When it comes to investing for the long run, ASX investors shouldn’t be relying solely on the dividends and profit of today to base their expectations of what will make a good investment many years into the future.
In recent years, we’ve seen companies like WiseTech Global Ltd (ASX: WTC) and Afterpay Touch Group Ltd (ASX: APT) rise to greatness in small part due to their current financial performance but in large part, it’s thanks to their long-term growth potential. In other words, expanding valuations.
While ‘growth investing’ has its limits and will likely fall to its knees in a market downturn (relative to deep ‘value investing’), it’s obvious investors are willing to pay up for growth. Just look at shares of companies like Walt Disney (NYSE: DIS), the owner of Marvel and the Avengers franchise, and tech shares like Netflix Inc (NASDAQ: NFLX).
Increasingly, investors are willing to pay up for the right to, one day, potentially capture some of their growth. Here are three industries that Aussie investors should have on their radars in 2019 and well beyond…
The Internet of Things
The Internet of Things or ‘IoT’ is a term used to encapsulate the rise ‘smart’ devices. Toasters that can ‘talk’ to fridges which talk to a heater. In 10 or 20 years from now almost every household object will have a computer chip inside it.
For ASX investors, Altium Limited (ASX: ALU) is a global name. It provides software used by engineers to create the electronic pieces which sit inside everyday devices.
Altium is not alone. Cadence Design Systems (NASDAQ: CDNS), Synopsys (NASDAQ: SNPS) and Ansys (NASDAQ: ANSS) are key players in this market.
Exchange Traded Funds (ETFs)
We’ve covered ETFs in great detail here on Rask Media but the amount of money invested inside ETFs here in Australia alone is rapidly approaching $50 billion. Globally, there are thousands of ETFs listed on exchanges.
For investors, the best way to benefit from the rise of ETFs might be to invest in them — rather than find the shares of companies issuing them on exchanges since the the ETFs themselves are mostly commodities. There are nearly 200 to ETFs choose from in Australia. We released research on our #1 ASX ETF for 2019 in this free report (click here).
Augmented & Virtual Reality
Virtual reality (VR) and augmented reality (AR) will change the way humans engage with the world.
Movies are becoming virtual ‘walk-throughs’. We’re already able to download smartphone apps which allow users to apply Loreal makeup to one side of their face or place an IKEA couch in their living room to see how it looks. With social media apps, young kids (and adult kids!) are able to talk with their friends using a computer-generated face which shows them as the opposite gender.
It’s really hard to pick a single winner(s) from this trend but companies like Amazon.Com Inc (NASDAQ: AMZN), Activision Blizzard (NASDAQ: ATVI) and Tencent Holdings (HKG: 0700) are arguably very well-placed to benefit from these multi-year developments. Aussies can access shares in many as of these (primarily US-based) companies via an international brokerage account or via funds, like ETFs.
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Disclaimer: Any information contained in this article is limited to general financial/investment advice only. The information has not taken into account your specific needs, goals or objectives, so please consider consulting a licenced and trusted adviser before acting on the information. Please read The Rask Group’s Financial Services Guide (FSG) for more information. This article is authorised by Owen Raszkiewicz of The Rask Group, which is a corporate authorised representative No. 1264179 of Strawman Pty Ltd (ACN: 610 908 211) (AFSL: 501 223).
Disclosure: At the time of publishing, Owen Raszkiewicz does not have a financial interest in any of the companies mentioned.