Tag: Motley Fool

Warren Buffett’s track record of generating high returns means that following his advice could be a sound means of improving your retirement prospects.

Certainly, there is a risk that a second stock market crash will occur in the coming months. However, through buying high-quality stocks at low prices, and focusing on the long run, you could generate impressive returns that bring forward your retirement date.

Investing in the stock market

Warren Buffett’s capital has always been focused on the stock market. Although he has held significant amounts of cash, this is to provide security and the liquidity required to buy more stocks, rather than to generate a high return.

As such, following his lead and using the stock market to build a retirement nest egg could be a sound move compared to purchasing other assets. Although other mainstream assets such as bonds and property may hold some appeal at the present time due to ongoing economic risks, the past performance of the stock market shows that a recovery is very likely. Therefore, it could produce significantly higher returns than other asset classes, and make a greater positive impact on your retirement plans.

Warren Buffett’s focus on quality at a low price

Warren Buffett has always sought to purchase high-quality businesses when they trade at low prices. For example, he has bought companies that have wide economic moats. This essentially means that they have a competitive advantage over the peers that enables them to generate higher levels of profitability. When purchased at an attractive price, such companies allow investors to obtain a relatively favourable risk/reward opportunity.

At the present time, many stocks are trading at low prices. In some cases, their low valuations may be deserved due to their difficult outlooks. However, in many cases, weak investor sentiment towards specific industries and sectors may provide buying opportunities for long-term investors. Undervalued stock may be able to deliver improving financial performances as the economic outlook strengthens, which could lead to impressive capital returns.

Short-term worries

The prospect of a second stock market crash is unlikely to worry long-term investors such as Warren Buffett. He has always been comfortable with the idea of short-term volatility in the stock market, since he has a long-term view of his holdings. This has enabled him to buy when the stock market’s outlook is very uncertain and stock prices are relatively low.

Since many investors who are seeking to build a retirement nest egg are likely to have a long time horizon, short-term downturns should not be a major concern. In fact, they could provide further buying opportunities that enable you to add stocks to your portfolio and further benefit from the stock market’s growth potential over the coming years.

More reading

• How to earn a passive income of $50,000 with ASX dividend shares
• 3 ASX shares now trading at crazy cheap prices
• Why I would invest $100,000 across these fantastic ASX shares
• There are 2 ways to spend your ASX dividends. Are you choosing the right one?
• These were the best performing ASX 200 shares last week

Motley Fool contributor Peter Stephens 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 Money to invest today? I’d follow these 3 Warren Buffett tips to retire early appeared first on Motley Fool Australia.

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Wouldn’t it be nice to be paid $50,000 per year for doing nothing? Well, if you like the sound of that, then read on.

I believe the Australian share market is a great place to earn a passive income. This is because a large number of companies share their profits with shareholders by paying them dividends each year.

How can you earn $50,000 worth of dividends each year?

If you already have a large sum of money in your savings accounts, then you’re halfway there.

Rural Funds Group (ASX: RFF) plans to pay an 11.28 cents per share distribution in FY 2021. Based on the current Rural Funds share price, this equates to a 5% distribution yield.

This means that if you were to invest $1 million into its shares, in 12 months you would have earned $50,000 in dividends if it delivers on its plans.

Though, it wouldn’t be advisable to put all your eggs in one basket. I would suggest investors spread their funds across a number of similar yielding dividend shares or consider the Vanguard Australian Shares High Yield ETF (ASX: VHY).

This fund is invested in a total of 66 top shares which offer some of the most generous yields on the Australian share market.

What if you don’t have a million dollars to invest?

Not everyone is lucky enough to have funds of that nature to invest. So how else can you do this?

If you have time on your side, then you can achieve this by investing in dividend-paying shares which have the potential to grow strongly over the long term.

Biotechnology company CSL Limited (ASX: CSL) is probably my favourite example of this.

There will be very few investors that regard CSL as a dividend share. After all, it is paying a full year dividend of $2.952 per share in FY 2020. This represents a yield of just over 1%, which is nothing in comparison to what else is on offer on the share market.

However, if you invested in the company when it first hit the ASX boards, you would have a very different opinion.

If you invested in the biotech giant at that point, you would have paid a stock-split-adjusted price of $0.76 per share. This means that you would be earning a yield on cost (the yield on the price you paid) of 388%.

