How I'd invest my first $1,000 in ASX shares in 2024

I think this first pick could be a great choice.

| More on:
Businessman at the beach building a wall around his sandcastle, signifying protecting his business.

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

If I had $1,000 to invest in ASX shares as a beginner, one of the first choices I'd want to buy is VanEck Morningstar Wide Moat ETF (ASX: MOAT).

Why an exchange-traded fund (ETF) to start with? I think it's great for diversification.

If I took my $1,000 and invested in one business like Telstra Group Ltd (ASX: TLS) or Coles Group Ltd (ASX: COL), I'd have 100% of my portfolio in just one business. All the eggs are in one basket.

With an ETF, we can buy a whole group of businesses in just one transaction. The portfolio is instantly spread across a number of companies.

So why the MOAT ETF? There are a few key reasons.

Strong competitive advantages

With most investments on the (ASX) share market, we're looking to find businesses with economic moats. This describes a company's ability to maintain its competitive advantages and defend its long-term profitability from 'invaders'.

The investment team at Morningstar has identified five sources of sustainable competitive advantages: switching costs, intangible assets, network effects, cost advantages and efficient scale. The annual management fee is 0.49%, which is quite cheap for how much work is being done to identify ideas.

Some of the businesses in the portfolio that you may have heard of that have strong competitive advantages include Alphabet (Google), Campbell Soup, Nike, Walt Disney,, Bank of America, Berkshire Hathaway, Pepsico, Microsoft, Starbucks and Adobe.

There are a total of 54 holdings in the portfolio at the time of writing.

Good value

The MOAT ETF only invests in these target companies when they're trading at "attractive prices" compared to Morningstar's estimate of fair value.

It doesn't just invest in these competitively-advantaged businesses at any price, the Morningstar team only buy when the business is valued noticeably less than they think the company is worth.

I like this because it can help the MOAT ETF only focus on good value businesses, rather than overvalued. Exiting a position if it has climbed too high can be a good move.

Solid returns

Past performance is definitely not a guarantee of future returns, but I think this fund has the potential to perform as well as any solid ASX shares.

Since the ETF was started in June 2015, it has returned an average of 16.1% per annum.

Any return of more than 10% per annum is a great number for compounding. $1,000 can double in around five years if it returns at 15% per annum.

Bank of America is an advertising partner of The Ascent, a Motley Fool company. Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has positions in and has recommended Adobe, Alphabet, Bank of America, Berkshire Hathaway, Microsoft, Nike, Salesforce, Starbucks, and Walt Disney. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has recommended the following options: long January 2025 $47.50 calls on Nike, long January 2026 $395 calls on Microsoft, and short January 2026 $405 calls on Microsoft. The Motley Fool Australia has positions in and has recommended Coles Group and Telstra Group. The Motley Fool Australia has recommended Adobe, Alphabet, Berkshire Hathaway, Nike, Salesforce, Starbucks, VanEck Morningstar Wide Moat ETF, and Walt Disney. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

More on ETFs

ETF written with a blue digital background.

4 ASX ETFs to supercharge your returns in 2024 and beyond

Here are four quality ETFs that could be buys for investors next week.

Read more »

The letters ETF with a man pointing at it.

3 of the best ASX ETFs to buy now

Here are a few ETFs that could be used to strengthen an investment portfolio.

Read more »

Cybersecurity professional man inspects server room and works on ipad

Is the Betashares Global Cybersecurity ETF (HACK) a good long-term investment?

This ASX ETF gives exposure to a rapidly growing industry.

Read more »

ETF written in yellow gold.

3 ASX gold ETFs smashing all-time record highs today

ASX gold ETFs are giving shareholders a great start to the new month.

Read more »

a man with a wide, eager smile on his face holds up three fingers.

3 reasons the Vanguard US Total Market Shares Index ETF (VTS) is still a top buy

The US stock market has been a great investment.

Read more »

A young woman holds her hand to her mouth in surprise as she reads something on her laptop.
Energy Shares

How much would I have now if I'd invested $10,000 in Betashares Global Uranium ETF (URNM) a year ago?

Has this been a great place to invest your hard-earned money?

Read more »

A young man wearing glasses writes down his stock picks in his living room.
Growth Shares

1 under-the-radar ASX growth stock to consider buying now

Many investors don't even think of these shares as growth. So that's why savvy investors could swoop in for a…

Read more »

ETF written on cubes sitting on piles of coins.
Dividend Investing

How is the Vanguard Australian Shares ETF (VAS) falling almost 1% today?

Investors should be happy to see this index fund drop today. Here's why.

Read more »