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Large ASX investor says FY20 will be a challenged year

Large ASX investor Argo Investments Limited (ASX: ARG) has said that FY20 could be a more challenged year.

Argo is one of the oldest listed investment companies (LIC) and previously had Donald Bradman as its Chairman, so you can imagine how it tries to invest.

The large LIC held its AGM today, with both the CEO and Chairman giving their comments on performance, current economic conditions and the outlook.

Argo’s Chairman Russell Higgins said that the outlook for this year appears more challenged with a number of risks to worldwide growth. Argo said that trade tensions between the US and China, ongoing civil unrest in Hong Kong, the uncertainty arising from the protracted Brexit negotiations and conflict in the Middle East are all potential issues.

Each of the above risks could have large geopolitical and economic ramifications for the global and Australian economy. Australia is a large exporter, so it’s reliant on the global economy to do well – particularly China. The ASX is not immune to global events. 

Argo also pointed to the fact that very low interest rates are having a stretching effect on the share market, particularly with high price/earning ratio shares.

Argo’s strategy in this current investment environment is to find businesses that are growing. Either ones that are growing at a fast pace with a low dividend yield, or at a slower pace with good shareholder returns. Some names are CSL Limited (ASX: CSL), Transurban Group (ASX: TCL), Sydney Airport Holdings Pty Ltd (ASX: SYD), APA Group (ASX: APA), BHP Group Ltd (ASX: BHP), Rio Tinto Limited (ASX: RIO), Ramsay Health Care Limited (ASX: RHC), Sonic Healthcare Limited (ASX: SHL) and Macquarie Group Ltd (ASX: MQG).  

Foolish takeaway

Argo will probably be around a long time after we check our portfolios for the last time. It’s a solid dividend share with a grossed-up dividend of 5.6%. It would perhaps be my pick of the old LICs, but I think there are better shares for dividends and growth on the ASX.

Like these leading picks which have solid yields and are growing faster than Argo.

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Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia has recommended Macquarie Group Limited, Ramsay Health Care Limited, Sonic Healthcare Limited, Sydney Airport Holdings Limited, and Transurban Group. 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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