This means that if you had invested $12,900 into its shares during its IPO, you would be generating an income of $50,000 in dividends in 2020.

But what about the future? While very few shares will have as much success as CSL, I believe there are some out there which have the potential to grow their earnings and dividends at a very strong rate over the next couple of decades.

Two that jump out at me are electronic design software company Altium Limited (ASX: ALU) and lottery ticket seller Jumbo Interactive Ltd (ASX: JIN). I believe both could be well worth consider as buy and hold investments.

More reading

• Why I would invest $100,000 across these fantastic ASX shares
• Buy these beaten down ASX 200 shares after the market selloff
• 3 ASX blue chip shares I’d buy with $3,000 right now
• 2 solid ASX dividend shares for income in 2020
• Why I would buy and hold Altium and these top ASX 200 shares

James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and recommends Altium. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of CSL Ltd. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. recommends Jumbo Interactive Limited. The Motley Fool Australia owns shares of and has recommended Jumbo Interactive Limited and 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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It can be quite difficult to find ASX shares at cheap prices that aren’t value traps.

When a business looks cheap, it’s probably cheap for a reason. But there are businesses out there that could be too cheap for the underlying growth that they may produce over the next few years.

With that in mind, I think these ASX shares are now trading at crazy cheap prices:

Citadel Group Ltd (ASX: CGL)

I think Citadel is cheap because it’s trading at 15x FY22’s estimated earnings at the current Citadel share price.

The ASX software share is the market leader in healthcare software for pathology and cancer care in Australia. After the acquisition of UK business Wellbeing it is the leader in healthcare software in the UK for radiology and maternity. Management believe there are significant cross-selling opportunities with an estimated market opportunity of $250 million to $350 million of total contract value revenue in tenders over the next two to three years.

The current business is strong with a (pro forma) gross profit margin of 65.3% and (pro forma) recurring revenue being 77% of total revenue. It’s a defensive business with limited impact from COVID-19.

I believe the Wellbeing acquisition is transformative for Citadel. It opens up more growth opportunities, but it also increases the quality of the earnings in my opinion.

It could acquire more bolt-on acquisitions that make sense over time, diversifying the ASX share’s earnings further.

Vitalharvest Freehold Trust (ASX: VTH)

I think Vitalharvest is cheap because it’s trading at a 17% discount to the net asset value (NAV) at 30 June 2020.

It’s an agricultural real estate investment trust (REIT). It owns large berry and citrus farms which are leased to Costa Group Holdings Ltd (ASX: CGC), the biggest Australian horticultural company.

The ASX share receives fixed rent and variable rent from Costa. The variable rent is a 25% share of the profit of the farms that Costa rents. The drought and other issues were a big drain on profit in FY20, but it seems that is about to get better with the drought conditions improving.

New manager Primewest Group Ltd (ASX: PWG) is looking to acquire new properties that will pay more consistent rent. Properties used for food processing, storage and logistics could be more reliable. More predictable rent could be good for the Vitalharvest share price and the distribution.

The ASX share has a trailing distribution yield of 6.3%. However, I think the distribution will recover in FY21 as conditions improve.

PM Capital Global Opportunities Fund Ltd (ASX: PGF)

I think PM Capital Global Opportunities Fund is cheap because it’s trading at a 21% discount to the pre-tax net tangible assets (NTA) per share at 28 August 2020.

The listed investment company (LIC) looks to invest in global businesses that it thinks are long-term opportunities.

It owns quite a diverse portfolio of businesses. Some of the ones it owns include homebuilder Cairn Homes, Bank of America, Visa, casino business MGM China Holdings, alternative asset manager KKR & Co, Siemens and copper miner Freeport-McMoRan.

Many of the holdings that it owns could rebound strongly when the global economy recovers from COVID-19 impacts.

I like that the ASX share has almost a third of its portfolio invested in European shares, which provides attractive diversification.

The LIC recently launched a share buyback and it also increased its dividend by 25% to 2.5 cents per share. At the current PM Capital Global Opportunities Fund share price it has a grossed-up dividend yield of 6.8%. That’s a solid yield in the current low interest environment.

