When a baby enters the picture, it can be an event that changes a family's thoughts about its financial situation. Sometimes parents may want to invest in ASX shares on behalf of their baby for the long term – or, perhaps, some family members may have even given them some money.
People invest with all sorts of different timelines in mind. But, if a family invests for the baby's benefit then it could be done with an investment horizon of 18 or 20 years, or even longer, in mind.
Certainly, it could be a very different world in two decades. Think how much has changed over the past 20 years! However, it gives us plenty of time to invest and benefit from compounding.
I have a few ideas that could be good long-term investments.
Australian Ethical Investment Ltd (ASX: AEF)
Australian Ethical is a business that families can be proud to own for the long term. It's a fund manager that prides itself on the fact that its entire range of funds is "rigorously screened in ethical and investment merits. Going beyond environmental, social and governance criteria (ESG), the team proactively seeks out companies that "do good".
This ASX share is growing its number of customers and funds under management (FUM). In FY22, the number of funded customers increased by 17%. Despite the volatility at the end of FY22, FUM rose by 2% over the year to $6.2 billion at 30 June 2022. FUM was $6.45 billion at 31 July 2022.
It's benefiting from ongoing mandatory superannuation contributions. FY22 super net flows rose 22% to $0.8 billion. Growth of net flows is also expected in FY23.
BetaShares Global Sustainability Leaders ETF (ASX: ETHI)
This is an exchange-traded fund (ETF) based on getting exposure to a portfolio of large global companies that meet strict sustainability and ethical standards.
The ASX share starts with a selection of companies from global developed markets, and they must be of a certain size.
As well, companies must be in the top one-third of performers in terms of carbon efficiency for their industries or be engaged in activities that can help reduce carbon use by other industries.
A number of screens are then applied to exclude fossil fuel producers. There are also no companies significantly engaged in armaments, gambling, alcohol, or junk food. Companies with human rights or supply chain issues are excluded as well as companies that lack gender diversity on their boards, and so on.
Some of the 200 names in the current portfolio include Apple, Visa, Home Depot, Mastercard, Nvidia, Adobe, ASML, and PayPal. Its holdings can come from across the world.
Coincidentally, or perhaps not, the BetaShares Global Sustainability Leaders ETF has performed well. Since it started in January 2017, the ETF has returned an average of 16% per annum. But past performance is not a reliable indicator of future results.
I like that this investment provides diversification, it has compelling holdings, and it seems capable of producing good returns over time.
REA Group Limited (ASX: REA)
REA Group is the owner of Australia's largest property portal – realestate.com.au. It takes a small 'toll' on almost every residential property that is sold in Australia. It has a strong market position, which allows it to regularly raise prices.
I think the 28% fall of the REA Group share price makes the ASX share a more attractive opportunity for the long term at the current level.
What would make this business an attractive option for the long term? It has investments in property sites in the US, India, and Southeast Asia. While each of these regions may not generate as much revenue per property as in Australia, the huge populations of these regions compared to Australia are certainly compelling. Each region could turn into a profit centre for REA Group.
