At the time of writing, the Macquarie Group Ltd (ASX: MQG) share price is struggling after news of a $2 billion investment in the UK.

What has Macquarie done?

The investment bank announced that Macquarie Asset Management (MAM) has reached an agreement to acquire a majority stake in Southern Water Services in the UK.

The Southern Water Services plan

Macquarie outlined that this business provides water services to 2.6 million and wastewater services to 4.7 million customers in Kent, Sussex, Hampshire and the Isle of Wight.

MAM will invest, on behalf of its long-term investors including pension funds and insurance companies, over £1 billion in new equity (almost $2 billion) to recapitalise the business and implement a more sustainable financing strategy for Southern Water.

This money will allow Southern Water to invest "significantly" to upgrade its network. Over the next four years of the current regulatory period, Southern Water will invest £2 billion to fix pipes, pump stations and sewers. These infrastructure items are reportedly "underperforming" and are causing harm to the local environment.

MAM outlined the size of the investment, saying it equated to £1,000 for each property in Southern Water's catchment area. The capital will allow the business to improve its operational performance for stakeholders and increase the financial performance and resilience for shareholders.

Macquarie makes commitments

MAM has had long discussions with Ofwat, which is the regulator of water and wastewater services in England and Wales.

The investment bank noted that Southern Water has one of the worst track records in the UK water sector. It aims to reduce pollution incidents by more than 50% over the next four years. It is committed to significantly improving Southern Water's environmental track record with a zero-tolerance mindset.

Another part of the plan is to reduce leaks through the significant investment programme.

The next commitment was ensuring affordable customer bills. The commitment was that, in total, average water and wastewater customer bills don't rise by more than inflation. That's in addition to honouring an existing £123 million customer rebate due to historical incidents.

Finally, Southern Water wants to offer better customer service by fixing the issues that customers are complaining about, and increasing the capacity to handle complaints.

Macquarie commentary

Leigh Harrison, the boss of Macquarie Infrastructure and Real Assets, said:

Southern Water needs significant investment to improve its operational and environmental performance, and financial health. Without it, the business will be unable to fulfil the expectations of the millions of customers that rely on its services each day or reduce its negative impact on the local environment.

This major £1 billion equity investment by one of our long-term infrastructure funds will help put Southern Water back on a stable footing and enable an ambitious multi-year transformation plan to make essential water and wastewater services in the South East of England more sustainable and resilient.

While we expect Southern Water will have made substantial progress in addressing its issues by the end of 2025, we acknowledge the business' transformation will take time and that is why we intend to own our stake in Southern Water over multiple regulatory periods.

Macquarie share price snapshot

Whilst Macquarie shares haven't done much today, it's up 8% over the last six months and up more than 25% in the last year.

The post Macquarie (ASX:MQG) share price struggles following $2b UK investment news appeared first on The Motley Fool Australia.

I believe there are a number of important rules that Aussies should follow to help their wealth grow over time.

Some of wealth-building is down to luck. But a lot of it is down to the process you use for your money and the systems you put in place.

I think these important rules are worth following to help you build wealth:

Spend less than you earn

I think one of the most important rules for building wealth is making sure that you spend less than you earn, that you live within your means.

It's easy to spend a lot of money. It's harder to earn more. The trick is to make sure that your spending isn't consistently more than your income. If you earn $100 a month more than you spend then you can build your wealth over time. If you always spend $100 a month more than you earn then your net worth is going to head downwards until interest and debt overwhelm you.

How are you supposed to know if you're spending less than you earn? By tracking of course! I'm sure whichever bank you're with would offer some personal finance tools whether it's Commonwealth Bank of Australia (ASX: CBA), Westpac Banking Corp (ASX: WBC), Australia and New Zealand Banking Group (ASX: ANZ) and National Australia Bank Ltd (ASX: NAB) or another one.

Plenty of people use another tool to track their finances like Excel, Google Sheets or even Zip Co Ltd's (ASX: Z1P) Pocketbook. I use Excel. 

