It's getting close to Christmas, so it's definitely time to start sorting out some presents if you haven't yet. One of the best presents could be ASX shares under the Christmas tree, an investment that could make a major difference to a child's financial future over the long term.
When I think about the types of investments I'd want to make for my own child, it would be something that has an appealing long-term future and has already demonstrated a good track record. Of course, capital growth is not guaranteed though. With that in mind, there are three names I'd heavily consider.
Vaneck Morningstar Wide Moat ETF (ASX: MOAT)
This is an exchange-traded fund (ETF) that is invested in businesses that have strong competitive advantages that are expected to endure for many years.
We don't need to own the biggest businesses to do well. There are some great companies at good prices that we can gain exposure to via this ETF. Names in the portfolio are regularly changing, but the investment style has done very well in the long term.
Past performance is not a guarantee of future results, but over the past five years, it has delivered an average return per annum of 15%.
I think it's the sort of investment that can be owned for many years because it provides diversification and exposure to good businesses. Some of the biggest holdings right now include Etsy, US Bancorp, Equifax and Charles Schwab.
Betashares Global Cybersecurity ETF (ASX: HACK)
I think it can make sense to invest in businesses that have strong revenue tailwinds for the long term. Cybersecurity is a global theme, that's seeing excellent growth because of the increasing need for good cyber defences. More data, more transactions and more information are online these days – organisations like the government and businesses need to keep users safe.
This ASX ETF is invested in both global powerhouses and emerging names within the sector, with a current total of 32 holdings.
Statista research shows the projected size of the global cybersecurity market is expected to grow from US$223.7 billion to US$478.7 billion in 2030.
I think it's the sort of industry that can demonstrate both growth and defensive traits. I've explained the growth outlook – it could be defensive because I don't think many customers are going to abandon their cyber defences just because there's an economic downturn.
Wesfarmers Ltd (ASX: WES)
I think Wesfarmers is one of the very best companies that the ASX has to offer.
Bunnings is one of the very best businesses in the country, in my eyes. It generated more than half of the Wesfarmers profit in FY23 – I think this business has a very compelling future as the Australian population grows. In FY23, Bunnings had a return on capital of 65.4% and Kmart Group achieved a return on capital of 47%.
In FY23, the company achieved a return on equity (ROE) of 31.4%.
What these numbers tell me is the business is earning strong profits on money retained in the business, and it continues to re-invest more into its business each year.
Wesfarmers continues to invest for long-term growth. Its healthcare efforts are compelling to me because of the tailwinds related to an ageing and growing population.
I think this ASX share could be materially bigger in 10 years and pay larger dividends, which is promising for shareholder returns.
