely, with employee welfare and client service satisfaction as our key priority. Our service standards have not been compromised during this period.

Mr Samlal said the new contract wins achieved this half year were a significant increase on the previous half. They reflected “strong underlying demand” for the company’s mission-critical SaaS and SwaS products across Asia Pacific and the Middle East.

We are well positioned to weather the current business environment and are increasingly seeing clients seeking to outsource HR and payroll functions to drive greater business efficiencies. Our successful capital raise in September 2020 will allow us to more rapidly capture these growing business opportunities.

More reading

• Why the PYC Therapeutics (ASX:PYC) share price is up 9% today
• Here’s why the CV Check (ASX:CV1) share price has soared 30% today
• Why the Tesserent (ASX:TNT) share price has surged 18% today
• Why the Envirosuite (ASX:EVS) share price has rocketed up today
• Why the Image Resources (ASX:IMA) share price is rocketing higher 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 4DMedical Ltd (ASX: 4DX) share price jumped higher today as the company was involved in Goldman Sachs Healthcare Forum. Despite only listing 2 months ago, 4DMedical has taken no time to grab investors’ attention, surging almost 20%.

4DMedical shares pushed 14.11% higher to close at a price of $1.90.

What 4D Medical does

Founded in 2012, 4DMedical is a Melbourne based software technology company focused on creating a change in the capacity of physicians to diagnose and manage patients with diseases involving their lungs.

The imaging company is focused on commercialising its ‘4D’ lung imaging technology, which uses patented algorithms to convert X-ray images into quantitative scan data. Unlike existing respiratory diagnostic procedures, its technology provides a non-invasive way of understanding regional lung motion and airflow in real-time. The company’s major focus is on US market commercialisation.

So What

The respiratory diagnostic sector represents a global market of over US$31 billion per annum according to Goldman Sachs.

Furthermore, Goldman points out that existing lung diagnostics are outdated. Over the last 200 years, advances in medical diagnostic technology have delivered dramatic benefits for mankind whilst advancements in lung diagnostics have stagnated. The current gold standard modality to diagnose lung dysfunction (Spirometry) was invented in the 1860s.

4DMedical uses its XV technology to change this. Its XV Technology allows physicians to understand airflow within the lung better. The technology leverages existing hardware and software in hospitals to deliver its XV Technology quicker and at a lower cost to existing procedures.

Moreover, the technology operates through a cloud based Software as a Service platform that fully integrates with existing X-ray equipment, alleviating the requirement for hospitals and clinics to make a capital investment.

The Goldman Sachs report outlines the investment opportunity and many investors clearly like what they hear as the 4DMedical share price soars.

Now what

Despite being early days for 4DMedical, the company has wasted no time in getting important TGA approval. This was perhaps aided as a result of the strong tailwinds provided by Covid-19 due to its damaging nature to the lungs.

As if the company doesn’t already have enough going for it, 4DMedical also boasts backing by Dr. Sam Hupert, the Co-founder and CEO of Pro Medicus Limited (ASX: PME).

More reading

• 3 ASX shares I’d buy if the share market crashes again
• ASX 200 up 1.6%: CBA higher on COVID-19 loan deferrals update, Reliance rockets
• 3 ASX growth shares to buy with $3,000 in October
• Grow rich with these excellent ASX shares
• Could this be the large cap version of the Brainchip (ASX:BRN) share price? 

Daniel Ewing owns shares of Pro Medicus Ltd. 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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Treasurer Josh Frydenberg is throwing everything and the kitchen sink at reflating the economy. And the FY21 federal budget papers shows he’s leaving a record $1 trillion debt hole behind.

He says it’s worth it to get Australia out of the COVID-19, even if it means that net debt will peak at just under that obscene level in FY24. On a gross basis, debt is tipped to peak at $1.7 trillion something over the next 10 years!

Should you be worried? And how will this impact on your ASX share portfolio?

After all, those horrifying projections may reflect the best-case scenario given Treasury’s prediction is based on some optimistic assumptions.

Is debt a four-letter word?

We have often been told that high levels of debt can lead us to financial ruin. What’s bad for the goose must surely cook the gander.

But before you hit the panic button, it’s important to note that government debt is not the same as household debt.

Lenders are happy to give governments a lot more leeway as the risk of a default by a developed nation is extremely low.

Key difference between government and consumer debt

While the federal government can adjust taxes and spending (similar to how you or I can change our income and expenses), it also the Reserve Bank of Australia (RBA) to act as a guarantor.

The central bank can print money to buy government bonds, and that gives Treasurer Josh Frydenberg a lot of room to borrow.

Mind you, there’s a limit to how much money the RBA prints, but it’s a very big limit. International investors have a high regard for Australia sovereigns and we are only one of 11 countries with the highest AAA credit rating from the three major ratings agencies.

