If I had $500 to invest into my first ASX shares I'd pick one of the two ideas in this article.
Investing in ASX shares is one of the best ways to grow your wealth in my opinion. But it can be difficult to know where to start.
There are thousands of different things you can invest in on the ASX. You could pick an exchange-traded fund (ETF), a managed fund, a listed investment company (LIC) or go straight for individual shares.
I think diversification is important for beginner investors. If you invested your first $500 into Commonwealth Bank of Australia (ASX: CBA) shares then 100% of your portfolio would be in one share.
It could be a wise idea to choose an investment that provides good diversification straight away. Some investments give exposure to a portfolio with the one pick. That's one of the main reasons why LICs are so attractive.
With that in mind, here are two ASX shares I'd happily buy with my first $500:
Share 1: MFF Capital Investments Ltd (ASX: MFF)
MFF Capital is a great LIC run by Chris Mackay, the co-founder of Magellan Financial Group Ltd (ASX: MFG).
It aims to invest in great businesses listed internationally. Not many ASX shares would count among the best businesses in the world.
It's invested in shares like Visa and Mastercard. Those two global payment businesses actually make up around a third of the portfolio. I think they have good growth runways with the shift away from physical cash payments to online shopping and contactless payments.
MFF Capital has been a solid ASX share over the past five years. The MFF Capital share price has risen by 54% since June 2015 despite the big selloff caused by COVID-19.
I think MFF Capital is worth owning because it has a diversified portfolio. Some of its other investments include Home Depot, CVS Health, Microsoft and some international banks.
At the end of May 2020 MFF Capital's portfolio was 46.4% net cash. That means it's well protected if the market were to fall again. It also means it has a good cash pile to buy beaten-up shares if that opportunity comes.
Share 2: Future Generation Global Invstmnt Co Ltd (ASX: FGG)
Future Generation Global is another overseas-focused LIC. The ASX share invested in a range of funds that invest in overseas shares. The fund managers of those funds work for free so that Future Generation Global can donate 1% of its net assets per year to youth mental health charities.
Some of the fund managers it's invested with include Magellan, Cooper Investors, Marsico Capital Management, Caledonia and Munro Partners. Each fund manager's fund comes with its own portfolio of shares. So Future Generation Global's underlying portfolio is very diversified.
At the end of May 2020, Future Generation Global's gross investment performance was showing a clear outperformance of the MSCI AC World Index (AUD). Over the past three years, Future Generation Global's 10.9% per annum portfolio performance outperformed the index by 1.7% per annum. Over the prior six months the index declined 4.2% whilst the Future Generation Global portfolio returned 1.2%.
If you're looking to buy the shares at a good price then you're in luck. The May 2020 net tangible assets (NTA) per share was almost $1.48, which compares to today's share price of $1.16. That's a 22% discount, which is very large considering the regular outperformance.
Foolish takeaway
I really like both of these ASX shares for the global exposure they provide, the quality investors involved and the attractive valuation on offer. At the current prices it's hard to pick a favourite, I'd really like to buy both.
