Buying ASX shares for your child for Christmas may be something you do, build the portfolio up over time and tell them when they’re older, or actively involve them and get excited with them when they’re young.
Investing in businesses for your child doesn’t have to create the greatest returns to start off with – the best return might be getting them excited and learning about investing.
In my first article about Christmas share ideas for children, I wrote about a couple of ideas relating to highly ethical ideas such as Australian Ethical Investment Limited (ASX: AEF), but not every pick needs to make an ethical statement.
Here are three ASX shares I’d buy for my child especially if I were going to talk with them about the value of shares and choose companies that would get them excited in a way that they’d understand:
Costa Group Holdings Ltd (ASX: CGC)
This business is one of the largest food businesses in Australia. It produces several different types of fresh food including tomatoes, berries, tomatoes, avocadoes and mushrooms.
Costa is tangible for kids because if you buy berries or tomatoes you can see the Costa name on the products. And, bonus points, it could get them interested to eat more healthy food.
The company had a rough time during the drought. It also suffered from crumbly berries and fruit flies not so long ago. But now the company seems to have turned a corner with the drought breaking and COVID-19 impacts subsiding.
The effects of the drought is estimated to have hurt underlying EBITDA (EBITDA explained) by $15 million in the tomato and berry categories. Crops recovered to a full yield by May with the new Corindi (NSW) raspberry crops coming ‘on stream’ from mid-August and the blackberry crop from mid-October.
Costa said that there is strong citrus export and domestic demand, along with good pricing which is encouraging for the rest of the season.
Future Generation Investment Company Ltd (ASX: FGX)
This ASX share is a listed investment company (LIC) which donates 1% of its net assets each year to youth-focused charities. There are no management fees or performance fees involved with this LIC, just like its Future Generation Global Investment Co Ltd (ASX: FGG). Fund managers work pro bono (for $0) so that the LIC can maximise its charitable donations. Future Generation (Australia) invests in the funds of fund managers that target ASX shares.
Future Generation could help affirm to your child the concept of charity, being kind and helping people in everything you do, even through ASX shares.
Some of the fund managers involved include Bennelong, Paradice Investment Management, Regal Funds Management, Eley Griffiths and Wilson Asset Management.
According to the latest monthly update, the Future Generation’s portfolio gross return over the past year was 7.6% and over the past three years the average return per was 8.9%, which compares to the S&P/ASX All Ordinaries Accumulation Index return of -0.1% over the past year and an average of 7.5% over the past three years. The outperformance over the last 12 months has been impressive.
It’s invested in many of the country’s best fund managers, it’s supporting plenty of excellent charities and it has a track record of outperformance.
Bega Cheese Ltd (ASX: BGA)
This is a bit of a wildcard choice, but this company has a number of brands in its portfolio that are recognisable and might be in your kitchen (what kid doesn’t love cheese?). It could be very helpful seeing, touching (and eating!) products that are made by the company they own. This might be especially helpful and tangible for younger children.
I’m sure everyone knows about the cheese products, but the ASX share also owns a number of other brands such as Farmer’s Table, Simply Nuts, B Honey, Bega Peanut Butter, Vegemite and ZoOsh.
The company recently made an acquisition called Lion Dairy. This added the following brands to Bega’s product range: Dare, Vitasoy, Yoplait, Dairy Farmers, Berri, Mildura and Just Juice. There are plenty of household brands in its stable. I think the diversification could help Bega’s earnings be more consistent, the economies of scale could help grow margins.
If you want some more ideas, then you could think about the ASX growth shares that the Rask Media team regularly write about.