This means our government debt is more highly rated (seen as safer) than the United States.

Why debt may not be so bad

This brings me to the second point. The US has three times more debt than Australia and has long had a large debt load, most of which was accumulated during the GFC.

But this hasn’t hampered its economy, neither has it dethroned the US as the global investment benchmark.

It helps that the US dollar is regarded as the world’s reserve currency, but another big reason why a heavy debt load isn’t an issue is because investors can’t get enough of it.

Australia may not quite be in the same category despite our stronger credit rating, but I have little doubt that investors are happy to keep lending us cash for a very extended period.

The upside from having more debt

This may sound contradictory, but having more debt may actually be in our country’s interest! When ex-Treasurer Peter Costello repaid all of the Howard Government’s debt, it effectively shut down our bond market.

Bond fund managers were left distressed as international investors went away. Then the GFC hit, and the Australian government had to restart the bond market.

That not only took more time, but some investors were reluctant to return due to worries that the bond market would again disappear when the good times returned.

But with the growing pool of bonds that have to be issued under the current 10-year plan, credit investors can at least take heart that they will have a reasonably large and liquid pool to play in.

Foolish takeaway

As long as there’s confidence that Australia can repay its loans, this love affair can go on into perpetuity.

With the amount of excess cash slushing around in the global financial market and record low interest rates, there has never been a better time for the Morrison government to borrow big to reflate our depressed economy.

More reading

• Here’s why the Karoon Energy (ASX:KAR) share price is up 22% this week
• Why the Estrella (ASX:ESR) share price has rocketed 450% today
• Why the Temple & Webster (ASX:TPW) share price is sinking lower
• Why growth investors still have a lot to like about the Magellan (ASX:MFG) share price
• Which ASX ETFs offer the most diversification?

Motley Fool contributor Brendon Lau has no position in any of the stocks mentioned. Connect with me on Twitter @brenlau.

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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Karoon Energy Ltd (ASX: KAR) shares are up 8% in afternoon trading today, bringing the the company’s share price gains for this week to nearly 22%.

The string of daily gains this week follow Karoon’s ASX announcement on Monday, updating investors on its Baúna oil field acquisition in the Santos Basin off the coast of Brazil.

This week’s big gains in the Karoon share price will come as welcome news to the company’s shareholders.

It certainly hasn’t been an easy year for companies involved in the oil and gas business. To give you just one benchmark, Brent crude oil (as priced in US dollars) tumbled 72% from early January through to mid-March this year as the pandemic dried up demand. Despite doubling since then, to today’s price of US$42.10 per barrel, Brent crude is still down 39% since 6 January.

Crashing energy prices were clearly mirrored in the Karoon share price, which fell 74% from 21 February through to 19 March. Despite this week’s big gains, Karoon shares remain down more than 25% year to date.

For comparison, the S&P/ASX 300 Index (ASX: XKO) is down 8% since 2 January.

What does Karoon Energy do?

Karoon Energy is an international oil and gas explorer headquartered in Melbourne. The company has projects in Australia, Brazil and Peru. Karoon was founded as an exploration company but is transforming into a global energy producer.

The Karoon share price first began trading on the ASX in June 2004. Since then, its market capitalisation has grown from $8 million to $469 million.

What’s moving the Karoon share price?

On Monday, Karoon announced a promising update to its Baúna oil field acquisition. The company first announced the signing of a binding sale and purchase agreement (SPA) for the oil field in July 2019, stating the acquisition “moves Karoon directly into production, marking a new phase in Karoon’s history”. The effective date of the transaction was 1 January 2019.

Monday’s announcement reiterated that certain remaining conditions need to be met to complete the transaction. These include: “outstanding third party/regulatory conditions precedent: (i) Agência Nacional do Petróleo, Gás Natural e Biocombustíveis (“ANP”) approval, and (ii) FPSO charter assignment”.

Karoon reported significant progress on the ANP approval, citing only minor administrative issues remain.

The company also reported progress with the FPSO charter assignment, and expects that to be ready for execution once the ANP approval is received. Karoon forecasts the transaction will be complete in the latter half of October 2020 and is preparing to market its first Baúna cargo.

Judging by this week’s action on the Karoon share price, if the company is able to announce it’s successfully completed all the remaining conditions for the transaction by the end of this month, shares could move considerably higher.

More reading

• Why the Estrella (ASX:ESR) share price has rocketed 450% today
• Why the Temple & Webster (ASX:TPW) share price is sinking lower
• Why growth investors still have a lot to like about the Magellan (ASX:MFG) share price
• Which ASX ETFs offer the most diversification?
• Here’s why the shares of this Nearmap (ASX:NEA) rival are surging higher today

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.

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The Estrella Resources Ltd (ASX: ESR) share price has been reinstated to the market today with a bang. It comes as the exploration company found a significant amount of nickel sulphide in Western Australia.

