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ASX investors chasing yield – again

Australia has welcomed a new prime minister. The Dow Jones has spiked about 2% since Monday. China has moved to quell debt and liquidity fears. The S&P/ASX 200 index (Index: ^AXJO) (ASX: XJO) is set for its third consecutive day of gains.

And now ASX investors are resuming the chase for yield seen early this year.

No bargains, please, just brand names

Between Wednesday and Thursday this week, Commonwealth Bank (ASX: CBA) and Westpac (ASX: WBC) gained nearly 4% and 3% respectively. For their part, Woolworths (ASX: WOW) and Wesfarmers (ASX: WES) rose 3.7% and 2.8%.

At the risk of reading too much into a short-term trend, it seems investors just now prefer brand names to bargains.

Despite the market slide of recent weeks, the obvious plays among banks and consumer staples aren’t cheap – most are still trading for fairly lofty valuations. (Sure, the dividends each pay will likely beat term deposit rates, but it’s still important not to ignore what the long-term returns and the overall opportunity cost might look like.)

A few more exciting opportunities

Investors looking for growth and capital appreciation might be well advised to look to the smaller end of the market – off the beaten path. The ASX small cap sector offers a number of bargains and interesting investment ideas, from online lottery company Jumbo Interactive (ASX: JIN) to innovative map company Nearmap (ASX: NEA), as well as receivables management company Credit Corp (ASX: CCP), which is expanding into the U.S.

In fact, some of Australia’s most promising small companies are still flying under the radar. Discover two exciting ASX investments in our brand-new special FREE report, “2 Small Cap Superstars”. Click here now, it’s free!

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Motley Fool contributor Catherine Baab-Muguira does not own shares in any company mentioned here.

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