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The world bank warns of negative returns for decades, what ASX shares to invest in?

Global growth could be slowing faster than expected, leading to negative returns for a very long time.

That’s the view of World Bank President David Malpass, according to Bloomberg reporting. Global growth is likely to be less than 3% in 2019, which is less than what economists and analysts were expecting.

A large part of the blame can be put on the ongoing trade war between China and the US. The tariffs are causing manufacturing to falter, and there are slowdowns happening in other countries like Mexico and India. Europe is also not doing well and is at the epicentre of negative interest rates.

The problem is that there’s now US$15 trillion invested in zero or negative yield bonds. Why would investors think that’s a good idea? It certainly suggests lower future growth.

But there are plenty of investment managers out there who still think it is possible to make money.

Sure, some technology valuations have gone too far. Particularly in the US where unprofitable tech companies are being priced with huge multi-billion price tags like Uber and WeWork.

But I think there are at least two or three areas that could generate decent growth even in an extremely low interest environment.

Where to invest?

The first area is businesses (at decent value) that are exposed to structural growth. It could be ageing tailwinds like Japara Healthcare Ltd (ASX: JHC), it could be technology utilisation like Altium Limited (ASX: ALU) & MNF Group Ltd (ASX: MNF), or perhaps it’s businesses with exposure to the growing Chinese economy such as A2 Milk Company Ltd (ASX: A2M) or LVMH.

The other area I think that could continue to generate decent investment returns are assets that generate dependable cashflow each year such as Vitalharvest Freehold Trust (ASX: VTH), Rural Funds Group (ASX: RFF), Duxton Water Ltd (ASX: D2O) and Viva Energy Reit Ltd (ASX: VVR).

It may also be an idea to buy investment funds which have a record of good performance and buy when they’re trading at a high single digit or double digit discount to their underlying value. I have my eye on Magellan Global Trust (ASX: MGG), WAM Global Limited (ASX: WGB) and MFF Capital Investments Ltd (ASX: MFF) at the moment.

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Tristan Harrison owns shares of Altium, DUXTON FPO, Magellan Flagship Fund Ltd, MAGLOBTRST UNITS, RURALFUNDS STAPLED, Vitalharvest Freehold Trust, and WAMGLOBAL FPO. The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns shares of Altium. The Motley Fool Australia owns shares of and has recommended MNF Group Limited and RURALFUNDS STAPLED. The Motley Fool Australia owns shares of A2 Milk. The Motley Fool Australia has recommended DUXTON 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.

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