The ASX is throwing up a lot of different investment opportunities at the moment. The ASX Index as a whole is fairly close to its multi-year high, but there are a number of ASX shares that look attractive to me. Only by investing differently to most people can you beat the average. Of course, getting the average result for most people would be perfectly acceptable. An investment in BetaShares Australia 200 ETF (ASX: A200) would do quite well for Aussie investors. But I think there are a number of investments that could beat the ASX’s returns over the next few…
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The ASX is throwing up a lot of different investment opportunities at the moment. The ASX Index as a whole is fairly close to its multi-year high, but there are a number of ASX shares that look attractive to me.
Only by investing differently to most people can you beat the average. Of course, getting the average result for most people would be perfectly acceptable. An investment in BetaShares Australia 200 ETF (ASX: A200) would do quite well for Aussie investors.
But I think there are a number of investments that could beat the ASX’s returns over the next few years:
WAM Global Limited (ASX: WGB) – $3,500
WAM Global is the listed investment company (LIC) in the Wilson Asset Management stable that invests internationally. If it is as successful as WAM Capital Limited (ASX: WAM) over the long-term then WAM Global will do very well.
Until the February 2019 NTA report is announced we won’t officially know the discount to the net tangible assets per share it’s trading at, but it seems as though it’s trading at a discount of around 10%.
WAM Chairman and CIO Geoff Wilson has been busily buying WAM Global shares over last week, which says to me it’s trading at good value today.
Vanguard FTSE Asia Ex Japan Shares Index ETF (ASX: VAE) – $3,000
Charlie Munger himself has said that China may offer the best investment opportunities because businesses are valued at a cheaper price there compared to their western counterparts.
This Vanguard Asian ETF has around 850 holdings, which mostly eliminates individual share risk. Although some people would argue that Chinese businesses have a high level of government and governance risks.
However, with the index as a whole having a price/earnings ratio of only 12x it seems cheap, particularly considering its earnings growth rate is 11.5% and the return on equity (ROE) ratio is 15.8% according to Vanguard.
Naos Emerging Opportunities Company Ltd (ASX: NCC) – $2,000
I really respect an investment manager who is willing to make high-conviction investments in shares that could beat the market. If you’re going to be different from the index, why not really go for it? What good is having your 40th best idea in the portfolio?
Small caps also have the potential to beat the general market return over time, particularly because they are covered less by analysts and so therefore there is a higher chance of valuation mispricing.
All of the above is how Naos invests through this listed investment company (LIC).
Since inception it has beaten the ASX small cap index by 7% per annum before fees. With an NTA of $1.13 at the end of February, the Naos LIC was trading at a discount of 5.3%, which partly compensates us for the volatility/risk that illiquidity can create with microcap shares in downturns.
It currently offers a trailing grossed-up dividend yield of 9.8%.
Costa Group Holdings Ltd (ASX: CGC) – $1,500
It’s getting harder to outperform with mid-cap and large-cap shares at the moment, particularly with the economy faltering.
However, Costa could be one of the ones to outperform the market with the company predicting underlying profit growth of ‘at least 30%’ in 2019 and food prices returning to normal.
At around 21x FY19’s estimated earnings, I think Costa looks pretty attractive right now.
I think all four of the above ideas are capable of beating the ASX Index’s return over the next few years. At the current prices it’s hard to pick a favourite idea due to the discounts or low valuations they are each trading at.
If I had another $2,000 to invest I consider putting it into one of these top ASX shares.
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Motley Fool contributor Tristan Harrison owns shares of COSTA GRP FPO, VANGUARD FTSE ASIA EX JAPAN SHARES INDEX ETF, and WAMGLOBAL FPO. The Motley Fool Australia owns shares of and has recommended COSTA GRP 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.