Following a recent trading halt, Estrella’s share price is trading 457% higher today, up to a price of 7.8 cents.

What’s powering the Estrella share price?

The driver behind Estrella’s share price gain is a significant nickel sulphide discovery at Carr Boyd. The discovery announced this morning represents a major change of fortune for the company’s T5 project that was initiated in 2019. It comes after the company’s drill team spent the last 7 weeks on the ground drilling and setting up at T5.

CEO Chris Daws said:

It is certainly an unprecedented time for all those involved with Estrella and the Carr Boyd Rocks Ni-Cu Project. Modern science, technology, belief, and persistence has led to this highly significant discovery which is now beginning to unlock the true potential of T5.

The company is still drilling and expects to find more high grade nickel deposits. Other miners such as Poseidon Nickel Ltd (ASX: POS) and Chalice Gold Mines Limited (ASX: CHN) have also had recent success in Western Australia.

What now

The discovery could be perfect timing for the mineral exploration company as batteries take front stage around the world. Nickel is essential in powering the electric vehicle revolution, providing higher energy capacity than other substances.

The Estrella share price is currently trading a 457% higher at the time of writing, after reaching a high of 8.4 cents in earlier trade.

More reading

• Here’s why the Karoon Energy (ASX:KAR) share price is up 22% this week
• Why the Temple & Webster (ASX:TPW) share price is sinking lower
• Why growth investors still have a lot to like about the Magellan (ASX:MFG) share price
• Which ASX ETFs offer the most diversification?
• Here’s why the shares of this Nearmap (ASX:NEA) rival are surging higher today

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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It certainly has been an eventful day for the Temple & Webster Group Ltd (ASX: TPW) share price on Thursday.

In morning trade the online furniture retailer’s shares stormed 4.5% higher to a record high of $14.00. When its shares peaked at this level, it meant they were up a staggering 430% since the start of the year.

However, in afternoon trade the Temple & Webster share price has given back these gains and more.

At the time of writing the company’s shares are down over 2.5% to $13.02.

What is happening with the Temple & Webster share price today?

Firstly, the storming to a record high has been driven by the company’s strong performance during the pandemic thanks to the shift to online shopping.

This led to Temple & Webster recording a 74% increase in revenue to $176.3 million in FY 2020 and a material year on year increase in its operating earnings from $1.5 million to $8.5 million.

Management also revealed that its sales growth was strong early in FY 2021, putting the company in a position to deliver another impressive result.

Since then, the Federal Budget has been announced and tax cuts have been backdated to the start of the financial year. This will put more money in consumers’ pockets and could support Temple & Webster’s sales growth.

So why are its shares dropping lower now?

Investors have been hitting the sell button this afternoon after the company revealed that its chairman has offloaded the majority of his shares.

Insider sales rarely go down well with the market, especially when it is such a large portion of a director’s holding. This is because it is often interpreted as a sign that a share price may have peaked. 

According to the release, Stephen Heath has sold 150,000 of his 184,000 shares through an on-market trade on 31 August. Mr Heath received a total of $1,387,845 for the shares.

No explanation was given for why the notice was filed so late. Generally, directors have five days to inform the market of their trades.

More reading

• 2 hot e-commerce ASX shares to buy today
• Why IAG, Mayne Pharma, Mesoblast, & Temple & Webster shares are tumbling lower
• 3 ASX shares poised for huge growth in FY21
• 5 ASX shares held by leading fund managers
• 3 ASX shares making all-time highs today

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 Temple & Webster Group Ltd. The Motley Fool Australia has recommended Temple & Webster Group 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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I feel Magellan Financial Group Ltd (ASX: MFG) is one of the best performing ASX shares of the past decade. In fact, if a growth investor put $10,000 into Magellan shares on 2 January 2010, it would be worth over $700,000 based on today’s Magellan share price. This requires a share price compound annual growth rate (CAGR) of 53.3%. Furthermore, the company has continued to grow its earnings per share and dividend payments at an impressive rate. 

Magellan is an investment manager with a solid track record of outperformance. To illustrate further, yesterday the company announced cash inflows of $1.19 billion during September. This brings its total funds under management to $102.08 billion. These figures suggest to me that retail and institutional investors, as well as ASX growth investors, have trusted this company.

Is the Magellan share price still suitable for growth investors?

After such a prolonged period of growth, it’s fair to question whether the Magellan share price has reached a point where its growth, and the company’s earnings, will start to level out. Nonetheless, Magellan is still producing solid results, and has a large scale strategy to increase revenues even further.

Magellan recently announced it had taken a 40% stake in Barrenjoey Capital Partners, an unlisted, full service, investment bank planned for Australia. These types of companies work on complex issues between corporations and the financial markets. Specifically, they help to issue shares for initial public offerings (IPOs) or capital raisings, arrange for debt financing, and help to execute mergers and acquisitions. 

