These 3 shares will instantly diversify your portfolio

Diversification is one of the key parts to an investment strategy. Mitigating risk whilst still attaining high investment returns is one of the best things you can do for your portfolio.

Being focused too much on one sector, such as banks, can be a problem. That’s why I think the follow three shares are good options for a strong portfolio:

Challenger Ltd (ASX: CGF)

Challenger is the leading annuity provider in Australia. It offers retirees a way to get a guaranteed source of income from their capital. There is a rising source of funds heading towards Challenger for two reasons.

The number of retirees is expected to rise by 75% over the next 20 years and the superannuation pool is growing thanks to the 9.5% mandatory super contributions.

Challenger is also growing thanks to a relationship with a large Japanese company, offering 20-year Australian dollar annuities.

It’s currently trading at 18x FY18’s estimated earnings.

Ramsay Health Care Limited (ASX: RHC)

Ramsay is one of the largest private hospital operators in the world with large operations in Australia, France and the UK.

The ageing population in Australia and the other countries it operates in is a big opportunity because it could mean more patients will likely need to visit the hospital because sadly the elderly are the people who require healthcare the most.

Ramsay is well placed to profit from this trend. It’s currently trading at 22x FY18’s estimated earnings.

Blue Sky Alternative Investments Ltd (ASX: BLA)

Blue Sky is an ‘alternative’ fund manager that offers investors the chance to get exposure to different investment classes. It is attracting funds under management at a strong rate as people are convinced that assets like its water fund and student accommodation offer good diversification.

If the fund manager can keep attracting funds at above-average rates, then it should be able to keep beating the market.

It also runs the listed investment company (LIC) Blue Sky Alternatives Access Fund Ltd (ASX: BAF) if investors want to get exposure to the underlying investments.

Foolish takeaway

I believe all three could be market-beating opportunities. At the current prices I’m motivated to invest in Ramsay shares because it’s trading at the lowest price/earnings ratio that it has done for a long time.

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Motley Fool contributor Tristan Harrison owns shares of Challenger Limited and Ramsay Health Care Limited. The Motley Fool Australia owns shares of and has recommended Challenger Limited. The Motley Fool Australia has recommended Ramsay Health Care 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 Scott Phillips.

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