Budgeting can be a really powerful tool to help you save money.

Be intentional with your savings

Spending less than you earn is a good outcome of your hard work and financial choices. But I think it's important to come up with an intentional system for your money.

Some people like the idea of saving money first and spending what's left after that. If you're aiming for a long-term savings goal, such as a house deposit, you need to make sure you're actually putting that money aside into a savings account rather spending it.

Even if you just save $100 or $200 a month, it's important to classify money not spent that month as savings. Keeping it physically separate in a savings account is a good idea. Otherwise you could just end up spending it a month or two later.

You can really start building good savings habits if you just make it into a routine to save money (like a fitness routine). As Warren Buffett said: "Chains of habit are too light to be felt until they are too heavy to be broken."

Have an investment plan

No-one has a crystal ball to be able to tell you when share prices are going to fall or rise. It's impossible to predict. A year ago I don't think anyone would have seriously predicted that a global pandemic was about to happen.

I think it's important to regularly invest into your portfolio. It doesn't matter whether the market is up or down. It doesn't matter which side of politics is in power. Don't worry much about the latest GDP or house price statistics. Investing regularly will make sure your wealth-building plan stays on track. It could be once a month, once every two months or even once a quarter. Just commit to regularly investing.

What shares would make good regular investments? I think some exchange-traded funds (ETFs) would be good ideas like Betashares Global Quality Leaders ETF (ASX: QLTY), BetaShares Global Sustainability Leaders ETF (ASX: ETHI) or Vanguard Msci Index International Shares Etf (ASX: VGS).

I also think that listed investment companies (LICs) and trusts (LITs) can be good for regular investing. I like ideas such as MFF Capital Investments Ltd (ASX: MFF), Magellan Global Trust (ASX: MGG), WCM Global Growth Ltd (ASX: WQG) and Future Generation Global Invstmnt Co Ltd (ASX: FGG).

The post 3 important rules to help you build wealth appeared first on The Motley Fool Australia.

However, the difference between a REIT or ETF and an ASX LIC is the structure of the business. LICs are generally limited companies, while ETFs and REITs are explicitly trusts. There are a range of differences but for me the most important is that a LIC is like any other company. Therefore, you buy shares not units. Meaning, you buy a part of the company rather than a unit in the underlying assets.

Hearts and Minds Investments Ltd (ASX: HM1)

Hearts and Minds is a great ASX LIC which listed during 2019. The fund managers forgo all fees, instead donating to leading Australian medical institutes. It has a concentrated portfolio in 25-35 Australian and global securities. These are based on the highest conviction ideas from leading fund managers.

In year to date trading, Hearts and Minds is up by 6.71% despite the coronavirus market crash in March. The company achieved a growth of 7.2%, compared to 3.4% in the MSCI World Net Total Return Index (AUD).

This LIC is currently trading at less than its net tangible assets (NTA) value per share of $3.71.

Ophir High Conviction Fund (ASX: OPH)

The Ophir High Conviction fund provides shareholders with a concentrated fund on companies outside of the S&P/ASX 50 Index (ASX: XFL). The company's investment philosophy is very fundamental. That is, a bottom up approach to identify under-valued ASX shares. Particularly those with existing and proven business models and large, or growing, addressable markets.

What originally attracted me to this ASX LIC is that both founders have all of their liquid investments here. In year to date trading, this ASX LIC's share price is up by 21.69%. It is trading at a price to earnings ratio (P/E) of 11.08, and at a slight premium to its NTA per share of $2.98.

The Ophir LIC portfolio uses the S&P/ASX Mid Small Index (ASX: AXMSA) as a benchmark. In FY20 the LIC delivered a growth rate of 12.7% against a benchmark growth rate of -5.3%.

