It can be difficult to know which ASX shares to make your first investment in. But, I know which investment I'd want to start with as a beginner.
I often like to write about ASX share Washington H. Soul Pattinson and Co. Ltd (ASX: SOL) when considering choices for a portfolio. However, if I were a beginner starting with $1,000, there are a few things I'd want to keep in mind.
Investing in ASX shares can be a really good way to build long-term wealth. But diversification is an important part of helping us lower risk while still achieving long-term returns.
If someone were to invest in just one business with their first $1,000, then their entire portfolio would be just one business. That's not diversified at all.
That's why I think the ASX share I'm about to name would be a smart starting investment.
Image Source: Getty Images
BetaShares Global Sustainability Leaders ETF (ASX: ETHI)
Firstly, let's consider the diversification aspect of this investment.
It is an exchange-traded fund (ETF), meaning that it is invested in a portfolio of shares. That instantly provides diversification. Indeed, this ETF is invested in around 200 positions. That's a lot of diversification straight away, with just one investment.
These names come from across the world including the United States, Japan, Switzerland, the Netherlands, the United Kingdom, Germany and France. In my opinion, it ticks the box for global diversification as well.
I think the businesses in this ASX share's portfolio are among the best at what they do around the world. I like that almost 40% of the portfolio is invested in information technology businesses, because the technology sector is normally where it's possible to find growth businesses with good margins.
Some of the names I'm referring to are Apple, Visa, Home Depot, Mastercard, Toyota, United Health, Nvidia, Cisco Systems, Adobe and ASML.
In my opinion, it has a good list of holdings. The quality of the businesses has shone through with the net returns – since its inception in January 2017, the BetaShares Global Sustainability Leaders ETF has returned an average of 16% per annum. But remember, past performance is no guarantee of future results.
Another good reason to like this ETF
Not only is it a global ETF with quality holdings and impressive historical returns, but it has reasonable management costs (0.59% per annum) and a strong ethical screening process.
Some investors may not mind owning gambling shares, alcohol or coal shares, but plenty of other investors may want to exclude those areas from their investing.
To get into the portfolio, companies need to be in the top one third of performers in terms of carbon efficiency for their industry, or engaged in activities that can help reduce carbon use by other industries.
I think this ASX share ticks all the boxes as a beginner investment, which is why I'd be happy to put my first $1,000 into it.
