Getting diversification right for your portfolio is one of the best ways to deliver strong returns. Diversification can mean spreading your investments across industries and geographies.
It's a good idea to expand your portfolio into companies that operate in different industries. If you invest like everyone else, then you'll get similar results.
Here are three shares that I think would help diversify a portfolio:
Propel Funeral Partners Ltd (ASX: PFP)
Propel Partners is the second largest funeral provider in Australia and New Zealand with a single digit market share. It is a long way behind InvoCare Limited (ASX: IVC), but that just means it has plenty of room to grow larger in my opinion.
Propel is expecting good organic growth over the coming decades as the number of deaths is expected to rise due to Australia's ageing population. Propel is also using an acquisition strategy to grow into other geographical areas.
a2 Milk Company Ltd (ASX: A2M)
A2 Milk is a rapidly-growing dairy company which has very successfully turned the a2 protein into a brand worth paying good money for. The infant formula segment to the business is growing exceptionally strongly, but the other parts are growing too.
Investors may be cautious about value at the moment due to a2's meteoric rise, but there's every chance that it could keep growing strongly as it grows its sales in North America and China. The company has continually beaten expectations and may do so again over the next couple of years.
MNF Group Ltd (ASX: MNF)
MNF is a Voice Over Internet Protocol (VOIP) business to Australian retail and wholesale customers. VOIP is a much cheaper form of connection than the traditional landline phones.
It's achieving very strong organic growth and now has plans to launch a new phone brand for older consumers who want a reliable, cheap phone package. The market doesn't like this idea, but it doesn't need a huge amount of revenue to be profitable.
Foolish takeaway
I believe all three shares will beat the market over the next three to five years. At the current prices I think both Propel and MNF will do very well for shareholders because they should be able to generate a lot of organic growth.