WCM Global Growth Ltd (ASX: WQG)

WCM Global is a $200 million ASX LIC with an estimated NTA per share of $1.48 at the time of writing. This LIC also focuses on fundamental company analysis. However, it places a lot of value in the organisation's moat, or competitive advantages. In FY20, the LIC delivered a return of 17.6% for the year. Outperforming its benchmark MCSI All-Country World ex Australia Index by 12.9%.

This ASX LIC provides access to a range of giant global technology companies. For instance, it includes companies like Shopify Inc (NYSE:SHOP), Tencent Holdings Ltd (HKG: 0700), and Mercadolibre Inc (NYSE:MELI). At close of trading on Wednesday, this ASX LIC is selling for a P/E of 9.32.

The post 3 ASX LICs that are destroying the benchmark appeared first on The Motley Fool Australia.

I think the best ASX shares to own in your portfolio are ones that have good revenue growth potential, have a good path to profit growth and are scalable.

There's not much point going for a business that doesn't have much revenue growth potential in my opinion unless you're focused on dividends. Owning mediocre businesses would probably lead to mediocre returns. Going for income may be a poisoned chalice if the share price declines over time.

I believe profit growth is important. The share price of a business is linked to its earnings. If the earnings aren't going anywhere then the share price may not go anywhere either.

Scalable businesses are really attractive to me because it means they make more profit from revenue growth than they did before. It's the profit growth that ultimately helps increase the share price and dividends. Finding a business that can generate very strong profit growth is good for potential shareholder returns.

Pushpay Holdings Ltd (ASX: PPH)

Pushpay is one of my top ASX share ideas right now. It's probably my highest-conviction idea. It helps not-for-profits like US churches receive electronic donations. It also provides livestreaming options for clients to connect with their congregations. It's very useful in this new COVID-19 world. 

When you can find a great business at a really good price I think you just have to jump on that opportunity.

At the current Pushpay share price it's priced at 36x FY21's estimated earnings. I don't think that's unreasonable at all considering its growth and how low official interest rates have gone in Australia and New Zealand.

FY20 was an incredible year for Pushpay. It acquired Church Community Builder which really increased the capabilities of Pushpay with the personnel, the access to new clients for both businesses and the ability to offer a combined service. The combined business will hopefully be able to generate more revenue per client.

Pushpay revealed strong revenue growth in FY20 with an increase of 32% to US$129.8 million. In FY21 the ASX tech share is expecting to at least double its earnings before interest, tax, depreciation, amortisation and foreign currency (EBITDAF).

The ASX share impressed me most in FY20 with how much its profit margins increased. In FY21 its gross profit margin increased from 60% to 65% and its EBITDAF margin improved from 17% to 22%. The company is aiming for US$1 billion revenue in the coming years, so its margins could go much higher. 

WCM Global Growth Ltd (ASX: WQG)

This ASX share is a listed investment company (LIC) that likes to find businesses with rising competitive advantages and a corporate culture that supports that goal.

A positive moat trajectory for businesses suggests that the companies are getting even stronger, which should lead to good shareholder returns. WCM measures this with a rising return on invested capital (ROIC) as opposed to those with a large but static or declining moat.

In the past it owned shares like Facebook, Apple, Amazon, Netflix and Alphabet, but it has moved on to other opportunities which are seeing regular improvement.

At the end of August 2020, the ASX share's biggest 10 positions were: Shopify, West Pharmaceuticals, MercadoLibre, Visa, Stryker, Taiwan Semiconductor, Tencent, Lululemon Athletica, Thermo Fisher Scientific and Ansys.

As you can see, there's a large allocation to IT and healthcare businesses. This offers secular growth for investors. It's also invested in plenty of businesses that aren't focused on just the US.

I believe that WCM offers attractive diversification that you can't really get with ASX shares nor from the most popular exchange-traded funds (ETFs).

It has done very well. Over the past three years its portfolio return (after management fees but before expenses) has been 22% per annum. There's no guarantee of future performance, but it shows how good WCM is at picking businesses. 