Foolish takeaway

Each of these ASX shares look attractively cheap to me. I think they could all beat the ASX over the next few years. I think Citadel will produce the biggest returns over the next few years because of its international growth and high margins. However, the other two look like good options for income investors.

More reading

• 2 ASX shares I’d buy in a heartbeat
• 3 ASX shares to buy for international growth
• Why it makes sense to invest in ASX tech shares
• Beat low interest rates with these ASX dividend shares
• 4 ASX growth shares I’d buy in September

Motley Fool contributor Tristan Harrison owns shares of PM Capital Global Opportunities Fund Ltd. The Motley Fool Australia owns shares of and has recommended COSTA GRP FPO. The Motley Fool Australia has recommended Citadel 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.

The post 3 ASX shares now trading at crazy cheap prices appeared first on Motley Fool Australia.

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If you’re currently constructing a $100,000 portfolio, you’ll no doubt be on the lookout for investment ideas.

To help you on your way, I have picked out a couple of shares which I think could be excellent core holdings.

Here’s why I think investing some of these funds across these ASX shares would be a smart move:

CSL Limited (ASX: CSL)

I think constructing a portfolio around this biotherapeutics company would be a very good starting point. Especially given that its shares are down almost 20% from their 52-week high. I feel this has left them trading at an attractive level for long term investors.

This is because I continue to believe CSL can be a market beater for a long time to come. This is thanks to the strong demand for immunoglobulins, its pipeline of potentially lucrative therapies, and recent acquisitions. I expect this to support solid earnings growth over the next decade and drive the CSL share price higher over the 2020s.

Xero Limited (ASX: XRO)

Xero could be a good long term option as well. The cloud-based business and accounting software provider was on form again in FY 2020. It delivered a 30% increase in operating revenue to NZ$718.2 million thanks to solid subscriber growth across all markets. Things were even better further down the income statement, with its margin expansion leading to a 52% increase in EBITDA to NZ$139.17 million.

While FY 2021 is likely to be impacted by the pandemic and could stifle its growth somewhat, its subscriber numbers continue to grow. At its annual general meeting it revealed that it added 96,000 net subscriber additions to its platform between April and through to 31 July. This took its subscribers to a total of 2.38 million at the end of the period. The good news is this is still scratching at the surface of its significant global market opportunity. And thanks to the quality and stickiness of its product, I expect it to capture a big slice of it over the next decade.

More reading

• ASX All Technology Index swells with new additions
• Buy these beaten down ASX 200 shares after the market selloff
• 3 ASX growth shares to buy after the market selloff
• After the crash, is it time to buy this Nasdaq ETF?
• Why the Afterpay share price crashed 9% lower 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 CSL Ltd. and Xero. 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 Why I would invest $100,000 across these fantastic ASX shares appeared first on Motley Fool Australia.

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Dividends are one of the nicest things you can get from owning ASX shares. As true passive income, dividends from a quality income share will hit your account every 6 months like clockwork. They don’t discriminate on age, gender, occupation, social status or nationality (except for tax reasons, of course). If you own the shares, you will get the dividends, period.

Whil this is a wonderful process in itself, dividends are not the end of the journey of wealth creation, they are only part of the means to the end.

Let me explain.

When you receive a dividend, you have 2 choices as to what to do with the money. Some (usually young and inexperienced) investors might treat the dividends as a windfall, ‘free money’ if you will. They will go out and buy themselves something special, a reward for their discipline in holding an income-producing asset.

That’s totally fine, of course. It’s a free market and a free country. Everyone’s money is perfectly entitled to be spent on anything its owner (legally) desires.

Dividend lessons from the past

But there’s another way to spend your dividends. I think it’s best illustrated by this quote from one of the best books on investing ever written: George S. Classon’s 1926 classic The Richest Man in Babylon. A young man is telling his older teacher about his first successful investment, upon which his teacher asks him what he is doing with the proceeds (or dividends if you will). He replies:

 I do have a great feast with honey and fine wine and spiced cake. Also I have bought me a scarlet tunic.

Upon hearing this, the young lad’s teacher responds with the following:

You do eat the children of your savings. Then how do you expect them to work for you? And how can they have children that will also work for you? First get thee an army of golden slaves and then many a rich banquet may you enjoy without regret.

