I’m always thinking about where I want to invest in ASX shares.
I want to invest in shares that I think are good value. There are plenty of shares that are trading at near all-time highs like CSL Limited (ASX: CSL) and Macquarie Group Ltd (ASX: MQG). Indeed, even whole share markets like the ASX 200 (ASX: XJO) and the S&P 500 are trading at highs. It’s hard to find good value right now.
I have my eyes on several leading growth shares like Webjet Limited (ASX: WEB) and Pushpay Holdings Ltd (ASX: PPH) which look good long-term value, but they too have been strong performers since October 2019.
You shouldn’t invest just for the sake of it, you should believe that your prospective investment will deliver attractive long-term returns. If I had $1,000 to invest in an ASX share right now, I would pick:
PM Capital Global Opportunities Fund Ltd (ASX: PGF)
It’s a listed investment company (LIC) which invests in overseas shares. To me, the immediate value is that it’s trading at a 13% discount to the net tangible assets (NTA) disclosed at 10 January 2020, plus the NTA may have grown a bit more since then. Even after accounting for fees, I think this is an attractive discount compared to an exchange-traded fund (ETF) which trades at its price. Plus, the investment team think the current portfolio is at good value, so there’s a potential double discount.
I like that it provides its investors with changing diversification away from the ASX, which only represents 2% of the world’s market capitalisation – there are many other opportunities out there in the global share market.
It’s invested in a variety of themes including a property recovery in Europe (where home builders are still very cheap) such as Cairns Homes, global domestic banking like Bank of America, gaming in Macau, alternative investment managers like KKR & Co and materials such as copper with Freeport-McMoRan Copper.
I’m particularly intrigued by its investments in banking. Not only is there a push back against negative rates in Europe, but the trade deal between the US and China could cause central banks to raise rates if global growth returns. The trade war was one of the main reasons why the Fed cut rates last year. Rising interest rates should be good for bank earnings.
Its portfolio can deliver strong returns just like other internationally-focused investments. Over the past year its portfolio after fees delivered a return of 30.3%. Since inception its average net return per annum has been 12.3%.
It also has a growing dividend with a current trailing grossed-up dividend yield of 4.2%.
I think PM Capital Global Opportunities Fund could have one of the best chances to outperform the ASX 200 in 2020 because of its international investments and the discount to the NTA. I’ve already bought some shares and will look to buy more if it continues to have a double digit NTA discount.
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Tristan Harrison owns shares of PM Capital Global Opportunities Fund Ltd. The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns shares of CSL Ltd. and PUSHPAY FPO NZX. The Motley Fool Australia owns shares of and has recommended Macquarie Group Limited. The Motley Fool Australia has recommended PUSHPAY FPO NZX and Webjet Ltd. 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.