At the current WCM share price it's trading at a discount of 10% to the net tangible assets (NTA) at 18 September 2020.

Foolish takeaway

I really like both of these ASX shares and I think they could strongly outperform many other ASX shares over the next three to five years. I believe Pushpay could be the best one to buy for growth, but I like the international diversified growth offered by WCM.

The post 2 top ASX shares I'd buy with $2,000 right now appeared first on The Motley Fool Australia.

There are a few ASX shares that I'd buy in a heartbeat.

I can't say that about many ASX shares right now. COVID-19 is still causing a lot of uncertainty on the share market. The valuations of some businesses like Afterpay Ltd (ASX: APT) have gone through the roof due to good growth and even higher expectations of the future.

Government assistance for the Australian economy will continue with lower jobkeeper payments, but COVID-19 impacts are still hard to predict with the situation constantly evolving.

Regardless of what happens next with COVID-19, I'd be happy to buy these two ASX shares in a heartbeat:

WCM Global Growth Ltd (ASX: WQG)

WCM Global Growth is a listed investment company (LIC) which invests in global shares and excludes ASX shares.

The portfolio is run by WCM Investment Management, a Californian based manager with a focus on high growth businesses in the consumer, technology and healthcare sectors.

A key focus for the LIC is to look for businesses with a growing economic moat. One of the main measures of this is an improving return on invested capital (ROIC). It wants to be invested in business that are strengthening their market positions, rather than businesses that are mature or declining. It's the 'direction' of the moat that is the most important thing to WCM.

The LIC also looks at the management and culture of the business to ensure that they are focused on a positive moat trajectory.

Some of its current big positions include: Shopify, West Pharmaceuticals, MercadoLibre, Visa, Stryker, Tencent, Lululemon Athletica, Taiwan Semiconductor, Crown Castle International and Ecolab.

The ASX share invests with a long-term holding period in mind. The investment approach has led to very strong returns. Over the past three years its portfolio has returned 20.15% per annum after fees, outperforming its global benchmark by 9.4% per annum. I'm not sure the next three years will be as strong as that, but I think the good performance can continue with how it invests.

At the current WCM Global growth share price of $1.26 it's trading at discount of nearly 16% to the pre-tax net tangible assets per share at 24 July 2020. That's a nice discount for a strong performer in my opinion. I'd be happy to buy shares today. 

Bubs Australia Ltd (ASX: BUB)

The Bubs share price has dropped by 11% since giving its June 2020 update to the market.

I was a bit unfortunate with the timing of my recent bullish assessment of Bubs but the ASX share looks even better value to me now.

I think it's a good idea to know businesses well enough that you'd be confident to buy (more) shares when the share price drops. That's the case for me with Bubs – I'd be happy to buy shares at this lower price.

The infant formula business has an exciting future in my opinion. In the FY20 update, the ASX share said that it grew its revenue by 32% to $62 million. Infant formula revenue increased by 69% during the year. It's the infant formula segment that I'm particularly interested in because it has a gross profit margin of around 40%, which is much higher than the overall business. As infant formula becomes a larger percentage of total sales, Bubs' margins will naturally improve – and that's before the benefit of economies of scale kicks in.

Management are expecting another strong year of growth in FY21. It's expecting to achieve profitability at the 'normalised earnings before interest, tax, depreciation and amortisation (EBITDA)' level.

The recent announcement of the launch of Vita Bubs – a vitamin and mineral supplement range – should help boost longer-term revenue as it can satisfy more of the consumer's daily nutritional and dietary needs. Hopefully having Jennifer Hawkins as the global ambassador will also help the company's long-term growth.

I think investors are underestimating how much the company can grow over the long-term. Even if the short-term wasn't as good as some hoped.

The post 2 ASX shares I'd buy in a heartbeat appeared first on The Motley Fool Australia.

ASX share prices change every day. Share prices can move a lot over a week or a month. 

We have to decide if the price being presented is good value or not. We can decide to buy shares at the price the market is offering. Perhaps we may take the price the market is willing to buy our shares for. Or we can just do nothing.

