The ASX is facing another day in the red with the S&P 500 seemingly finishing in the red again.
Some people believe that this is just a short-term correction and that prices will stop falling soon. If the trade war does stop then you can imagine prices would quickly revert some of their declines.
So with that in mind, here are four ASX shares to buy with $20,000 in this volatility:
Challenger Ltd (ASX: CGF) – $6,000
Challenger is my favourite financial business on the ASX and it’s usually one of the ones that are hardest hit during market dips. Its huge balance sheet is reliant on asset prices holding up.
But, like all crises, this one shall pass – meaning Challenger will recover. In-fact, the demand for annuities could increase due to market crashes because retirees are seeking a safer source of income.
Challenger is currently trading at under 14x FY19’s estimated earnings with a grossed-up dividend yield of 5.4%.
BetaShares Asia Technology Tigers ETF (ASX: ASIA) – $4,000
Despite the arrest of the Huawei executive, the trade war between the US and China is currently on hold for now. You would think that the trade war will eventually end, even if it takes a year or two. Don’t forget, we are investing with a longer timeframe in mind than just a couple of years.
I think it makes sense to buy this Asian exchange-traded fund (ETF) for two reasons.
Firstly, the trade war may not hurt the constituent companies as much as expected. Many of the businesses are listed outside of China. The ones inside China generate a lot of their earnings from domestic sources or from the rest of the globe that isn’t the US.
The other good reason to consider it is the valuation. According to BetaShares, at the end of October this ETF was trading with a price/earnings ratio of 11 with a trailing dividend yield of 1.5%.
However, I wouldn’t make it a big portion of your portfolio as the government and governance risks are higher than a typical ETF.
Australia might be seen by many global investors as a safe haven away from US and Asian troubles. Therefore, the ASX may not be hit as hard and opportunities may not be as good.
It might be a good idea to invest with quality globally-focused investment managers who have long-term track records of beating the market after fees. Importantly, WAM Global and Magellan Global have high levels of cash which somewhat protects the values of their portfolios and provides ammunition to buy some beaten-down opportunities.
WAM Global aims for small and medium global businesses whereas Magellan Global targets global businesses with large market caps.
I believe the value offered by all four of these shares is compelling and I think they can all beat the market. I already own shares of all four and I’d happily buy more on a day like today.
Challenger is the only individual company on my list, but there are other ASX businesses out there trading at very attractive values.
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Motley Fool contributor Tristan Harrison owns shares of BetaShares Asia Technology Tigers ETF, Challenger Limited, MAGLOBTRST UNITS, and WAMGLOBAL FPO. The Motley Fool Australia owns shares of and has recommended Challenger Limited. The Motley Fool Australia owns shares of BetaShares Asia Technology Tigers 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.