Pertinent advice indeed. Dividends are a powerful force that you should aim to harness over many, many years. Cycling your dividends back into more shares is one of the best ways you can turbocharge the compounding process. Pulling your dividends away from your investments only kneecaps your portfolio’s potential returns. So if you’re not reinvesting your dividends, I would strongly encourage you to reconsider, unless you have already retired of course. Some companies even offer the chance to do so automatically with a Dividend Reinvestment Plan (DRiP). As Classon so eloquently put it, you’re ‘eating the children of your savings’ otherwise and forgoing the chance of having your own ‘rich banquet’ as soon as possible.

More reading

• Why I would invest $100,000 across these fantastic ASX shares
• These were the best performing ASX 200 shares last week
• These were the worst performing ASX 200 shares last week
• 3 unstoppable ASX shares to hold for the next decade
• ASX All Technology Index swells with new additions

Motley Fool contributor Sebastian Bowen 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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After a strong start to the week, the S&P/ASX 200 Index (ASX: XJO) gave back all its gains and more on Friday.

A sizeable decline on the final day of the week led to the index recording a 2.4% weekly decline to end it at 5925.5 points.

Fortunately, not all shares dropped lower with the market last week. Here’s why these were the best performers on the ASX 200 over the period:

SKYCITY Entertainment Group Limited (ASX: SKC)

The SKYCITY share price was the best performer on the ASX 200 last week with an 11.7% gain. Investors were buying the casino and resorts operator’s shares following its FY 2020 results. While SKYCITY posted a sharp decline in normalised earnings, its trading update got investors excited. Management revealed that local gaming in Auckland and Hamilton is now ahead of pre-COVID levels and local gaming in Adelaide is now consistent with pre-COVID 19 levels. In light of this, the company expects to deliver profit growth in FY 2021.

Lendlease Group (ASX: LLC)

The Lendlease share price wasn’t far behind with a strong 9.1% gain over the period. The catalyst for this was a positive reaction to the international property and infrastructure company’s strategy update. One leading broker that was pleased with its new strategy was Goldman Sachs. Its analysts retained their conviction buy rating and lifted their price target on its shares to $16.37.

AMP Limited (ASX: AMP)

The AMP share price was a positive performer last week and jumped 8.5% higher. Investors were buying the financial services company’s shares amid speculation it has received offers for some of its assets. This could see AMP breaking up its business and selling off parts if it creates value for shareholders.

Costa Group Holdings Ltd (ASX: CGC)

The Costa share price was on form and climbed 8.5% higher last week. Investors have been buying the horticulture company’s shares since the release of its half year results on Friday of last week. For the six months ended 28 June 2020, Costa posted a 6.8% increase in revenue to $612.4 million and a 12% jump in net profit after tax to $45.8 million. This was driven by a very strong performance from its international business.

More reading

• ASX 200 down 2.75%: Afterpay & Appen sink lower, SKYCITY pushes higher
• Why Brainchip, De Grey, Mesoblast, & SKYCITY shares are pushing higher
• Are IOOF shares in the buy zone today after the MLC acquisition?
• Why I think the AMP share price is finally looking good enough to buy
• ASX 200 rises 0.8%, investors bet on SkyCity

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended COSTA GRP FPO. The Motley Fool Australia has recommended Sky City Entertainment 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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A very disappointing end to the week led to the S&P/ASX 200 Index (ASX: XJO) recording a sizeable decline last week. The benchmark index dropped 2.4% to end the period at 5,925.5 points.

While a good number of shares sank lower with the market, a few fell more than most. Here’s why these were the worst performers on the ASX 200 last week:

IOOF Holdings Limited (ASX: IFL)

The IOOF share price was the worst performer on the ASX 200 last week with a disappointing 22.5% decline. Investors were selling the financial services company’s shares following the completion of the institutional component of its $1,040 million capital raising. IOOF raised a total of $734 million from institutional investors at a sizeable 24.4% discount of $3.50. These funds are being raised to partly fund the acquisition of the National Australia Bank Ltd (ASX: NAB) wealth business, MLC Wealth for $1,440 million.

Afterpay Ltd (ASX: APT)

The Afterpay share price was uncharacteristically out of form last week and sank 11.9% lower. The payments company’s shares came under pressure for a couple of reasons. The first was an announcement by PayPal which revealed its plans to launch of Pay in 4 in the United States. Pay in 4 is a buy now pay later offering which allows consumers to pay for items in four interest-free instalments. Also weighing on the company’s shares was a broad tech selloff on Friday.

