Your instant 10-share diversified portfolio

Last week I wrote that adequate diversification and having smaller position sizes could be a useful trick to make share ownership less risky for beginning investors. I suggested that owning 20 shares was a good target for readers to aim for.

20 companies is too many to fit in one article, but in the spirit of that advice, here are some ideas for a 10-share diversified portfolio to get you started. There are companies from 8 of the ASX’s 11 GICS Categories (market sectors):

  • A2 Milk Company Ltd (Australia) (ASX: A2M) – Consumer staples (retail)

Produces a type of milk and baby formula potentially suitable for people with reported lactose intolerance. Growing operations in ANZ, China, USA, and UK.

  • Altium Limited (ASX: ALU) – information technology (software)

A developer of computer software used for the design of printed circuit boards (PCBs) which are used in all electronic devices. Thought to have a long growth runway ahead with Internet of Things (IoT) and other tailwinds.

  • Costa Group Holdings Ltd (ASX: CGC) – Consumer staples (agriculture)

Horticulture company that grows berries, mushrooms and tomatoes among others. Growing operations in Australia, Morocco, and China.

  • Greencross Limited (ASX: GXL) – Consumer discretionary (retail)

Vet and pet retailer aiming to consolidate the fragmented Australian industry. Currently controls 6% of the market and is targeting 20% over the long term.

  • Medibank Private Ltd (ASX: MPL) – Financials (health insurance)

Health care insurer with implicit support for the industry as government aims to migrate health care burden from public to private sector. Competitive industry but reliable sales and ability to raise prices to cover costs.

  • National Storage REIT (ASX: NSR) – Real Estate (storage)

A storage facility operator across Australia and New Zealand with an attractive dividend. Appears less vulnerable to a property downturn than many other REITs.

  • Platinum Asset Management Limited (ASX: PTM) – financials (fund management)

Blue-chip fund manager with a record of outperformance and attractive dividend. Growing Australian fund management industry is a tailwind.

  • Reliance Worldwide Corporation Aus P Ltd (ASX: RWC) – industrials (manufacturing)

Designer and manufacturer of proprietary plumbing fittings including SharkBite push-to-connect. Competitive market but potential for new products to disrupt staid industry.

  • Senex Energy Ltd (ASX: SXY) – Energy (oil and gas)

Oil and gas producer with long-term sales agreements, sitting on significant untapped fields. Minimally profitable but potential to become much larger in time.

  • TPG Telecom Ltd (ASX: TPM) – Telecommunications (internet and mobile)

A large telco with a variety of popular internet brands benefiting from reliable demand for internet service. Potential to grow its market share during customer migration to the NBN.

That’s not to say you should go out and buy all 10 companies tomorrow, but this list could be a good starting point for building a diversified portfolio.

Here are 3 more ideas that our experts are recommending right now:

Top 3 ASX Blue Chips To Buy In 2017

For many, blue chip stocks means stability, profitability and regular dividends, often fully franked..

But knowing which blue chips to buy, and when, can be fraught with danger.

The Motley Fool's in-house analyst team has poured over thousands of hours worth of proprietary research to bring you the names of "The Motley Fool's Top 3 Blue Chip Stocks for 2017."

Each one pays a fully franked dividend. Each one has not only grown its profits, but has also grown its dividend. One increased it by a whopping 33%, while another trades on a grossed up (fully franked) dividend yield of almost 7%.

If you're expecting to see the likes of Commonwealth Bank, Telstra and Wesfarmers shares on this list, you'll be sorely disappointed. Not only are their dividends growing at a snail's pace, their profits are under pressure too due to the increasing competitive environment.

The contrast to these "new breed" blue chips couldn't be greater... especially the very real prospect of significant share price gains, something that's looking less likely from the usual blue chip suspects.

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Motley Fool contributor Sean O'Neill owns shares of A2 Milk. The Motley Fool Australia owns shares of A2 Milk, Altium, and Greencross Limited. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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