3 ASX investing trends to consider right now

Investors can get ahead of the curve by searching for opportunities exposed to tailwinds.

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Key points

  • Recycling and the production of recyclable packaging is a tailwind, thanks to the push for a circular economy
  • Australia’s superannuation pool of assets is expected to keep rising in the coming years
  • The nation's population is expected to grow to around 30 million by FY33

Investing in certain sectors can give investors exposure to tailwinds that can help drive earnings in the future. In this article, I'm going to talk about three (ASX) investing trends.

First up though, just because a business has exposure to a tailwind doesn't automatically make it a good business. Investors should still evaluate a company's positives and negatives such as its valuation, management, its balance sheet, and other factors.

Having said that, these are three areas where ASX investors could benefit:

Circular economy

Statista numbers show the global waste recycling service market was US$55.1 million in size in 2020 and that it could grow to US$88 billion by 2030. That's a rise of about 60%.

Australian states, such as Victoria, are looking to recycle more of the waste that comes from households.

There are some businesses involved with the packaging transition, such as Amcor (ASX: AMC) and Pact Group Holdings Ltd (ASX: PGH).

There are also a couple of ASX shares involved in the recycling process, such as ASX small cap share Close The Loop Inc (ASX: CLG) which is expanding internationally, and Cleanaway Waste Management Ltd (ASX: CWY).

Growing superannuation balances

Another beneficial ASX investing trend is the steady growth of the superannuation pool of assets.

According to Challenger Ltd (ASX: CGF) data from Deloitte, the superannuation system had $3.3 trillion of assets in 2022. This is expected to grow to at least $9 trillion by 2042 — that would be growth of 270%.

As well as being driven by mandatory contributions, growth is also being spurred through voluntary contributions due to their tax efficiency. As well, super is also growing thanks to the compound return growth of its asset valuations.

Challenger is taking advantage of this by providing annuities. This allows retirees to turn their capital into a regular source of income, enabling them to establish that certainty.

There are several other ASX financial shares connected to the growth of superannuation wealth in Australia.

Australian Ethical Investment Ltd (ASX: AEF) shares could be another way to get exposure. This fund actually offers superannuation for its members. The number of its members is growing too.

Australian population growth

Australia's population is steadily growing. This can boost earnings for a wide range of businesses because it increases overall demand and total potential customer base.

According to Australian government projections, the national population was expected to reach 26.3 million at the end of FY23 and reach 29.9 million by the end of FY33. This is a rise of 13.7% over the next decade.

When we look at which companies could benefit from this ASX investing trend, I'm thinking about names like supermarket business Coles Group Ltd (ASX: COL), telco Telstra Group Ltd (ASX: TLS), Bunnings and Kmart owner Wesfarmers Ltd (ASX: WES), pathology company Sonic Healthcare Ltd (ASX: SHL), building products business Brickworks Limited (ASX: BKW), and IGA supplier and hardware business Metcash Ltd (ASX: MTS).

Motley Fool contributor Tristan Harrison has positions in Brickworks. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has positions in and has recommended Australian Ethical Investment and Brickworks. The Motley Fool Australia has positions in and has recommended Amcor Plc, Brickworks, Coles Group, Telstra Group, and Wesfarmers. The Motley Fool Australia has recommended Australian Ethical Investment, Challenger, Metcash, and Sonic Healthcare. 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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