The ASX200 (ASX: XJO) has been on a tear this year. Even with today's steep decline, the ASX 200 is still up 15.3% which doesn't even include the dividends.
However, the issues facing the ASX200 could soon see some of those returns reversed.
The trade war could see Chinese demand for commodities fall and hurt the share prices of BHP Group Ltd (ASX: BHP) and Rio Tinto Limited (ASX: RIO).
Falling investor confidence could see people exit out of those really expensive ASX growth shares like WiseTech Global Ltd (ASX: WTC), Appen Ltd (ASX: APX) and Pro Medicus Limited (ASX: PME).
Indeed, we could see many of the popular shares this year underperform. So where are investors supposed to look? Well, cash and gold are often seen as safe havens, but gold doesn't appeal to me and the returns of cash are minimal – the only attraction would be capital preservation.
I think the answer could be to invest in shares that can grow over the long-term that offer returns quite alternative to the general share market.
One of my main ideas along this line of thinking is Duxton Water Ltd (ASX: D2O), a company that purely owns water entitlements. The dry weather conditions have sent up water prices and Duxton Water's net asset value (NAV) per share. Over the past year the combined performance of the NAV and dividend has been almost 22% from Duxton Water.
However, a sizeable discount to the underlying NAV has opened up. The current discount is 12% to the post-tax NAV and a 20% discount to the pre-tax NAV.
Foolish takeaway
I'm always open to buying assets at an attractive discount. I also like that Duxton Water is targeting a growing dividend, as long as it's supported by the cashflow of the business. It currently offers a forward grossed-up dividend yield of 5.7%.
Whilst a wet year would be the best time to buy shares, this is a fairly good time to buy shares in my opinion due to the growing discount to the underlying assets.
