If I were investing my first $1,000 right now I'd want to make sure my first pick is a really good one.
It's rare for the share market to turn into a bear market with big falls. That's exactly what has happened on the ASX and overseas because of the coronavirus outbreak.
The human side of this is terrible. If you are able to keep yourself safe from the infection and you also have some extra cash to invest then I think it's an opportunistic time to do it with lower share prices.
If I were investing my first $1,000 right now I'd go for:
MFF Capital Investments Ltd (ASX: MFF)
This is a listed investment company (LIC) which aims to invest in some of the world's best quality businesses at value prices. It has lower costs than most other LICs, which adds to net returns.
In the 2010s it was the best-performing LIC, predominately owning two of the best global blue chips – Visa and Mastercard. Those payment giants have been seeing great earnings growth with a growing global population, more cashless transactions in store and a growing preference for online shopping.
I think the skill of Chris Mackay is coming through in this market selloff. MFF Capital decided to pay a large special dividend before the falls happened. And MFF Capital has since moved to a cash position of over 25% for future opportunities.
MFF Capital is very aware that the recovery from this period could take longer than many politicians are hoping and it is avoiding the cyclical businesses.
The LIC believes that its top holdings of the payment giants and Home Depot will be some of the best placed business to do well when life starts going back to normal, perhaps after an effective vaccine is produced.
One of the good things about a LIC is that it can offer a diversified portfolio, but only be invested in the right shares for certain market conditions.
Is MFF Capital good value?
The pre-open share price is $2.61. At the end of March the LIC had pre-tax net tangible assets (NTA) of $2.97 and post-tax NTA of $2.48. It's a pretty decent discount to the pre-tax NTA, so I'd be happy to buy shares of MFF Capital today and add to my current position.
