There are some ASX shares that I’d happily invest in for my portfolio every month.
I think a regular investment strategy can be very effective. You just need to pick the right shares. Individual businesses like Appen Ltd (ASX: APX) and Altium Limited (ASX: ALU) can see their share prices move significantly in a relatively short amount of time. This can change if they’re good value or not.
However, there are some ASX shares that offer good diversification and I’d happily invest in them every month:
BetaShares Global Quality Leaders ETF (ASX: QLTY)
I think that quality businesses can deliver outperformance in both good times and bad times. To make it into the holdings of this exchange-traded fund (ETF) businesses have to rank well on four key metrics: return on equity (ROE), debt to capital, cash flow generation ability and earnings stability.
If companies rank well on all of these metrics then you can see why they’d probably generate solid shareholder returns.
This ETF comes at an annual cost of just 0.35% per annum. That’s pretty cheap considering what it does. It doesn’t invest in ASX shares, it provides exposure to global shares.
Some of the companies in its holdings are: Apple, Nvidia, Adobe, Facebook, Intuitive Surgical, Accenture, Intuit, Nike, Alphabet and Texas Instruments. I like that its holdings aren’t limited to just one country.
The returns have been strong since inception in November 2018, it has delivered returns of 18.8% per annum. That’s strong considering it includes the period of the COVID-19 crash.
Magellan High Conviction Trust (ASX: MHH)
This is a listed investment trust (LIT) which invests in the highest-quality businesses that it can find at a good price.
It maintains a portfolio of a limited number of names, around 10 or so, which it has strong conviction in. It also doesn’t invest in ASX shares, it picks businesses that are listed in other places like the US or Asia.
Some of its highest-conviction picks are: Alibaba, Alphabet, Microsoft, Tencent and Facebook. These are great businesses with strong operating models. They have been able to continue to generate good earnings through this hard COVID-19 period.
Over the long-term Magellan High Conviction Trust’s picks could be long-term winners.
At the current Magellan High Conviction Trust share price, it’s trading at 4% discount to its net asset value (NAV) per unit. Since inception in October 2019 it has returned 10.4% per annum after fees.
BetaShares Global Sustainability Leaders ETF (ASX: ETHI)
Ethical investing is growing in popularity. But picking ‘ethical’ businesses doesn’t mean sacrificing returns. This ETF, which is all about picking sustainable businesses, has performed very strongly.
Since inception in January 2017, BetaShares Global Sustainability Leaders ETF has returned an average of 20.3% per annum.
The businesses in this ETF have been identified as climate leaders and also exclude ‘irresponsible’ companies that don’t match a wide set of ESG criteria. Its annual fee of 0.59% is very reasonable in my opinion.
This ETF also doesn’t invest in ASX shares, it just sticks to global names. Its top holdings include names like Apple, Nvidia, Mastercard, Visa, Home Depot, Adobe, Paypal, Tesla, Netflix and Toyota.
I really like that BetaShares Global Sustainability Leaders ETF’s portfolio has a 38% information technology allocation. This is the sector that’s likely to generate the most growth, so I’m glad that it has the biggest allocation. The next biggest exposure is healthcare with a 15.9% holding.
Over 70% of the ETF’s holdings are listed in the US – though many of them have global customer bases. It’s also invested in businesses located in Japan, Switzerland, the Netherlands, France, Hong Kong, the UK, Germany, Canada and so on.
I like each of these ASX shares as an idea to get global diversification. I’d be happy to buy any of them at the current prices, particularly as the Australian dollar has strengthened against the US dollar. If I had to pick one it would be BetaShares Global Sustainability Leaders ETF for the larger number of holdings and strong focus on tech shares.
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Tristan Harrison owns shares of Altium. The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns shares of and recommends Altium. The Motley Fool Australia owns shares of Appen 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.
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