When thinking about how to balance a long-term savings vehicle, such as your Self-Managed Super Fund, assets which align with broader socio-economic trends are infinitely attractive. Creating a recurring contribution to a diversified fund gives confidence to more active value-seeking elsewhere in your portfolio.

The performance of the iShares Global Healthcare ETF (ASX: IXJ) and the BetaShares Global Healthcare ETF – Currency Hedged (ASX: DRUG) make them great additions to an SMSF portfolio.

What is driving these global healthcare ETFs higher?

The S&P/ASX 200 Health Care (ASX: XHJ) index has increased in value by almost 225% in 10 years. To put that in context, the broader ASX 200 index, S&P/ASX 200 (ASX: XJO), has increased just 12% over the same period.

To break that down annually, the health care index has put on an impressive 13% on average every one of those ten years in contrast to just 2% per annum for the broader ASX 200.

Healthcare has historically had a reputation as a defensive stock class. People still get sick during recessions, the unemployed still use toothpaste. However, increasing application of technology and growing demand from demographic change has supported strong growth.

The World Bank estimated that from 2000 to 2015 expenditure on healthcare grew from 8.5% to 10% of global GDP. With aging populations around the globe and increasing wealth, increasing healthcare expenditure as a % of GDP offers the potential for long term market-beating appreciation.

ETFs to make you healthy and wealthy

So, you've decided healthcare exposure is what you're after. There a couple of options on the ASX which provide access to the global market.

Firstly, offered by Blackrock, the iShares Global Healthcare ETF share price has averaged 11.44% across the last 10 years.

A second option, added to the boards in just August 2016, is BetaShares Global Healthcare ETF. The BetaShares offering has put on around 20% since its inception, around 7% per annum.

It should be noted that iShares and BetaShares ETFs both have around 70% exposure to the United States, where the worlds largest pharmaceutical companies are domiciled. As such, they may both be sensitive to headwinds in that market, should any appear.

As with any type of fund, returns must be viewed in the context of the fees which they offer. Both funds have management expense ratios (MERs) of just less than 0.5%, on the mid to lower end of the fees for ETFs tradable on the ASX.

Foolish Takeaway

Utilising a passively managed fund to add easy diversification is now gospel in investing. Global Healthcare ETFs, such as iShares and BetaShares Global Healthcare offer diversified access to companies benefitting from underlying economic growth and demographic change. As such, they can make great additions to your SMSF, and beyond.

The post How to add health and wealth to your SMSF appeared first on The Motley Fool Australia.

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With government intervention in supply lines, rapidly approaching 5G, and a hotbed of competition, the Telecommunications Services sector of the ASX is an interesting place at the moment.

Amaysim Australia Ltd Capital Raising and results

Amaysim Australia Ltd (ASX: AYS) shares entered a trading halt on 22 February and will stay there until 28 February as the company issues new equity to existing shareholders. The Amaysim share price is currently down 40% on its high of $1.57 traded this time last year.

A challenger brand in telecommunications and energy with a market cap of around $200M, Amaysim is seeking to raise $50.6M from retail and institutional shareholders with the intention of restructuring debt and investing in expansion activities.

After debt restructuring, $17.6M will be used to invest in marketing, a new energy product suite, and upgrading the technology stack to support growth.

The top, middle and bottom line for Amaysim's interim results released 26 February are as follows:

• Net revenue down 5.6% to $263M
• Underlying EBITDA up 32.2% to $29.2M (up 11.3% to $23.5M under previous accounting standards)
• Net loss after tax $4.8M

At the segment level, Energy profit increased by 27% and compensated for an 8% lower profit in mobile. Looking forward, Management forecasts operating EBITDA between $44-$48M (under the new accounting standards) for the FY19 full year indicating a tempered second half.

TPG Telecom Ltd's strategic frustrations

TPG Telecom Ltd's (ASX: TPM) share price has reflected the repeated strategic frustration the business has faced. First, in partnering with out of favour Chinese equipment provider Huawei to roll out the 5G network. And, expression of preliminary concern by the ACCC around the proposed merger with Vodafone Hutchison Australia. The final decision from the regulator is due on 28 March 2019.

As announced yesterday, 26 February, if the Vodafone merger is scuttled by the ACCC, TPG Telecom will be looking at a circa $228M impairment due to write-offs from the 5G kerfuffle.

Is Amaysim's strategy TPG Telecom's competition problem?

Amaysim has busily divested from the fixed line Broadband business in the past half year with a view to focus on mobile services.

