ASX shares that are delivering good underlying growth may be able to produce strong shareholder returns. I'd happily buy the two investments in this article with $1,000 today.
If I had $1,000 to invest, I'd want to choose something I think can do well over the long term and that I'd want to buy more of in the future. I don't want to own 40 different investments with $1,000 in each. I'd rather have my portfolio focused on somewhere between 10 to 20 names unless investing in just a few exchange-traded funds (ETFs).
With that in mind, these are two ASX share options I really like.
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BetaShares Global Sustainability Leaders ETF (ASX: ETHI)
This is an ETF that is invested in a global portfolio of businesses that have passed a number of ethical screenings.
It has a total of around 200 names – around 70% of the portfolio is allocated to US businesses, with Japan (9%), Germany (4.4%), the Netherlands (3.5%), Denmark (1.9%), Canada (1.9%) and Switzerland (1.5%) being the countries with a weighting of more than 1%.
The businesses in the portfolio have to be climate leaders in their industry or be involved in helping the world decarbonise.
This investment process cuts out businesses involved in gambling, alcohol, tobacco, armaments, fossil fuels and other sectors that are engaged in activities deemed inconsistent with responsible investment considerations.
The ETHI ETF also avoids businesses that have supply chain concerns, or if they don't have gender representation on boards.
It has an annual management fee of 0.59%, which I think is good value considering the extensive process that it has gone through.
Some of the names in the portfolio include Nvidia, Visa and Apple. These three positions currently make up 15.4% of the portfolio.
Past performance is certainly not a guarantee of future performance, but since inception in January 2017, the portfolio has achieved an average return per annum of 16.8%.
Bailador Technology Investments Ltd (ASX: BTI)
Bailador is a business that invests in unlisted technology companies. I like that with this ASX share we can get a good growth profile and diversification across the different businesses.
It currently has a portfolio of seven names, with the biggest three being Siteminder Ltd (ASX: SDR), RC Topco (formerly Rezdy), Access Telehealth and Rosterfy. You can check out the company's monthly update for a more detailed description of each business, as well as regular commentary on the portfolio's progress.
There are a few different characteristics that Bailador typically looks for in a business: run by the founders, two to six years in operation, proven business model with attractive unit economics, international revenue generation, a huge market opportunity and the ability to generate repeat revenue.
In the three years to December 2023, the portfolio return after tax has been 13.3% per annum, which is solid considering the disruption of different economic events.
It targets a dividend yield on the pre-tax net tangible asset (NTA) of 4%, excluding the bonus of franking credits. With the business currently trading at a 25% discount to the pre-tax NTA, the dividend yield is bigger than that.