I don't think there are many shares that are trading at great value at the moment due to uncertainty caused by COVID-19 (and the related impacts) as well as the strength of the share market's recovery since March 2020.

But there are still some ASX shares I'd be happy to buy for my portfolio today:

Bubs Australia Ltd (ASX: BUB) – $3,500

Bubs is a business which is still fairly early on in its growth journey. It's an infant formula business with a specialisation in goat milk products.

With a smaller business I think it's important to think about the long-term. Don't think about how much an ASX share may grow in six months. Think about where the business will be in three years or five years from now.

Bubs is doing an excellent job of growing its international revenue. In the quarter ending 31 March 2020 it more than doubled its Chinese revenue. Its 'other markets' revenue increased by about 20 times in that same quarter. I think the company has great global growth potential. There is a huge addressable market in Asia alone.

The Bubs share price looks good value to me. Due to the essential nature of the business' products, I think Bubs has defensive revenue with a great growth trajectory.

WCM Global Growth Ltd (ASX: WQG) – $2,500

This is a listed investment company (LIC) that targets global businesses. It looks for international businesses that have an expanding economic moat. One of the main factors that WCM looks for is a rising return on invested capital. It also looks for businesses with a corporate culture that supports that goal of an improving economic moat.

Some of the ASX share's current largest positions include Shopify, Tencent, Visa and MercadoLibre. These businesses are leaders in their respective markets.

The LIC's returns have been strong over the past three years, yet the WCM Global Growth share price is still trading at a double digit discount to the pre-tax to the latest net tangible asset (NTA) disclosed in the weekly update.

City Chic Collective Ltd (ASX: CCX) – $1,000

City Chic is one of the most promising ASX retail shares in my opinion. The ASX share is a fashion leader in Australia for plus-size clothing for women.

City Chic was growing nicely before COVID-19 came along. Whilst store closures were tough, the company saw online sales growth of 57% during the shut store period. That's impressive considering the company said two thirds of global sales are online.

I'm excited by City Chic's aim of becoming a world leader in plus size women's clothing. It's making smart acquisitions to try to make this happen.

At 21x FY22's estimated earnings I think the City Chic share price looks like a good long-term buy.

Vitalharvest Freehold Trust (ASX: VTH) – $2,000

There is a lot of uncertainty in the share market and economy at the moment. A cheap agricultural real estate investment trust (REIT) could be a good way to play this situation.

Farming returns can be quite different to the overall share market. Vitalharvest owns some of the largest berry and citrus farms in Australia. Those farms are leased to Costa Group Holdings Ltd (ASX: CGC). Hopefully the next 12 months will be better for Costa's earnings because Vitalharvest has a profit share agreement with the horticultural giant.

I'm excited that Vitalharvest has a new manager which will be looking across the whole farming supply chain for investment opportunities. Things like food storage and food processing properties will be among the considerations for the ASX share's portfolio.

At the current Vitalharvest share price it's trading at an approximate 20% discount to the net asset value (NAV) at 31 December 2019. I think that's a big discount that can close up with better earnings and distributions from the REIT.

Foolish takeaway

I think each of these ASX shares could beat the market over the next three to five years. Vitalharvest looks great value and I believe Bubs has a very good growth journey ahead of it, assuming China doesn't cause any problems with exports.

The post Where I'd invest $9,000 in ASX shares appeared first on The Motley Fool Australia.

Do you have $1,000 to invest into ASX shares? I think there are still several investment opportunities on the ASX, we just have to be more picky than a few months ago when the COVID-19 selloff caused there to be lots of good value opportunities.

But I still think there are some wonderful investment ASX share ideas if you have $1,000 to invest today:

Exchange-traded fund (ETF)

BetaShares Global Quality Leaders ETF (ASX: QLTY)

I think it's worthwhile investing in quality companies during this difficult COVID-19 period. This ETF only invests in businesses which rank highly on return on equity (ROE), debt to capital, cash flow generation ability and earnings stability metrics.