Among other issues, the ACCC is considering whether fixed line Broadband and mobile plans may become increasingly substitutable products, particularly as 5G services arrive. That substitution could push Vodafone and TPG into more direct competition.

Amaysim is basing its strategy, and appeal to the market for capital, on the assumption that fixed-line broadband is not a requisite for packaging services to households. If the ACCC agrees that mobile substitute for fixed line broadband, TPG's merger plans could be sunk.

Foolish Takeaway

TPG's challenges could push short term damage to results and lessen the effectiveness of one of Telstra Corporation Ltd's (ASX: TLS) primary competitors as the 5G transition moves ahead.

Personally, I like the decisive action being taken by the Amaysim team, raising a quarter of their market cap and looking to combine telecommunications and energy into a complementary, customer friendly offering. The commoditization of mobile services makes the cross-sell with traditional 'household utilities' like energy a believable proposition.

Amaysim's share price may also follow the entitlement offer's discounts to cheaper territory. The potential upside certainly appeals to my inner small to mid-cap thrill seeker.

The post Better Buy: Amaysim Australia Ltd or TPG Telecom Ltd? appeared first on The Motley Fool Australia.

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The MYOB Group Ltd (ASX: MYO) share price closed 0.3% lower on Friday, after its chance to better private equity firm KKR's offer of $3.40 per share by 22 February passed without a competing bidder materialising. That currently represents a slight premium to Friday's close of $3.37.

Following the offer being announced on 8 October 2018, the MYOB share price shot up 19% to close at $3.55. MYOB directors were convinced the offer was in the best interest of shareholders due to an attractive EBITDA multiple (17x FY18) and the near-term investment needed to execute on growth plans.

KKR, which already owns 19.9% of MYOB, will have shareholders vote on the offer in mid to late April. MYOB listed on the Australian Stock Exchange in 1999. If approved by shareholders, MYOB's transition off the ASX boards will end a 20-year run on the bourse.

The MYOB results for the year ending 31 December 2018 (announced on 21 February 2019) showed:

• Revenue up 7% to $445 million
• EBITDA flat at $190 million
• Net profit after tax up 2% to $104 million

What are the consequences of new MYOB ownership?

Should MYOB shareholders agree to the sale, KKR's ownership could go in two directions.

Firstly, if KKR invests capital and attention, the business may execute an existing strategy and perhaps beyond. There are several possible value-add synergies in the KKR portfolio, particularly in credit provision (Pepper Group) and digital services (Go Daddy). In addition, MYOB's ambitions have been domestic rather than global. That could feasibly change with a new perspective from KKR.

Alternatively, private equity's more ignominious reputation for limited investment and value extraction, could also feasibly play out.

Daylight appearing in a competitive market

In addition to MYOB potentially entering the KKR stable, smaller competitor Reckon has publicly moved away from direct competition with its much larger antagonists. Following falling revenues and citing competition and the disruption caused by a failed MYOB acquisition, Reckon Limited (ASX: RKN) will offer white label solutions and focus on the healthcare vertical.

With both MYOB and Reckon experiencing potentially disrupted focus, Xero Limited (ASX: XRO), the first mover in cloud-based accounting software for small and medium business, would have the opportunity to further execute on its early lead.

Foolish takeaway

If the MYOB acquisition does go ahead, Xero seems to be at least a temporary winner, and maybe a permanent one. If MYOB doesn't execute on the existing growth strategy under the auspices of KKR, Xero will have a chance to sweep the local region. Alternatively, if Reckon provides a guide, calendar 2019 could be a tough year for MYOB sales even if the long term looks rosier as a result.

2019 could be the year that Xero gains decisively in Australia-New Zealand.

The post MYOB shares were lower on Friday: Takeover offer goes to shareholders appeared first on The Motley Fool Australia.

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The Magellan Financial Group Ltd (ASX: MFG) share price is currently exchanging hands at $32.72, some 50% above its 52-week low at 4 July 2018. Impressive, and further still, should be seen in the context of almost a compounding annual share price growth rate of around 24% over the past 5 years.

Following its 1H FY19 results release on 14 February 2019, Magellan Financial Group's share price turned frothy. Building on a recovery from the late 2018 turmoil of the post-October market downturn, Magellan has added 13% to the share price since 14 February.

Magellan's financial results for 1H FY18 were overwhelmingly positive. Net profit after tax adjusted for significant items (primarily the $56M IPO costs for Magellan Global Trust (ASX: MGG)) grew by 62% from 1H FY18 to $175.3M in 1H FY19. That result was driven by dramatic Funds under Management growth, and accompanying growth in fee revenue amidst a decline in operating costs of 7% in comparison to the previous corresponding period.

