I think there are wonderful ASX shares that we can buy for our portfolios. I’m going to write about three of them in this article.
In my opinion, investors should either go for some of the best businesses you can for what you’re trying to achieve with your portfolio, or simply go for a great portfolio investment like an exchange-traded fund (ETF)
or a listed investment company (LIC).
These ASX shares are wonderful ones to watch:
Xero Limited (ASX: XRO)
Xero is one of the best ASX tech shares in my opinion.
There are only two things certain if life – death and taxes. Businesses need accounting software to help them report their financials to their country’s taxation department. Xero’s online accounting software has so many useful tools and automation processes – this makes it very attractive for everyone involved: the business owner, accountants, advisors and so on.
Xero has a long growth runway, it’s expanding in many different countries like the UK, the USA, Canada, Singapore, South Africa, Australia and New Zealand.
The software business has very high gross profit margins, it’s winning subscribers, expanding its offering and building market share.
MFF Capital Investments Ltd (ASX: MFF)
There’s no correct way to invest in shares, but I think Chris Mackay is one of the most effective fund managers in Australia that picks international shares. MFF Capital Investments only goes for quality businesses that it thinks are good value. It has been one of the best-performing listed investment companies (LICs) over the last decade.
One of the most useful things about MFF is its low costs, which are mostly fixed. As it gets bigger, the costs to shareholders are even lower in percentage terms. Combine that with good share picks like Visa, Mastercard, Amazon, Home Depot, Facebook, Microsoft, Prosus, Berkshire Hathaway and so on.
I also like the commitment of the ASX share’s board to increase the dividend over time, which is useful for accessing a portion of the returns that MFF is generating. The MFF share price is valued at a 7.5% discount to the net tangible assets (NTA) per share at the end of February 2021.
Magellan Financial Group Ltd (ASX: MFG)
Magellan is one of Australia’s biggest fund managers, it has seen its share price fall by around 30% over the last four months.
Its main equity investment strategy has been struggling in recent months with the volatile share market and worries about rising inflation leading to increasing interest rates.
However, I think this is likely to be a short term blip and Magellan will get back to generate positive returns soon, which will hopefully lead to a return of market confidence about the fund manager.
Even if the Magellan share price lingers around this level for a while, it has a high dividend payout ratio to reward longer term investors and it also has grown plans. It’s planning to launch a retirement product, which could boost funds under management (FUM), and its private/’principal’ investments could also become more important over time.
It has a trailing partially franked dividend yield of more than 5%.
