I think that Future Generation Investment Company Ltd (ASX: FGX) is the perfect ASX share to invest your first $500 into.
Future Generation is a listed investment company (LIC) which invests into funds managed by ASX-focused fund managers. There are no underlying management fees in relation to Future Generation, the fund managers work for free! Instead, Future Generation donates 1% of its net assets to youth charities each year.
Why Future Generation is such a good ASX share for your first $500
Good price
The coronavirus has caused the Future Generation share price to fall 24% since the share market dropping from 21 February 2020. That in itself makes Future Generation a better ASX share buy before than before.
But I like the idea of buying LICs at a discount to their net tangible assets (NTA). That hopefully means getting a double discount. First, it means buying $1 of shares for less than $1. Second, hopefully the shares the fund managers own are cheaper than their calculated underlying value.
It's trading at a 10% discount to the NTA at 31 March 2020.
Good dividend yield
It's nice to be rewarded by your investments via dividends from your ASX shares. There's a reason "it pays dividends" is a phrase. Getting paid cash simply for owning a growing investment is a very attractive proposition.
Future Generation has increased its dividend each year since 2015, which is a solid record. I'm not sure what the next 12 months of dividends looks like. But as the effects of coronavirus pass, I think Future Generation's dividend will grow again. It may keep growing through this period.
It currently has a trailing grossed-up dividend yield of 7.9%.
Attractive diversification
Each fund manager that Future Generation is invested in has their own portfolio of ASX shares. That could mean 10 shares, 30 shares or more per portfolio. There are around 20 fund managers, which suggests there would be very good underlying diversification.
Added to that, at the end of March 2020 10.7% of the portfolio invested in cash and term deposits. This provides protection and ammunition for market downturns like right now.
Solid returns
Future Generation was started in September 2014. It is set up to be able perform well in good times and outperform in downturns with how it's invested in ASX shares and cash.
At the end of March its investment portfolio's gross performance had outperformed the S&P/ASX All Ordinaries Accumulation Index over the past month, six months, 12 months, three years, five years and since inception.
Foolish takeaway
I'm a big fan of Future Generation. There's a lot to like about the LIC, particularly the philanthropic nature of it. I plan to keep buying shares of this ASX share throughout this period whilst the NTA discount is high and the share price is significantly lower.