The Barrenjoey investment may cause some growth investors to be put off the Magellan share price since there are are plenty of local and international investment banks in Australia. However, Barrenjoey has already secured some of the best talent in the nation. The start-up has been poaching top flight executives from UBS Group AG (NYSE: UBS). This team has forged a trail of success starting from the wreckage of the global financial crisis.

In a telling move, each of the major names has either surrendered bonus payments to join Barrenjoey, or has been paid an equivalent bonus as part of a signing fee. In either case, it is a very strong vote of confidence in the new investment bank and the professionals set to lead it. 

Options for even more growth

Another interesting possibility for growth investors when considering today’s Magellan share price is the potential for the company to add further unlisted assets to its portfolio. 

Foolish takeaway

The Magellan share price is currently trading at a price-to-earnings (P/E) ratio of 28.9, which clearly prices in hopes for future performance. It also has a trailing 12-month dividend yield of 3.41%. In my view, this is a great company led by a great investor in Hamish Douglass. Even without the new venture, I believe the Magellan share price will continue to grow over the next 5 to 10 years. 

However, after also factoring in the new revenue stream and future potential, to me, Magellan shares become an even more compelling proposition. I believe the Magellan share price could be  poised for a potentially significant growth spurt which is quite rare for a large cap ASX share.

More reading

• Brokers name 3 ASX shares to buy right now
• Here’s why the Magellan (ASX:MFG) share price is pushing higher today
• 3 ASX shares I want to buy in October
• How to generate $50k a year from ASX dividends
• Top ASX Stock Picks for October 2020

Motley Fool contributor Daryl Mather 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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Which ASX exchange-traded funds (ETFs) offer investors the most diversification today?

Diversification is one of those investing buzzwords that is probably used a little too much. I penned an article last week on the dangers of over-diversifying a portfolio, which might be worth a look in the context of this article. Even so, diversification remains (in my view) something that most ASX should aspire to in some form. And ETFs are an easy and efficient way of beefing up a portfolio’s diversification without too much effort.

The diversification problem with single-market ETFs

But which ETFs to choose? Well, it might seem logical to start with an index fund which tracks the S&P/ASX 200 Index (ASX: XJO), such as the iShares Core S&P/ASX 200 ETF (ASX: IOZ). These are by far the most popular ETFs in Australia, especially if we include the Vanguard Australian Shares Index ETF (ASX: VAS), which tracks the S&P/ASX 300 Index (ASX: XKO).

But these ETFs, although very diversified in their own right, pale in comparison with some other ETFs out there. For one, they hold either 200 or 300 companies in just the Australian market. In contrast, something like the Vanguard U.S. Total Market Shares Index ETF (ASX: VTS) holds more than 3,500 US shares. That’s more than 10 times as many different holdings than IOZ or VAS.

But all of these ETFs only track one single market (albeit with massive diversification within them). If an economy-wide malady, such as a national currency collapse, were to affect one of these markets, there could be insufficient diversification to protect investors.

So where to turn?

Are multi-market ETFs the answer?

Well, there are ETFs that cover multiple markets and countries. The Vanguard MSCI Index International Shares ETF (ASX: VGS) is one such option. VGS is still relatively heavily weighted towards US shares, which make up 68.1% of the funds’ 3,466 holdings. However, with more than 20 other countries also represented, at least you have this buffer. Another option is the Vanguard All-World ex-US Shares Index ETF (ASX: VEU), which has a similar number of total holdings, but excludes US shares for a far more balanced portfolio. The country with the most weighting in VEU is Japan, but this only represents 16.9% of the total funds’ holdings.

A final option to consider is the Vanguard FTSE Emerging Markets Shares ETF (ASX: VGE). This fund is extremely diversified. It holds more than 5,200 individual holdings across 23 different markets like India, Taiwan, Brazil, Mexico, Chile, Egypt and Greece. However, this fund is heavily weighted towards Chinese companies, which make up 45.2% of the funds’ total holdings.

Foolish takeaway

Whilst I think a single market ETF (especially those covering the ASX or US markets) is a great investment for any investor, the reality is that these funds are not completely immune from a lack of diversification. As such, I think if you are heavily concentrated in these markets, a small to mid-size investment in a multi-market ETF might be a good way of adding some extra diversification to your portfolio. It might not be for everyone, but if it helps you sleep better at night, it might well be worth it.

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• 5 things to watch on the ASX 200 on Thursday
• Why you should wait another month to invest in ASX shares
• Has the Afterpay (ASX:APT) share price stalled?

Motley Fool contributor Sebastian Bowen has no position in any of the stocks mentioned. The Motley Fool Australia has recommended Vanguard MSCI Index International Shares ETF. 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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