Investment portfolio themes to consider
Increase your investment opportunities by tapping into worldwide trends.
Now we’re halfway through the year, it’s a good time to reflect where financial markets are sitting – and consider the investing opportunities for the rest of the year and beyond.
It’s been a good few months for the Aussie share market. Mid-way through the year it’s at a record all-time high, up 11 per cent from last year. The US is also trading at record levels, up around 13 per cent. If you have shares in banks or the mining industry, then you’re doing well. Banks are over-performing as employment is back to pre-pandemic levels and people are buying more homes. Governments are investing a lot into green energy, and infrastructure, giving the mining sector a big boost too.
“There are several investment themes which are worth considering as we move in to the second half of the year,” says Bell Direct’s Senior Market Analyst, Jessica Amir. “These can be invested in by buying Exchange Traded Funds (ETFs). ETFs are a low-cost way to access global markets and also diversify your portfolio. Some ETFs have produced returns that have outpaced the Australian share market, so far this year - which is sitting on a gain of 11 per cent.”
Here’s some investment portfolio ideas for you to consider:
“The economy is growing out of the pandemic, which means costs are rising due to a shift in both the supply and demand curves. This means food and agriculture companies are making more money as revenue rises – and will continue to do as global life expectancy and population growth is predicted to rise,” says Ms Amir. The ETF FOOD, invests in 50 of the world’s largest food companies, outside of Australia. It includes companies such as John Deere that sells tractors to farmers, and Nutrien, the world’s biggest crop fertilising company. The ETF FOOD has done well so far this year, rising 18 per cent.
2. Electric vehicles
By 2030, 70 per cent of new cars sold in Australia are set to be electric. The rest of the world is even further ahead; Norway and the Netherlands have banned the sale of new petrol cars after 2035, and President Biden wants to put part of a $2 trillion infrastructure bill toward building an electric vehicle charging network. “This means lithium and battery technology is set to have a huge surge,” says Ms Amir. “The ETF ACDC invests in 30 of the world’s leading lithium and battery companies, from Tesla who produce electric cars to lithium companies like Pilbara Minerals. Last year it gained around 60 per cent.”
3. Climate Change
“About 30 countries plan to be carbon neutral by 2050, so investing in companies that are already working towards reducing their carbon footprint could boost your investment portfolio,” says Ms Amir. The ERTH ETF invests across 100 companies that are leading the reduction of carbon footprint across a range of industries. ERTH’s largest holding is Trane Technologies who create efficient and sustainable climate innovations to buildings, homes and transportation.
4. The tech race
The US wants to overtake China as the world’s new tech leader. This means there’s going to be a lot of incentives made available to US tech companies, including semi-conductor firms who create microchips, Artificial Intelligence, robotics, quantum computing and research. “Earlier this month, a $250 billion bill was passed into US law, aiming at building tech manufacturing facilities and attracting US semiconductor firms to open in the US,” says Ms Amir. Companies in the semiconductor sector are already doing well, due to rising demand and lack of supply. There are shortages of semi-conductors that are needed to power electric cars, laptops, and smartphones. And don’t forget semi-conductors will also be needed as businesses scale up and develop driverless cars. One of the most purchased ETFs that invests in US tech companies is the ETF NDQ, so you could invest in that too, or look at the Australian tech ETF ATEC.
5. Stocks that pay dividends
“We’ve seen that dividends have fallen back into fashion again. Savvy investors have cottoned onto the fact that cryptocurrencies and meme stocks don’t pay dividends, so many investors are reverting back to investments that do.” says Ms Amir. There’s three ETFs that pay dividends that stand out from the pack. BNKS invests in around 60 of the world’s biggest banks including HSBC and RBC. As the banks’ shares have grown in value, so has the ETF, and as a result, it’s currently up 21 per cent. MVB invests in seven Australian banks including CBA, WBC and NAB, and has risen 23 per cent on the ASX. VHY invests in over 60 Australian companies that all have a history of paying high dividends, from BHP to Transurban. This means you get both share price growth and dividends. Win-win.
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This information is not advice and has been prepared without taking into account your objectives, financial situation or needs. You should consider its appropriateness for your circumstances. Investing carries risks. The value of your investment may go down as well as up. The information in this article is intended to provide general information of an educational nature only. It does not have regard to the financial situation or needs of any reader and must not be relied upon as financial advice. Investors should consult a range of resources, and if necessary, seek professional advice, before making investment decisions in regard to their objectives, financial and taxation situations and needs because these have not been taken into account. Any securities or prices used in the examples given are for illustrative purposes only and should not be considered as a recommendation to buy, sell or hold. Past performance is not indicative of future performance.
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