MENU

Here’s how to diversify your portfolio

I’m always on the lookout for ways to diversify my portfolio whilst maintaining strong returns. If you can mitigate risk whilst also beating the Aussie market then that’s a powerful combination.

Diversification usually means investing into different industries and perhaps businesses that offer geographical diversification away from Australia.

Here are three shares that I think would offer good diversification:

TPG Telecom Ltd (ASX: TPM)

TPG is one of Australia’s largest telecommunication companies. It not only has its value-brand TPG to sell to customers, but it also owns the iiNet brand too, which has a reputation of better quality and customer service.

I think TPG is a much better option than Telstra Corporation Ltd (ASX: TLS) because it offers growth to investors. It has plans to build mobile networks in Singapore and Australia. I think this is key because 5G could replace fixed wired broadband connections for a lot of households. TPG may come to the market with very cheap mobile offerings, one expert recently said TPG could be Amazon-like with its mobile offering.

TPG is currently trading at 18x FY19’s estimated earnings.

Japara Healthcare Ltd (ASX: JHC)

Japara is one of Australia’s largest aged care providers. The number of people who need to go to an aged care home is predicted to dramatically increase as Australia’s ageing demographics plays out.

The company is building its presence throughout the country with brownfield and greenfield expansion. The company is also acquiring small competitors to grow such as the recent Riviera Health purchase which adds 507 bed licenses to Japara’s total.

Japara is currently trading at 18x FY17’s earnings.

Vanguard US Total Market Shares Index ETF (ASX: VTS)

Many Aussie investors probably don’t have enough exposure to the American share markets, which happens to be the home of most of the world’s global companies.

This Vanguard index fund offers investors exposure to the biggest shares in the US like Apple, Facebook, Berkshire Hathaway and Microsoft.

This ETF has a very low management fee of 0.04%, which is one of the lowest in the world.

Foolish takeaway

I’d be happy to buy all three shares at the current prices, though I’d personally lean towards Japara because it also comes with a very large fully franked dividend.

Want even more diversification ideas? Try this top stock which I own in my portfolio, it should get a boost if a recession happens.

OUR #1 dividend pick to grow your wealth over the new financial year is revealed for FREE here!

Financial year 2018 is here and The Motley Fool’s dividend detective Andrew Page has revealed his must buy dividend share to grow your wealth in 2018.

You might not know this market leader's name, but it's rapidly expanding into a highly profitable niche market here in Australia. Even better, the shares boast a strong, fully franked dividend that should balloon in the years to come. In other words, we're looking at the holy grail of incredible long-term growth potential AND income you can watch accruing in your account in real time!

Simply click here to grab your FREE copy of this up-to-the-minute research report on our #1 dividend share recommendation now.

Motley Fool contributor Tristan Harrison owns shares of JAPARA DEF SET. The Motley Fool Australia owns shares of and has recommended Telstra Limited and TPG Telecom 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.

Two New Stock Picks Every Month!

Not to alarm you, but you’re about to miss a very important event! Chief Investment Advisor Scott Phillips and his team at Motley Fool Share Advisor are about to reveal their latest official stock recommendation. The premium “buy alert” will be unveiled to members and you can be among the first to act on the tip.

Don’t let this opportunity pass you by – this is your chance to get in early!

Simply enter your email now to find out how you can get instant access.

By clicking this button, you agree to our Terms of Service and Privacy Policy. We will use your email address only to keep you informed about updates to our website and about other products and services we think might interest you. You can unsubscribe from Take Stock at anytime. Please refer to our Financial Services Guide (FSG) for more information.