Platinum Asset Management Ltd (ASX: PTM)

The Platinum share price wasn’t far behind with a 10.1% decline last week. The majority of this decline came on Friday during the market selloff.  In addition to this, a week earlier Macquarie slapped an underperform rating and $3.40 price target on Platinum’s shares. It doesn’t believe its premium over listed peers is justified and expects this to narrow in the near future.

Medibank Private Ltd (ASX: MPL)

The Medibank share price was out of form and sank 9.6% lower last week. This appears to have been driven by general market weakness and its shares trading ex-dividend. Eligible Medibank shareholders can now look forward to receiving its 6.3 cents per share fully franked final dividend on 24 September.

More reading

• ASX All Technology Index swells with new additions
• ASX 200 plunges 3.1%, Afterpay suffers
• Why the Transurban share price is outperforming today
• Every bull run has pullbacks. Why today’s share price falls are ‘healthy’
• Why ASX investors shouldn’t fear a market crash

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of AFTERPAY T FPO. 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 ASX shares that look unstoppable. They could be worth holding for the next decade.

The next 12 months of share price movements is unpredictable. The next week is unpredictable. But when you give yourself and the business a long time, the ASX share could produce enormous growth.

Sometimes it just takes time for a growth share to grow into its valuation. When Facebook listed some investors thought it was expensive. Maybe it was. But now the share price is close to US$300.

A business like CSL Limited (ASX: CSL) has regularly been called expensive. It’s gone up a lot over the past five years.

With growth shares it’s important to think about where the profit will be in five years, not just in one year from now.

Businesses growing strongly now could keep rapidly growing revenue and profit. Today’s prices could seem very cheap in a decade from now.

I think these unstoppable ASX shares could be long-term buys:

Temple & Webster Group Ltd (ASX: TPW)

Temple & Webster has been one of the best-performing ASX shares since the COVID-19 crash. Since 23 March 2020 the Temple & Webster share price has gone up 496%.

I think the rise is largely justified. As an online retailer it is well positioned to help households buy furniture and homewares during the shift to online shopping.

The company was growing well before COVID-19, but the last six months of FY20 saw very strong trading.

In FY20 full year revenue was up 74% to $176.3 million, with the fourth quarter revenue rose by 130%. The business was cashflow positive and it grew earnings before interest, tax, depreciation and amortisation (EBITDA) by 467% to $8.5 million. Excluding an income tax benefit of $5.9 million, it also generated a net profit after tax (NPAT) of $6 million.

I think the ASX share is very scalable. Over the next decade it has a long growth runway. In FY21 to 27 August 2020 the company had seen year on year revenue growth of 161% with an EBITDA contribution of around $6 million for just two months.

At the current Temple & Webster share price it’s trading at 45x FY22’s estimated earnings.

City Chic Collective Ltd (ASX: CCX)

The plus-size women’s apparel, accessories and footwear retailer is doing a really good job of expanding its presence overseas.

In FY20 it reported that 42% of its global sales were in the northern hemisphere, up from 20% in FY19. FY20 saw sales revenue growth of 31% to $194.5 million.

I’m bullish about City Chic’s long-term prospects because of its global growth plans and its expanding online presence. In FY20 alone it saw online website growth of 113.5% compared to FY19. In FY20 online sales made up 65% of total sales, up from 44% in FY19.

The ASX share has a good chance of becoming a large player in the US after making a few acquisitions of financially distressed competitors. Catherines is the latest business that City Chic is looking to buy and turn into an online-only business. The US is a huge market and online fulfilment should have higher profit margins than having a national store network.

At the current City Chic share price it’s trading at 22x FY22’s estimated earnings.

Kogan.com Ltd (ASX: KGN)

Kogan.com is another business that has performed exceptionally well since the big crash. From 16 March 2020 to today, the Kogan.com share price has risen by 409%.

It’s another online business which has seen a massive increase in spending during this COVID-19 period. Not only does it sell a wide variety of retail products, but it also offers other services like insurance, superannuation and telecommunications.