This ETF costs a bit more than the cheapest ETFs out there, but its annual fee is still only 0.35%. It has performed very strongly since inception in November 2018, returning an average 19.76% per annum after fees.

Past performance is not a guarantee of future performance, but quality usually does well over time. Its current top holdings are shares like Nvidia, Apple, Adobe, Accenture, Alphabet and L'Oreal.

Growth shares 

Pushpay Holdings Ltd (ASX: PPH)

I think Pushpay is a great ASX growth share. It's one of the businesses that is seeing accelerated growth due to the unfortunate circumstances. Its an electronic donation business that helps facilitate digital giving. At the moment most of its current earnings and potential growth is from the large and medium church sector in the US.

Pushpay now expects that earnings before interest, tax, depreciation, amortisation and foreign currency (EBITDAF) will at least double in FY21. That would be impressive after the strong FY20 result.

It's the rising profit margins and long-term growth runway that make me particularly excited about the company. The Pushpay share price has dropped back over the past couple of weeks to be better value.

Bubs Australia Ltd (ASX: BUB)

Bubs is another exciting ASX growth share in my opinion. It's riding the infant formula wave of demand from Asia. It specialises in goat milk products, which is seeing rapidly rising demand from countries like Vietnam and China.

As long as there aren't any more trade disputes between Australia and China, I think Bubs has a good chance of delivering a lot of revenue growth and an improving gross profit margin over the next five years.

Bubs was cashflow positive in the quarter ending 31 March 2020. This bodes well for profitability in FY21.

I'd be very happy to buy Bubs shares at the current price. 

An eternal investment house

Washington H. Soul Pattinson and Co. Ltd (ASX: SOL)

Soul Patts has been listed in Australia since 1903. There are very few ASX shares in Australia that can point to that type of long-term history.

An investment conglomerate has a major advantage to most other businesses because it can alter its investment holdings over time. Being able to shift towards new growth opportunities – and divest old ones – is much better than being stuck as something in a low growth environment like a bank or telco.

I like to invest in ASX shares that I can see myself holding for many years. I want to minimise capital gains tax events and transaction costs as much as possible. Soul Patts definitely counts as a long-term idea. 

The current Soul Patts share price is still down more than 10% compared to its February 2020 high. I think it's a good time to buy shares for the long-term.

Listed investment companies and trusts

Magellan High Conviction Trust (ASX: MHH)

This listed investment trust (LIT) is run by Hamish Douglass and his well-respected investment team. The trust only invests in businesses that it has a high conviction in, hence the name. There are quality shares on the ASX, but many of the world's best blue chips are listed overseas.

Names like Alibaba, Alphabet, Microsoft, Tencent and Facebook feature in they trust's holdings. Those names have extremely strong economic moats. I'm not sure you could displace those businesses even if you were given $50 billion to try to do it.

At the current Magellan High Conviction Trust share price it's trading at a 5.6% discount to the net tangible assets (NTA) per share.

WCM Global Growth Ltd (ASX: WQG)

This ASX share is a listed investment company (LIC) that aims to invest in businesses with strengthening economic moats. One of the main measures of this is improvement is a rising return on invested capital. For investment manager WCM, the direction of the 'moat' is more important than the size of the moat.

The LIC has performed strongly, its investment portfolio has returned an average of around 20% per annum, after fees, over the past three years.

At the end of June 2020 some of its largest positions included internet and ecommerce related shares like Shopify, Tencent and MercadoLibre.

WCM Global Growth's share price is trading at a 13% discount to the pre-tax net tangible assets (NTA) at 17 July 2020.

Foolish takeaway

I really like each of the above shares. If I had $6,000 then I'd love to invest $1,000 into all six of them. At the current prices I think WCM Global Growth, Bubs and Pushpay are the three most likely to deliver the best returns over the next five years, so they would be the ones I'd go for first.