The scalability of the business model was also on full show with management anticipation of expenses growing from $101M in FY18 to just $105M for full year FY19. A relatively fixed cost base opens the possibility of further margin growth.

Revenue growth depends on Funds under Management

Funds under Management (FuM) climbed to $72.9B by 31 January 2019, a 35% increase on the prior corresponding period. The increase in FuM is positively impacted by the addition of Airlie Funds Management business in early 2018. Accompanying management and services fee revenue is up 28%, lagging the increase in funds due to a changing business mix from Airlie.

Monthly average retail inflows of $79M were up from $55M in 2017. Institutional inflows of $0.9B, however, down $0.5B on the previous period. This was all in the context of declining marketing spend which contributed to the lowered costs for 1H FY19.

As the aggregate balance has grown, investment returns have become the primary determinant of change in Magellan's key revenue driver, FuM. Average performance across the portfolio since inception is 10.8% p.a., exceeding the Board's hurdle target of 10% p.a. However, with market turbidity weighing on the 1- and 3-year results across the fund, further share price gains in 2019 need good old-fashioned investment performance in the underlying portfolios.

Regulation could drive new product opportunities

Magellan is not just banking on the quality of its existing portfolio. Brett Cairns, CEO, mentioned that considered product expansion was a goal and that "one area we are looking at closely is retirement income".

This focus may prove timely given the passage on 14 February 2019 of the Social Services and Other Legislation Amendment (Supporting Retirement Incomes) Bill 2018, which pushes Super funds to offer comprehensive retirement income strategies to members.

Foolish Takeaway

While the Magellan share price bounced dramatically, net profit, EPS, dividend, and revenues have grown even faster. Looking ahead, as FuM drives fee revenue, Magellan may well put down an even stronger full-year performance.

Pending no repeat of the general retreat of last October, continued revenue growth on a fixed cost base seems likely making MFG a good addition to your holdings.

The post Magellan Financial Group share price has climbed 50% from its 52-week low: Is it a buy? appeared first on The Motley Fool Australia.

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As of 19 February 2019, the Goodman Group (ASX: GMG) share price has increased by almost 60% over 12 months, making it the fastest growing company in the ASX50 in the period.

The Goodman Group – an integrated property provider of investment, development and management solutions – is continuing momentum from previous periods as cogitations on first half FY19 results push trading to fresh heights.

For contrast, the ASX50 (ASX: XFL) index has posted a modest, inflation-beating 3% or so over the same period. The next fastest individual mover is Santos Ltd (ASX: STO) at around 35%.

To caveat the increase, it should be noted that Goodman Group's share price growth is accentuated by trading at an 8-month low in February 2018 along with a well-received 1H FY19 result being posted on 14 February 2019.

With that said, considering 24 months, Goodman Group's share price has delivered capital gains of some 77%. Lingering on this register has materially rewarded shareholders.

To recap Goodman Group's results from 1H FY19:

• Operating profit of $465M, up 10.4% on 1H FY18
• Operating EPS of 25.5 cents
• Gearing 6.5%, up from 5.1% in 1H FY18
• Distribution per share of 15.0 cents, up 9.1% on 1H FY18

Goodman Group's three operating segments are Property Investment, Development, and Management, representing a full lifecycle property platform.

Property Investment:

Goodman Group divested from almost a billion dollars' worth of real estate while rebalancing away from direct ownership to a greater proportion of cornerstone investments. This divestment has resulted in earnings reducing to $181.8M for 1H FY19 however management is confident of improving future earnings.

Development:

Goodman Group's Development arm has 68 development projects in flight – valued at $3.6B – across 12 countries with a forecast yield of 7.1%. Management expects that number to grow to $4.0B in the near term indicating continued AuM growth. Earnings from Development were $273.3M in 1H FY19.

Management:

Earnings from Management of $189.4M, a 15% increase from the prior corresponding period, made it the fastest growing division. Goodman Group's assets under management (AuM) total $42.9B (contrasting with a portfolio worth $74M at IPO back in 1995).

What's driving Goodman Group's future growth?

Goodman Group is benefiting from increasing customer demands for high quality industrial real estate close to major population centres.  Urbanisation, growth in the global middle class and changing consumer behaviour are driving fulfillment and supply chains investment that translates to demand for Goodman Group's industrial real estate offering.

