At times of great ASX share market distress, it can be difficult to stay invested. I’m going to highlight two investments which could make it easier to stay invested through market volatility.
We can’t expect share prices to never fall. Share prices can go both up and down, that’s why the ASX share market represents a ‘risk’ asset. Share prices don’t go up every single day forever, it’s normal for there to be declines too.
However, there are a few investments I’d happily buy which I could sleep more soundly owning than a highly-volatile ASX share.
Washington H. Soul Pattinson and Co. Ltd (ASX: SOL)
WHSP has a very diversified portfolio across a range of businesses and sectors. It owns private businesses in areas like swimming schools, retirement living, agriculture, electrification (specialising in mining and similar sectors).
It owns a number of ASX shares including Brickworks Ltd (ASX: BKW), New Hope Corporation Ltd (ASX: NHC), TPG Telecom Ltd (ASX: TPG), Tuas Ltd (ASX: TUA), BHP Group Ltd (ASX: BHP), Macquarie Group Ltd (ASX: MQG), Wesfarmers Ltd (ASX: WES), Westpac Banking Corp (ASX: WBC) and CSL Ltd (ASX: CSL).
The great thing about this ASX share is it’s not too exposed to volatile sectors, nor is it heavily linked to the global economy.
Its portfolio delivers defensive cashflow for WHSP and this means it’s able to keep paying dividends to shareholders.
Typically, WHSP shares can fall less than the wider market because of its defensive portfolio, though that’s not guaranteed to always happen. Its portfolio value can continue growing in the coming years, so I think it could perform in the long-term.
VanEck MSCI International Quality ETF (ASX: QUAL)
The purpose of this fund is to give investors exposure to a diversified portfolio of quality international companies listed on stock exchanges in developed markets around the world (excluding Australia). It’s not exactly an ASX share, but we can buy on the ASX.
The world’s highest quality companies are based on key fundamentals, namely a high return on equity (ROE), earnings stability and low financial leverage. Each of those factors, individually, are a good factor for a business to have. Together, all three of those characteristics together combine to just the best of the best businesses are in this portfolio.
According to VanEck, investments focusing on companies with quality characteristics have delivered outperformance over the long-term relative to global share benchmarks.
It has an impressive portfolio with approximately 300 companies across a range of geographies, sectors and economies.
The QUAL ETF’s biggest positions are businesses like Meta Platforms, Apple, Microsoft, Nvidia, Visa, Eli Lilly and Alphabet.
I think quality businesses have the best chance of continuing to grow through difficult periods like now. The QUAL ETF could a good way to own quality companies and ride through recessions.
