How much say do you have over how your hard-earned superannuation is managed?
Perhaps your level of involvement is limited to selecting a fund and ticking one of the conservative, balanced, or growth investment option boxes.
Or maybe you are among the roughly 4% of Aussies who have complete control over how their retirement funds are invested via a self-managed super fund (SMSF)?
You could also fall somewhere in the middle. That is, you're generally content having a retail super fund managing your nest egg, but the ability to nominate some specific investments appeals to you.
In years gone by, the only way to directly invest your super funds in individual assets such as ASX shares, exchange-traded funds (ETFs), or term deposits was to establish an SMSF. But today, many Aussie super funds offer members the flexibility of choosing a combination of both fund-managed and self-managed-style investments.
According to Australian Super, these types of funds allow members to take a hands-on approach to managing their super with lower fees and fewer admin requirements than associated with actual SMSFs.
Regardless of the investment vehicle, choosing which stocks to entrust your retirement funds with is a big decision.
So we asked our Foolish writers which ASX shares they think would make an excellent addition to a super fund in April. Here is what they came up with:
6 best ASX shares for your super fund right now (smallest to largest)
- Lovisa Holdings Ltd (ASX: LOV), $3.61 billion
- Sandfire Resources Ltd (ASX: SFR) $4.14 billion
- Vanguard US Total Market Shares Index ETF (ASX: VTS), $4.34 billion
- Endeavour Group Ltd (ASX: EDV), $9.38 billion
- Washington H Soul Pattinson & Company Ltd (ASX: SOL), $12.49 billion
- Wesfarmers Ltd (ASX: WES), $75.65 billion
(Market capitalisations as of market close 12 April 2024).
Why our Foolish writers love these ASX passive income stocks
Lovisa Holdings Ltd
What it does: A company still in its youth, Lovisa was founded in 2010 by Shane Fallscheer and retail connoisseur Brett Blundy. Fourteen years later, the fast fashion jewellery retailer commands a network of 854 stores worldwide.
By Mitchell Lawler: My guess is people generally optimise for dividends inside their superannuation funds. However, I believe it is far more worthwhile investing in a company that can compound at a high rate of return and sell parcels of shares as needed.
Lovisa may not yet wield the same market presence and profits as fellow retail stock Wesfarmers, but it is growing at a greater pace. For example, Lovisa's profits have roughly doubled in five years. Meanwhile, Wesfarmers' earnings are up only 17% compared to 10 years ago.
With Lovisa successfully expanding internationally, there could be many years of high earnings growth still to come. Analysts at Morgans recently said, "As we have said before, [Lovisa] may just prove to be one of the biggest success stories in Australian retail. [Lovisa] is showing every sign of becoming a global brand."
Motley Fool contributor Mitchell Lawler owns shares of Lovisa Holdings Ltd.
Sandfire Resources Ltd
What it does: Sandfire Resources is one of the largest copper companies listed on the ASX. The miner is focused on its MATSA operations in Spain and the development of the Motheo Copper Mine in Botswana. Sandfire owns two metal processing hubs in the Iberian Pyrite and Kalahari Copper belts.
By Bernd Struben: Sandfire Resources could help boost your superannuation balance as the miner continues to ramp up copper production after its DeGrussa mine was successfully transitioned to care and maintenance in FY 2023.
The company has been in a capex-heavy growth stage and has been burning cash. But that looks set to turn around. Motheo achieved a throughput rate of 3.5 million tonnes per annum (Mtpa) in Q2 FY 2024 with the planned ramp-up to 5.2Mtpa underway. Sandfire also aims to expand its copper reserves at MATSA.
This comes at an opportune time, with the copper price up 10% in 2024 and widely forecast for further gains. Copper demand growth is outpacing new supplies amid the global push for electrification, along with fresh demand from the booming artificial intelligence (AI) sector and the data centres this involves.
The Sandfire share price is up by around 30% over the past 12 months.
Motley Fool contributor Bernd Struben does not own shares of Sandfire Resources Ltd.
Vanguard US Total Market Shares Index ETF
What it does: This ASX exchange-traded fund is a simple, index-based ETF that tracks the performance of the whole United States stock market.
