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Where I’d invest $10,000 into ASX shares

If I were lucky enough to receive $10,000 to invest into ASX shares I would want to make sure I invested in the right businesses.

To make it super simple, someone could just invest in an exchange-trade fund (ETF) like iShares S&P 500 ETF (ASX: IVV) or Vanguard MSCI Index International Shares ETF (ASX: VGS).

However, if I were going to invest money I would want to try to buy things at strategic value such as:

WAM Global Limited (ASX: WGB) – $3,000

This is a listed investment company (LIC) that invests in global growth shares that the investment team at Wilson Asset Management (WAM) believe are undervalued.

Most of its top holdings are very recognisable like Alphabet, American Express, Danone, Diageo, HCA Healthcare, Logitech and Reckitt Benckiser.

Other than diversification away from Australia, I think WAM Global is a good one to consider right now because it’s trading at a discount of around 13% to the underlying assets at the end of March 2019. I think the discount is very attractive, despite the ongoing fees charged.

Washington H. Soul Pattinson and Co. Ltd (ASX: SOL) – $3,000

I think that Soul Patts might be the best business on the ASX. It might not have the highest profit margins, return on equity or any other statistic, but the fact that it’s an investment conglomerate means it has excellent optionality. The fact it’s able and willing to invest in other ASX shares and own private businesses & property outright means it can put money to work anywhere.

Soul Patts has a diversified yet concentrated portfolio of assets it acquired a long time ago and is now reaping the benefits with pleasing dividends from its investments.

The recent fall in the share price provides a much better entry price for potential investors. Soul Patts’ reliable dividend is funded by the net cash the business generates from the dividends received, less its operating expenses.

It currently has a grossed-up dividend yield of 3.4%.

Costa Group Holdings Ltd (ASX: CGC) – $1,500

Costa has also seen its share price fall recently because of a disappointing 2018, but I think 2019 and onwards could see things turn around for the horticultural business that grows berries, tomatoes, mushrooms, citrus fruit and avocados.

Asia is a wonderful opportunity for the company over the longer-term. It can become a large grower in China and there is a very large potential customer base that would like to buy quality produce.

If Costa can grow its underlying profit by the guided 30% or more this year it could be a pleasing market beater in 2019 and beyond.

It’s currently trading at 20x FY20’s estimated earnings.

NAOS Small Cap Opportunities Company Ltd (ASX: NSC) – $2,500

This is another LIC, but this one invests for the long-term in small caps on the ASX such as MNF Group Ltd (ASX: MNF).

It’s trading at a discount of 18% to the pre-tax NTA declared at the end of March 2019 and it’s currently going through a share buy-back to try to close up the discount, so it looks cheap to me. The grossed-up dividend yield of 12.9% also looks very interesting if it can be maintained.

Foolish takeaway

At the current prices I think each of the above shares can beat the ASX index over the next five years, it’s hard to pick a winner.

If I had even more money to invest I would consider one of these top ASX shares to go with my picks above.

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Motley Fool contributor Tristan Harrison owns shares of COSTA GRP FPO, NAO SMLCAP FPO, WAMGLOBAL FPO, and Washington H. Soul Pattinson and Company Limited. The Motley Fool Australia owns shares of and has recommended COSTA GRP FPO and Washington H. Soul Pattinson and Company Limited. The Motley Fool Australia has recommended Vanguard MSCI Index International Shares 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.

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