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This ASX share could be perfect for your first $500 investment

Tristan Harrison

If you’re just starting out on your investment journey with $500 then I think Magellan Global Trust (ASX: MGG) could be a great starting point.

Shares have proven to be a great wealth builder over the decades. You don’t need to take on tons of debt to invest like you need to do with a property. You can invest with as little as $500 each trade.

The share market has returned an average of 10% per year over the long-term. Over a decade that’s a return of 159%.

Fund manager Magellan Financial Group Ltd (ASX: MFG) specialises in investing in overseas shares. Only 2% of the world’s share market capitalisation is on the ASX, so it makes sense to look for opportunities outside of Australia.

Since inception in October 2017, listed investment trust (LIT) Magellan Global Trust has returned an average of 15.4% per annum, net of fees. The unlisted Magellan Global Fund, which has been going since July 2007 (before the GFC), has returned an average of 12.3% since inception. Over the past seven years it has returned an average of 18.2% per annum.

Magellan invests in what it calls the highest-quality businesses in the world like Microsoft, Apple, Starbucks, Alphabet (Google), Facebook, Visa, MasterCard, Alibaba and so on.

Magellan Global Trust has good diversification with its invested shares spread across various industries. The two largest allocations are: 21% of the portfolio to Internet & eCommerce and 14% to IT.

But, Magellan Global Trust has also put a lot of its money towards defensive assets which helps its portfolio usually fall less than the market. Around 9% is allocated to cash, 7% to ‘consumer defensive’, 10% to restaurants, 11% to infrastructure and 8% to health care.

Foolish takeaway

A bonus with Magellan Global Trust is that it targets a 4% distribution yield for investors. It offers a good combination of growth and income. Its share price is currently trading at around its underlying asset value, so it’s not cheap but not expensive either – I’d be happy to buy $500 of shares today.

The post This ASX share could be perfect for your first $500 investment appeared first on Motley Fool Australia.

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Motley Fool contributor Tristan Harrison owns shares of MAGLOBTRST UNITS. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

The Motley Fool's purpose is to help the world invest, better. Click here now for your free subscription to Take Stock, The Motley Fool's free investing newsletter. Packed with stock ideas and investing advice, it is essential reading for anyone looking to build and grow their wealth in the years ahead. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson. 2019