Christmas is a great time to think about presents. But what would be a greater present than ASX shares this year?
Creating that curiosity and interest in ASX shares could make a huge difference to the long-term trajectory of a child’s (and adult’s) wealth. Saving money and investing is usually a very good thing over time.
But what ASX shares would be a good way to spark that interest and feel like you’re supporting the right things?
With that in mind, these three ideas are ones that I’d be very happy to buy for my child for both returns and the idea behind them:
WCM Global Growth Ltd (ASX: WQG)
This is a listed investment company (LIC) that is managed by the culture-focused fund manager WCM. It looks for businesses that create a business culture that will help grow a company’s competitive advantages/economic moat over time. For WCM, growing economic strength is a key factor (like a growing return on equity (ROE)).
This has led to the LIC having a portfolio of names like Shopify, Sherwin Williams, Stryker, Thermo Fisher Scientific, LVMH, West Pharmaceutical Services and Old Dominion Freight Line at the time of writing.
Whilst it has delivered strong long-term outperformance, I think it can continue to do well after fees with its investment style.
I think that Aussies getting more global diversification is a good idea. There are some great businesses outside of Australia.
BetaShares Global Sustainability Leaders ETF (ASX: ETHI)
This is an exchange traded fund (ETF) that invests in 200 large global businesses which are climate change leaders (as measured by their relative carbon efficiency) and which are not materially engaged in activities classified as irresponsible.
Some of the sectors or problems excluded from this ETF include gambling, tobacco, alcohol, junk food, destruction of valuable environments, human rights issues and lack of board diversity.
Businesses that are the largest positions in this ASX share’s ethical portfolio include: Nvidia, Apple, Home Depot, Visa, Mastercard, Adobe, ASML, Toyota, Cisco Systems and PayPal.
When you look at the various ETFs on the ASX, this has been one of the best performers. Since the inception date in January 2017, it has returned an average of 23.1% per year. I wouldn’t expect that type of performance over the next five years, but I think it can keep doing well with the level of quality that’s in the portfolio.
Temple & Webster Group Ltd (ASX: TPW)
Temple & Webster is an ASX share that I think has loads of growth potential over the next decade.
It’s growing revenue very quickly, which is important to deliver good results.
This ASX share operates in a part of the economy (furniture and homewares) that is worth $16 billion in Australia, excluding business customers. Online is only around 10%, so there is still a long tailwind from that shift.
Temple & Webster has negative working capital, which helps it grow quicker as it invests for more growth in areas like advertising, technology and operational capabilities.
Over the long-term, I think the Temple & Webster can become much more profitable when it doesn’t need to invest as much of its revenue (in percentage terms) as it is now. International growth is a long-term potential avenue too.
