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When a baby enters the picture, it can be an event that changes a family’s thoughts about their financial situation. Sometimes parents may want to invest in ASX shares on behalf of their baby for the long term, or maybe some family members have even given them some money.
People invest with all sorts of different time frames in mind. But, if a family is investing for the benefit of the baby, then they might do so with an investment horizon of 18 or 20 years, or even longer, in mind.
Certainly, it could be a very different world in two decades. Think how much has changed in the last 20 years! However, it gives us plenty of time to invest and benefit from compounding.
I have some ideas that could be good long-term investments.
Australian Ethical Investment Ltd (ASX: AEF)
Australian Ethical is a company that families can be proud to own for the long term. He is a fund manager who prides himself on the fact that his entire range of funds is “rigorously evaluated on ethical and investment merits. Beyond environmental, social and governance (ESG) criteria, the team proactively looks for companies that “do good”.
This ASX action is increasing its number of clients and Funds Under Management (FUM). In FY22, the number of clients financed increased by 17%. Despite the volatility at the end of FY22, MUF increased 2% over the year to $6.2 billion as of June 30, 2022. MUF was $6.45 billion as of July 31, 2022.
You benefit from ongoing mandatory retirement contributions. FY22 super net flows increased 22% to $800 million. Net flow growth is also expected in FY23.
BetaShares Global Sustainability Leaders ETF (ASX: ETHI)
This is an exchange-traded fund (ETF) based on gaining exposure to a portfolio of large global companies that adhere to strict ethical and sustainability standards.
ASX action starts with a selection of companies from global developed markets, and they must be of a certain size.
Additionally, companies must be in the top third of the best in terms of carbon efficiency for their industries or engage in activities that can help reduce carbon use by other industries.
A series of screens are then applied to exclude fossil fuel producers. There are also no companies that are significantly engaged in weapons, gambling, alcohol or junk food. Companies with human rights or supply chain issues are excluded, as well as companies that lack gender diversity on their boards, etc.
Some of the 200 names in the current portfolio include Apple, Visa, house deposit, MasterCard, nvidia, Adobe, ASMLY PayPal. Your entries can come from all over the world.
Coincidentally, or perhaps not, the BetaShares Global Sustainability Leaders ETF has performed well. Since it began in January 2017, the ETF has returned an average of 16% per year. But past performance is not a reliable indicator of future results.
I like that this investment provides diversification, has compelling holdings, and seems capable of producing good returns over time.
REA Group Limited (ASX: REA)
REA Group is the owner of the largest real estate portal in Australia: realestate.com.au. It has a small ‘toll’ on almost all residential property sold in Australia. It has a strong position in the market, which allows it to regularly raise prices.
I think the 28% drop in REA Group share price makes ASX shares a more attractive long-term opportunity at the current level.
What would make this business an attractive long-term option? It has investments in property sites in the US, India, and Southeast Asia. While each of these regions may not generate as much property income as Australia, the sheer population of these regions compared to Australia is certainly compelling. Each region could become a profit center for the REA Group.