That demand can be seen in earnings and client growth. Operating profit growth rates at the half year had grown 8.5% in 1H FY18 and (as above) accelerated to 10.4% in 1H FY19.  Goodman Group's largest single client, Amazon, grew as a percentage of revenue from 4.5% in FY18 to 5.2% 1H FY19. If you are the average of the five people you spend the most time with, it's good to have Amazon as a client.

To execute on future opportunities, Goodman Group is well capitalised with $14.2B in undrawn debt reserves, equity and cash ($2.1B) to provide optionality for more expansion.

Foolish Takeaway

Goodman Group has delivered stand-out returns for shareholders. Despite those recent gains, the company is positioned with a strategy that aligns with macro trends in consumption which I believe warrants its position in your portfolio going forward. Although, personally, I may wait until some of the post-results enthusiasm tapers off with hopes of taking a position closer to $12.

The post Why is the Goodman Group share price up 60% in 12 months? appeared first on The Motley Fool Australia.

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The REA Group Limited (ASX: REA) share price fell 3.9% in the first 10 minutes of trade on Friday 8 February, dropping to $74.88, before finishing the day at $74, or 5% beneath the opening.  This came after the company announced a 98% fall in net profit in its first half 2019 results. At first glance, it seems like challenging times for the realestate.com.au owner.

In addition, recently appointed CEO, Owen Wilson, unveiled flagging residential listings amidst global regulatory focus on cooling property markets.

This included listing declines of 7% in Malaysia, 13% in Hong Kong and 3% in Australia during the first half of FY19. Mr. Wilson also gave cautionary statements about the near term – particularly for the Australian market where the upcoming federal election and the regulatory response to the Royal Commission present downside risk.

Why, then, should you buy REA Group shares now (and hold them)?

In addition to being partial to the Rothschild aphorism of: 'when there's blood in the street, buy property', things aren't as grim for REA Group as they appear at first glance – maybe it is time to buy property (technology).

Firstly, REA Group has been able to continue to grow revenue in Australia – accounting for 91% of revenue – despite falling numbers of listings through enhancing product mix and introducing new services. Indicators of user satisfaction from REA Group's platforms is also impressive and improving.

Risks for the business include global expansion execution, regulatory pressure on the financial industry, and governmental focus on house prices. However, REA Group will continue to benefit from its position as gatekeeper to the real estate market. The company has successfully implemented new product and revenue lines that bodes well for future growth.

Secondly, the 98% reduction in net profit for the first half of FY19 was driven by impairment to Goodwill from its Asian unit which covers Malaysia, Hong Kong, Indonesia, Thailand and Singapore. Macroeconomic deterioration led to a (presumably once off) $173.1M lowering of intangible assets.  Excluding such one-off costs, REA Group's results were resoundingly positive.

The company has shown repeated ability to post double-digit growth, an impressive feat for a business steadily closing in on $1B of annual revenue (and facing headwinds in key drivers). For the first half of FY19, revenue of $469.2M was up 15%, and EBITDA of $289.1M was up 19%, on the first half of FY18. Regionally, REA Group achieved double-digit revenue growth across Asia (14%) and Australia (16%), quite a feat for a business trending towards annual revenue of $1B (although this rate of growth is moderation on FY18).

Finally, REA Group's midday share price on 15 February 2019 is still at a 16% discount to its 20 August 2018 peak of $94.12. Due to robust earnings and a languid share price, REA Group's price-earnings ratio is about as good as it's been since FY15. For reference, the iPhone 6 was released in the first quarter of that financial year.

Looking at historical price-to-earnings (P/E) ratios following full-year announcements for FY16, FY17 and FY18, 12-month trailing P/E ranged from 39x to 40x. This contrasts with 12-month trailing P/E of 32x at the time of the H1 FY19 results (34x at midday 15 February), a notable improvement in affordability.

While forward-looking management expectations show tempered (still double-digit) growth out to FY20, REA Group remains a high growth, high margin business that is well-positioned in the Australian property market, with beachheads in foreign markets.

Foolish Takeaway

Risks, perceived and otherwise, have left REA Group with a price-to-earnings ratio that hasn't been seen in over 4 years. There is no guarantee that REA Group is going back to 40x P/E, however, when some vibrancy does return to the property market, REA will be a good stock to be holding.

While there is some uncertainty ahead, the quality of the business and track record of strong growth make a compelling case for picking up some exposure, particularly to hold into the longer term.

The post Why I think the REA Group share price is a buy (and hold) appeared first on The Motley Fool Australia.

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