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Diversify your stock-picking with these 3 investment companies

When you want to invest, but feel either you don’t have the time to follow stocks or just would rather have someone find the investment ideas for you, you may turn to managed funds.

They may not be able to give you the one-off 30%-50% one-year gains that good stock-picking might, but you don’t have to spend your weekends and evenings poring over business reports and financials, either.

You can search websites for managed funds comparison, and find ratings agencies that will help you sift through all the different funds, but that takes some time also.

The easiest way to start at least is to buy into the managed fund companies directly, and whittle the options down to a manageable number.

Here are three ideas to get you started.

Macquarie Holdings (ASX: MQG) isn’t a fund manager, it is the holding company for the famous investment bank. It does more than just manage funds. It generates income through providing services for corporate takeovers, rights issues, capital raisings, etc. When financial markets are heating up, as they are right now, it benefits from the increased financial activity.

Platinum Asset Management (ASX: PTM) listed in 2007, just before the GFC hit, so its five-year earnings growth rate is not impressive at negative 4.3%. Yet 2012 seems to be the bottoming of the earnings slide at $126 million, and then in 2013 it is up to $129 million. Its return on equity is 37.5% and its share price is up from about $3.65 to $6.01 over the past year.

Magellan Financial Group (ASX: MFG) has three global equities funds, so it can offer the returns of international companies and markets. During the GFC, that may not have been so attractive, but when the major economies are recovering, there are wealth opportunities all over the world.

It has seen a great run on its share price, $4.23 to $10.98 over the past year, but net earnings have soared from $13.6 million to $66.6 million just in 2013 alone. Return on equity is 43.5%.

Foolish takeaway

Managed investments can be the bedrock for a healthy portfolio so that when the share market goes topsy-turvy, you can feel more secure about leaving the stock picking to someone else.

Dividend income for future growth

Another way to assure steady income is through quality dividends. The Australian Financial Review says "good quality Australian shares that have a long history of paying dividends are a real alternative to a term deposit." Get "3 Stocks for the Great Dividend Boom" in our special FREE report. Click here now to find out the names, stock symbols, and full research for our three favourite income ideas, all completely free!

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Motley Fool contributor Darryl Daté-Shappard does not own shares in any company mentioned. 

See all posts by Darryl Daté-Shappard
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