The post Got $1,000? You should buy 1 of these 6 ASX shares appeared first on The Motley Fool Australia.

I try to regularly invest into ASX shares. At least once a month. A few months ago I was investing very regularly because I saw a number of cheap opportunities during the crash.

But the ASX has recovered strongly since March 2020. Over the past two months alone the S&P/ASX 200 Index (ASX: XJO) has gone up just over 10%.

I still think there is a lot of uncertainty in the local and global economy. COVID-19 impacts are being felt around the world and government economic support is starting to wind down. Many businesses seem like less obvious winners at the current prices.

My recent investing has kept the above uncertainty in mind. These are two ASX shares I've bought in recent weeks:

WCM Global Growth Ltd (ASX: WQG)

This is a listed investment company (LIC), its job is to invest in shares listed outside of Australia. The Australian dollar continues to strengthen against the US dollar, it's now worth US$0.71. The stronger the Australian dollar is the cheaper it is to buy US shares.

At the current WCM Global Growth share price of $1.30 the ASX share is trading at a 13% discount to the pre-tax net tangible assets (NTA) at 17 July 2020. Thankfully I bought shares at around $1.25.

I liked the idea of buying a quality LIC at a double digit discount to its NTA. But I also like the investment style of WCM, a California-based asset manager. WCM aims for businesses with an expanding economic moat. One of the main ways it measures this is with a rising return on invested capital, as opposed to a large but static or declining moat. The other key factor that WCM looks for is a corporate culture that supports the expansion of the economic moat.

At the end of June 2020 its five largest holdings were: Shopify, West Pharmaceuticals, MercadoLibre, Visa and Stryker. Just under half of the ASX share's portfolio is invested in IT and healthcare. I like the long-term outlook for these two sectors. 

Its investment style has performed well. Its investment performance, after fees, has been 20.15% per annum over the past three years.

I think this LIC is a solid ASX share, it even pays a partially franked dividend yield of 3.1%.

WAM Microcap Limited (ASX: WMI)

WAM Microcap is another LIC. It targets ASX share small caps with market capitalisations under $300 million at the time of acquisition.

There have been few Australian investment managers that have performed as well as Wilson Asset Management's WAM Microcap over the past three years. Since inception in June 2017, WAM Microcap's portfolio has returned an average of 15.9% per annum (before fees, expenses and taxes), outperforming the S&P/ASX Small Ordinaries Accumulation Index by 10% per annum. Over the past three months the WAM Microcap's portfolio has returned 32.9%, outperforming the index by 9%.

Future strong performance is definitely not guaranteed, but I think WAM Microcap's team has shown they can identify good value ASX shares.

I think small caps can produce very strong returns, you just have to choose the right ones. I'm happy to get a fair amount of my small cap exposure with WAM Microcap and receive a good dividend along the way.

At the current WAM Microcap share price of $1.38 it offers a grossed-up dividend yield of 6.2%, though luckily I recently bought shares at a price of around $1.25.

I believe that WAM Microcap will deliver strong total shareholder returns over the next few years from here. However, it tends to fall very hard during market uncertainty, so I may wait until the next market drop to buy more shares.

At the end of June 2020 it had a solid cash weighting of 17.2% to buy beaten-up opportunities if the market drops again.

Foolish takeaway

I really like both of these ASX shares. I think international shares and small cap ASX shares could outperform the broad ASX share market over the longer-term. At today's prices I'd probably buy WCM Global Growth again due to the high Aussie dollar and the discount to the NTA. But I'd love to buy even more WAM Microcap shares at the right time.

The post Here are two ASX shares I've recently bought appeared first on The Motley Fool Australia.

ASX shares are a great option for both growth and dividend income.

Businesses have the ability to make good profit and pay out some of it in the form a dividend whilst keeping the rest of the profit to re-invest for more growth in the future. 