By Bronwyn Allen: I've held the Vanguard US Total Market Shares Index ETF in my superannuation fund for several years. I bought it because it gives me exposure to the US market, it offers great diversification with more than 3,700 American companies of all sizes, and it has a teeny-tiny management fee of 0.03%.
Holding this ETF means owning Microsoft, Apple, Alphabet, Nvidia, Amazon, Berkshire Hathaway, and Eli Lilly, just to name a few.
I also like that it has exposure to small caps, which have some tailwinds this year. Morgans says small caps tend to rise when it's clear interest rates have peaked. US stocks are also outperforming, with the VTS ETF up 29.7% and the ASX 200 up 6.3% over the past year.
Motley Fool contributor Bronwyn Allen owns units of the Vanguard US Total Market Shares Index ETF.
Endeavour Group Ltd
What it does: Endeavour owns Australia's largest retail drinks network under the Dan Murphy's and BWS brands. It also runs the country's largest portfolio of licensed hotels.
By James Mickleboro: I think Endeavour Group could be a top option for a superannuation fund.
If I'm making long-term investments, I want to hold onto ASX shares that have positive growth outlooks and strong and sustainable business models. Endeavour certainly ticks these boxes. With an estimated 40% market share and plans to keep growing, I believe the company will remain the clear leader in its industry for a long time to come.
Another positive is that, as we saw during the pandemic, the liquor market is very defensive. I think this makes Endeavour an attractive option in an uncertain economic environment.
Goldman Sachs is a fan of the company. It currently has a buy rating and a $6.20 price target on Endeavour shares. The broker is also forecasting attractive, fully franked dividend yields greater than 4% each year through to at least FY 2026.
Motley Fool contributor James Mickleboro owns shares of Endeavour Group Ltd.
Washington H Soul Pattinson & Company Ltd
What it does: Soul Patts is an investment house that has been listed on the ASX since 1903. It has a diversified portfolio across a range of industries.
By Tristan Harrison: I think Soul Patts is a great choice for a superannuation fund because of the instant diversification it can bring to a portfolio. The company is invested across a range of ASX shares and sectors including telecommunications, resources, building products, property, financial services, farms, water rights, swimming schools, and electrical parts.
I hope to have as resilient a passive income stream as possible in retirement without employment earnings coming in. This ASX dividend stock has paid a dividend every year since 1903 and grown its dividend each year since 2000 — the longest dividend growth streak on the ASX.
Every year, Soul Patts receives cash flow from its investments in the form of dividends, distributions, and interest. The company covers its expenses and then sends a majority of its net cash flow to shareholders as dividends.
It retains some funds to re-invest in new investment opportunities — which can hopefully grow its dividends and portfolio value in future years. In the FY24 first-half result, Soul Patts' declared interim dividend was 54.8% of the net cash flow from its investments
Motley Fool contributor Tristan Harrison owns shares of Washington H Soul Pattinson and Company Ltd.
Wesfarmers Ltd
What it does: Wesfarmers is the retail and industrial conglomerate behind many famous household names, including Bunnings, Kmart, and Officeworks. It has a huge portfolio of different assets and businesses spanning across several corners of the economy.
By Sebastian Bowen: Wesfarmers is, in my view, an ideal stock for a super fund. For one, it is one of the most diverse companies in the ASX 20, and indeed in the ASX 200.
Wesfarmers' star performer is its Bunnings business, which stands out among its other strong retailers like Kmart and Officeworks. However, this company also has other interests ranging from gas distribution and lithium mining to workwear and chemical manufacturing.
Wesfarmers has a decades-long history of delivering both strong growth and healthy dividend income to its ASX investors. It has increased its fully franked dividend steadily over the past decade, which is great for a super fund. But this company's habit of making savvy acquisitions and spinoffs is another path Wesfarmers takes to build wealth for shareholders.
Investors benefitted enormously from the 2018 spinoff of Coles Group Ltd (ASX: COL). I also suspect Wesfarmers' recent acquisition of the Priceline pharmacy chain will prove lucrative.
I'd be happy to own Wesfarmers shares in my own super fund, as well as recommend them to anyone else.
Motley Fool contributor Sebastian Bowen owns shares of Wesfarmers Ltd.
