A top down, ‘big picture’ approach to investing has its positives and its negatives.
On the positive side it can help you identify themes to invest in, as well as themes to avoid. For example, the Chinese-led resource boom was a theme which provided a massive tailwind for investors if they correctly identified it and likewise investors who accurately identified the resource slowdown have done well by avoiding these same resource-exposed stocks.
On the negative side, even accurately identifying an investment theme won’t guarantee that you’ll make money – you still need to be a good stock picker.
China’s Food Bowl
One investment theme that could help to boost your portfolio’s return in 2015 is China’s growing demand for protein and the unique position Australia finds itself in thanks to the recent signing of the China-Australia Free Trade Agreement (FTA).
There are a number of ways to position your portfolio to benefit from this theme which could be in the beginnings of a multi-year growth phase. As the Managing Director of Freedom Foods Group Ltd (ASX: FNP) recently stated when announcing a multi-million dollar deal with Chinese agricultural industry giant New Hope, “Australia has a unique advantage in the supply and manufacture of high quality premium agriculture based foods”.
One of the companies bound to be a beneficiary of the FTA is major cattle herd owner and beef producer Australian Agricultural Company Ltd (ASX: AAC). This company could certainly be one to help beef up your portfolio in 2015!
Graincorp Ltd (ASX: GNC) hasn’t been in the news much since an attempted takeover for the company failed. While some shareholders may have been sorry that there was no change of control, its ASX listing means that investors can still gain exposure to a major grain storage, logistics, marketing and manufacturing business.
Bega Cheese Ltd (ASX: BGA) is a significant producer of cheese products for domestic consumers while also having a growing dairy export business, it too stands to gain from the FTA.
It’s not just the producers of proteins that stand to benefit but also input and service suppliers to the agricultural sector such as Ruralco Holdings Ltd (ASX: RHL). Ruralco offers livestock and grain handling services along with inputs such as fertiliser to farming communities across Australia.
Motley Fool contributor Tim McArthur does not own shares in any of the companies mentioned.
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