In FY20, gross sales went up 39.3% to $768.9 million, gross profit rose 39.6% to $126.5 million, adjusted EBITDA climbed 57.6% to $49.7 million and NPAT grew 55.9% to $26.8 million. The second half of FY20 saw adjusted EBITDA grow by 74.1%.

July 2020 was an incredible month for the ecommerce ASX share – gross sales increased by 110%, gross profit grew 160% and Kogan.com generated more than $10 million of adjusted EBITDA.

If Kogan.com can convince more of its growing customer base to sign up to be members and use other services then its profit margins could steadily climb.

At the current Kogan.com share price it’s trading at 40x FY22’s estimated earnings after Friday’s decline.

Foolish takeaway

I think all three of these ASX shares look like they could be good buys today for their long-term growth potential. Low interest rates justify some of the higher prices we’re seeing. Kogan.com has the potential to become a much larger business if it can convert more of its retail customers to its other services. However, I’d be happy to buy all three at the current prices for the long-term.

More reading

• Every bull run has pullbacks. Why today’s share price falls are ‘healthy’
• Why Appen, Kogan, OZ Minerals, & ResMed shares are dropping lower
• Why the Afterpay share price crashed 9% lower today
• Is the Kogan.com share price a strong buy?
• Why a recession shouldn’t matter for the ASX share market

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., Kogan.com ltd, and Temple & Webster Group Ltd. The Motley Fool Australia has recommended Kogan.com ltd and 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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The ASX’s newest index, the S&P/ASX All Technology Index (INDEXASX: XTX) is capping off an inaugural 6 months for the ages. Since it first listed back in February, the value of this index has climbed from approximately 1,800 points on listing to 2,340 today. Mind you, that period includes the majority of the March share market crash that hit the ASX earlier in the year.

Designed to give a more direct exposure to the tech shares on the ASX over the previously-used S&P/ASX 200 Information Technology Index (INDEXASX: XIJ), the All Technology Index has been buoyed by the massive outperformance of its top shares like Afterpay Ltd (ASX: APT) and Xero Limited (ASX: XRO) over the past few months.

But according to reporting in today’s Australian Financial Review (AFR), this index is about to get another boost. Today heralds this index’s quarterly rebalancing (a process that all indices undergo periodically). And according to the AFR, the XTX is about to get 8 new members. This process will swell the index to a total market capitalisation of more than $143 billion, up from $110 billion at the last rebalancing.

None of the index’s current top 10 holdings are set to change. These include Afterpay as well as Xero, Seek Limited (ASX: SEK), Computershare Limited (ASX: CPU) and REA Group Limited (ASX: REA).

Joining the index will be Dicker Data Ltd (ASX: DDR), Brainchip Holdings Ltd (ASX: BRN), Envirosuit Ltd (ASX: EVS), Mach7 Technologies Ltd (ASX: M7T), Novonix Ltd (ASX: NVX), Splitit Ltd (ASX: SPT), Sezzle Inc (ASX: SZL) and Whispir Ltd (ASX: WSP).

Is ASX tech a buy today?

Since the XTX is an index, you can’t buy shares in it directly. But luckily, you can buy shares in an exchange-traded fund (ETF) that tracks this index. The BetaShares S&P/ASX Australian Technology ETF (ASX: ATEC) does just that, holding all 50 companies (soon to be 58). Thus, if you are interested in getting a slice of the action from the ASX tech space, this ETF is a great place to start.

I do think the ‘tech sector’ has run a bit in recent months, especially since ATEC units have appreciated 27.7% since first listing back in March. But I’m also bullish on the Aussie tech sector in general, and so I think this ETF would make a great long-term investment, especially for a passive investor. As the index rebalances, it prunes out the losers and adds to the winners, which I think is a great advantage for the tech space in particular. ATEC does charge a management fee of 0.48% per annum, something to keep in mind.

More reading

• ASX 200 plunges 3.1%, Afterpay suffers
• The Envirosuite share price dropped 5% today. Here’s why
• The best dividend shares to buy today
• 3 ASX growth shares to buy after the market selloff
• Why the Transurban share price is outperforming today

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 recommends MACH7 FPO and Whispir Ltd. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Xero. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. recommends Sezzle Inc. The Motley Fool Australia owns shares of and has recommended Dicker Data Limited. The Motley Fool Australia owns shares of AFTERPAY T FPO. The Motley Fool Australia has recommended MACH7 FPO, REA Group Limited, SEEK Limited, Sezzle Inc, and Whispir 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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The S&P/ASX 200 Index (ASX: XJO) dropped by 3.06% today to 5,925 points.