It's hard to find businesses with the right mix of income and growth. There are some businesses like Telstra Corporation Ltd (ASX: TLS) that pay out a large proportion of their earnings, but the earnings and share price aren't growing.

Others have great growth potential but don't pay a dividend like A2 Milk Company Ltd (ASX: A2M) and Pushpay Holdings Ltd (ASX: PPH).

But there are some businesses that offer a good mix of both growth and dividend income:

Share 1: WCM Global Growth Ltd (ASX: WQG)

This is a listed investment company (LIC) which invests in global shares, not ASX shares. The name 'WCM' refers to WCM Asset Management, a manager based in California which was founded in 1976.

WCM looks for two key attributes for companies to make it into its global growth portfolio. The first is an improving competitive advantage, or in other words an expanding 'economic moat'. The second attribute is a corporate culture that supports the expansion of this moat. WCM believes that the direction of a company's economic moat is of more importance than its absolute width or size.

The fund manager looks for companies with a rising return on invested capital (ROIC), rather than businesses with a large but static or declining moat. The corporate culture is a key factor for a business' ability to achieve a constantly growing moat.

So what are some shares that make it into WCM's portfolio? The ASX share has positions in: Shopify, West Parmaceuticals, MercadoLibre, Visa, Stryker, Tencent, Lululemon Athletica, Taiwan Semiconductor, Crown Castle International and Ecolab.

As you may have noticed, there's a focus on technology and healthcare businesses. These two sectors offer investors growth and (usually) fairly defensive earnings.

The investment returns have been strong to June 2020. The ASX share said that its portfolio has returned 20.15% per annum after management fees over the past three years – don't forget this includes the COVID-19 market selloff a few months ago.

The dividend income part comes in with the biannual dividend that the LIC pays to shareholders. At the moment it's committed to paying a 2 cents per share dividend as its final FY20 dividend, partially franked to 50%. That means the grossed-up dividend yield is currently 3.8%. At the current WCM Global Growth share price, the ASX share is trading at a 14% discount to its pre-tax net tangible assets (NTA) at 17 July 2020.

I believe it looks like a compelling buy today.

Share 2: Brickworks Limited (ASX: BKW)

I think Brickworks is one of the most promising non-technology ASX shares for growth.

There are three sections to Brickworks, each of them look like they have good growth prospects.

One section is its industrial property trust which it owns half of along with Goodman Group (ASX: GMG). The trust has built industrial properties on excess land that Brickworks used to own. Just like other quality real estate investment trusts (REITs), this property trust is generating reliable rental profit each year. Over the next few years the trust will see two large distribution warehouses completed and leased to Amazon and Coles Group Limited (ASX: COL). The completion of these assets should see a pleasing uptick in rental income and valuation uplift for the property trust.

Another section is Brickworks' large shareholding of investment conglomerate ASX share Washington H. Soul Pattinson and Co. Ltd (ASX: SOL). The investment house has been a strong dividend share for a long time and it's steadily building its asset base with diversified businesses like TPG Telecom Ltd (ASX: TPG), Clover Corporation Limited (ASX: CLV) and Palla Pharma Ltd (ASX: PAL). Soul Patts has been delivering solid total shareholder returns for decades, so Brickworks should be able to keep benefiting here.

The last section may be the most important one. Brickworks owns building product businesses in both Australia and the US. COVID-19 has made it harder for construction businesses in the short-term, but Brickworks has set the foundations for good growth in the future when construction rebounds in both countries. I really like the company's long-term growth plan in the US to make the operations there more efficient and profitable. I think the best time to buy a somewhat cyclical business is during the downturn. 

At the current Brickworks share price it has a grossed-up dividend yield of 5%. It hasn't cut its dividend for over four decades.

Foolish takeaway

I think both of these ASX shares are trading at good value, have good growth potential and have decent starting dividend yields. I'd be happy to buy both of them for my portfolio at the current share prices.

The post 2 ASX shares for growth and dividends appeared first on The Motley Fool Australia.