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3 shares to diversify your portfolio

The share market is full of a variety of businesses in different industries.

Most investor portfolios are heavily skewed to the biggest shares on the ASX. There’s nothing wrong with having some exposure to ‘blue chips’, but I think people need to have a lot less exposure.

Here are three shares I’d be happy to add to my portfolio:

Greencross Limited (ASX: GXL)

Greencross is Australia’s largest pet company with its Greencross vets and Petbarn retail stores.

There aren’t many blue-chip businesses out there where you can get a piece of a growing business in a growing industry.

Greencross has a few different growth drivers. The pet population is growing, the amount we spend on our pets is rising and Greencross is taking more of the market share. You could also argue that its earnings are fairly defensive with pet staples like food and cat litter making up a lot of the revenue.

Greencross is currently trading at 17x FY18’s estimated earnings.

Healthscope Ltd (ASX: HSO)

Healthscope is Australia’s second biggest private hospital operator.

It could be one of the biggest beneficiaries from Australia’s ageing population because of how many more patients there could be over the coming years.

I like how defensive its earnings are and it could be on track for slow-and-steady growth over the next two decades as it grows its number of hospital beds.

Healthscope is currently trading at 19x FY18’s estimated earnings.

Australian Ethical Investment Limited (ASX: AEF)

Australian Ethical is a fund manager with a big difference compared to most others. It only invests in companies that it believes demonstrates ethical qualities in regards to humans and the environment.

More people are choosing ethical products and more investor funds are moving to the fund manager.

Its funds under management (FUM) figure is growing rapidly, which should boost earnings significantly in the coming years.

Australian Ethical is currently trading at 64x FY17’s earnings.

Foolish takeaway

I think all three shares would be a good way to diversify a portfolio. At the current prices I would probably go for Greencross because I really like its co-location strategy of putting a vet inside a Petbarn.

I also think these shares would be a really good way to build a strong portfolio.

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Motley Fool contributor Tristan Harrison owns shares of Greencross Limited and HEALTHSCPE DEF SET. The Motley Fool Australia owns shares of and has recommended 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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