4 reasons to stick with your ASX Ltd shareholding

The share price of ASX Ltd (ASX:ASX) has underperformed peers but the group's profits are heading higher.

| More on:
a woman

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The owner and operator of the Australian Stock Exchange, ASX Ltd (ASX: ASX) has been a bit of a disappointment to shareholders from a price point of view over the past five years.

While the S&P/ASX 200 (INDEXASX: XJO) has gained 14.4%, the ASX Ltd is up just 2.5%. In comparison, two of the ASX Ltd's peers – companies which are also closely linked to trading volumes and equity market levels – have not only outperformed the ASX Ltd but also the index.

Those peers, leading share registry and investor services firm Computershare Limited (ASX: CPU) is up 15.3% in the last half decade; while trading software and wealth management systems provider Iress Ltd (ASX: IRE) is up 18.7%.

The lacklustre performance could have some investors questioning whether the ASX Ltd has lost its mojo. Here are four reasons to be positive about the exchange's future.

  • The financial results for FY 2014 were positive with the group achieving record revenues and earnings. Revenue was up 6.6% to $658.3 million, net profit after tax was up 10% to $383.2 million and dividends were up 4.6% to 178.1 cents per share.
  • The Initial Public Offering (IPO) market was strong in FY 2014 with companies raising $28 billion. In dollar terms, IPO revenue was the largest contributor to growth for the group. That trend looks set to continue in FY 2015 with a number of IPOs having either already occurred or set to take place.
  • The ASX continues to innovate and expand its offering thereby maximising the usage of its exchange assets. One recent development has been the creation of a platform called mFunds which allows investors to buy and sell units in managed funds – the ASX already has 61 funds on mFunds!
  • Last week, ASX Ltd proposed to invest $65 million in Yieldbrokers in return for a 49% shareholding. Yieldbrokers is a firm that operates an electronic market for around 800 Australian and New Zealand debt securities and interest rate derivatives. This acquisition is another step in the growth direction for the exchange and its shareholders.

Motley Fool contributor Tim McArthur owns shares in Iress Ltd. The Motley Fool owns shares in Computershare.

More on ⏸️ Investing

Close up of baby looking puzzled
Retail Shares

What has happened to the Baby Bunting (ASX:BBN) share price this year?

It's been a volatile year so far for the Aussie nursery retailer. We take a closer look

Read more »

woman holds sign saying 'we need change' at climate change protest
ETFs

3 ASX ETFs that invest in companies fighting climate change

If you want to shift some of your investments into more ethical companies, exchange-traded funds can offer a good option

Read more »

a jewellery store attendant stands at a cabinet displaying opulent necklaces and earrings featuring diamonds and precious stones.
⏸️ Investing

The Michael Hill (ASX: MHJ) share price poised for growth

Investors will be keeping an eye on the Michael Hill International Limited (ASX: MHJ) share price today. The keen interest…

Read more »

ASX shares buy unstoppable asx share price represented by man in superman cape pointing skyward
⏸️ Investing

The Atomos (ASX:AMS) share price is up 15% in a week

The Atomos (ASX: AMS) share price has surged 15% this week. Let's look at what's ahead as the company build…

Read more »

Two people in suits arm wrestle on a black and white chess board.
Retail Shares

How does the Temple & Webster (ASX:TPW) share price stack up against Nick Scali (ASX:NCK)?

How does the Temple & Webster (ASX: TPW) share price stack up against rival furniture retailer Nick Scali Limited (ASX:…

Read more »

A medical researcher works on a bichip, indicating share price movement in ASX tech companies
Healthcare Shares

The Aroa (ASX:ARX) share price has surged 60% since its IPO

The Aroa (ASX:ARX) share price has surged 60% since the Polynovo (ASX: PNV) competitor listed on the ASX in July.…

Read more »

asx investor daydreaming about US shares
⏸️ How to Invest

How to buy US shares from Australia right now

If you have been wondering how to buy US shares from Australia to gain exposure from the highly topical market,…

Read more »

⏸️ Investing

Why Fox (NASDAQ:FOX) might hurt News Corp (ASX:NWS) shareholders

News Corporation (ASX: NWS) might be facing some existential threats from its American cousins over the riots on 6 January

Read more »