The sell-off started overseas with the NASDAQ falling by around 5%. Shares like Apple and Microsoft fell by 8% and 6.2% respectively. The broader S&P 500 Index dropped 3.5%. 

ASX 200 shares sold off

There was widespread selling in the ASX 200 today.

The worst affected shares were the high growth technology shares. The WiseTech Global Ltd (ASX: WTC) share price fell 7.3%, the Appen Ltd (ASX: APX) share price dropped 7.1%, the Nextdc Ltd (ASX: NXT) share price declined 6.8% and the Afterpay Ltd (ASX: APT) share price sank by 6.7%.

Australia’s biggest ASX 200 businesses weren’t immune to the falls. The Australia and New Zealand Banking Group (ASX: ANZ) share price dropped 3%, the BHP Group Ltd (ASX: BHP) share price fell 3.8%, the Commonwealth Bank of Australia (ASX: CBA) share price declined 2.1% and the Westpac Banking Corp (ASX: WBC) share price dropped 3%.

Fortescue Metals Group Limited (ASX: FMG)

Today it was announced that Fortescue would be entering the ASX 20, but the mining giant also released some market sensitive news as well.

It has received approval from WA to increase the material handling capacity of its Herb Elliot Port facility from 175 million tonnes per annum to 210mtpa on a staged basis. This includes 22mtpa of magnetite concentrate, which will be produced from the Iron Bridge magnetite operations with the first ore to be shipped from Iron Bridge in mid-2022.

The revised licence utilises the capacity of Fortescue’s existing port infrastructure, comprising five berths and three ship loaders and supports the company’s FY21 iron ore shipments guidance of 175mt to 180mt.

Elizabeth Gains, CEO of Fortescue, said: “Fortescue’s port operations are world leading and we have continually demonstrated our capacity to optimise the efficiency and productivity of our port infrastructure to deliver iron ore to our customers.

“We will continue to ensure that Fortescue remains a significant long-term contributor to the state and national economies through growth and development of our iron ore assets, job creation and investment.”

Fortescue also said it would ensure no net increase of dust emissions from the increase of throughput of the port by installing and implementing additional controls.

Index changes

There were a number of changes announced for the S&P/ASX Indices today, which will be implemented later this month.

Coles Group Limited (ASX: COL) and Fortescue made it into the ASX 20, with Scentre Group (ASX: SCG) and Suncorp Group Ltd (ASX: SUN) being demoted.

There were no changes in the ASX 50. In the ASX 100, Appen Ltd (ASX: APX) and Fisher & Paykel Healthcare Corp Ltd (ASX: FPH) will join the index with Cimic Group Ltd (ASX: CIM) and Virgin Money UK PLC (ASX: VUK) getting kicked out.

The ASX 200 also saw numerous changes. Auckland International Airport Limited (ASX: AIA), AUB Group Ltd (ASX: AUB), Ramelius Resources Limited (ASX: RMS), Westgold Resources Ltd (ASX: WGX) and Zip Co Ltd (ASX: Z1P) will make it into the ASX 200.

Leaving the ASX 200 were the following: McMillan Shakespeare Limited (ASX: MMS), New Hope Corporation Limited (ASX: NHC), Ooh!Media Limited (ASX: OML), Orocobre Limited (ASX: ORE) and Southern Cross Media Group Limited (ASX: SXL).

S&P Dow Jones Indices said that these changes would be effective at the open of trading on 21 September 2020.

More reading

• ASX All Technology Index swells with new additions
• Buy these beaten down ASX 200 shares after the market selloff
• The best dividend shares to buy today
• Insiders have been buying Fortescue and this ASX share
• Top brokers are urging you to buy these ASX stocks in this market meltdown

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 WiseTech Global and ZIPCOLTD FPO. The Motley Fool Australia owns shares of AFTERPAY T FPO, Appen Ltd, and COLESGROUP DEF SET. The Motley Fool Australia has recommended oOh!Media 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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