Looking to find ASX shares that can beat out the S&P/ASX 200 Index (ASX: XJO) over the coming decade?
Beating the ASX 200 mark over a long period of time is notoriously difficult. That's why many investors just opt to invest in a market-matching exchange-traded fund (ETF) and not bother with trying.
But beating the market is possible, as the likes of Warren Buffett can attest to. So if I had $100 to invest every month over the coming years to try and beat the market with, here's where I would put it.
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2 shares that I would bet on beating the ASX 200 index with
Washington H. Soul Pattinson and Co Ltd (ASX: SOL)
When looking at potential ASX 200 beaters, I would first look at the shares that have shown they have done it before. And no share matches this description better than ASX 200 investment house Soul Patts in my view.
Soul Patts is one of the oldest companies on the ASX, with its roots tracing back to the 19th century. Today, it manages a variety of assets and share portfolios on behalf of its investors.
Back in June, Soul Patts told the markets that its investors have enjoyed an average annual return of 12.9% per annum over the 20 years to 30 April 2023. That's more than 3% per annum better than its benchmark All Ordinaries Index (ASX: XAO).
The All Ords has a slightly different composition to that of the ASX 200 Index. But looking at the performance of an ASX 200 ETF like the SPDR S&P/ASX 200 Fund (ASX: STW), it still measures up as a market beater. The STW ETF has averaged a return of just 7.88% per annum since its inception in 2001.
So this is the first investment I would put our $100 a month towards in hopes of outperforming the ASX 200 index over the next decade.
iShares S&P 500 ETF (ASX: IVV)
The second investment I would pick to beat out the ASX 200 index over the next decade would be this US-based index fund.
The S&P 500 Index (INDEXSP: .INX) is the most widely-tracked index in the world. It represents an investment in the 500 largest companies listed on the US markets. The ASX 200 is great and all. But it simply can't match the scale and quality that the S&P 500's top echelons are defined by.
There are dozens of world-class companies that we all know and love in the S&P 500. They include the US tech giants like Apple, Microsoft, Alphabet and Amazon, of course. But there are also names like Netflix, Nike, Adobe, Coca-Cola, Visa, Mastercard, American Express and Berkshire Hathaway in the mix as well.
The ASX-listed iShares S&P 500 ETF has had a phenomenal decade, returning an average of 15.72% per annum over the past 10 years. I don't quite expect the next decade to give investors those kinds of returns.
But the quality companies that this ETF consists of still give it a pretty good shot of outperforming the ASX 200 index, in my view. Thus, I would happily direct some of our $100 a month into this ASX exchange-traded fund.
