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:
CSL Limited (ASX: CSL)
CSL is Australia’s largest healthcare company. It is a world leader of blood plasma products and also provides biotherapies and vaccines.
It is always developing new products to improve its existing treatments or create new ones. CSL has to invest in multi-year research and development cycles to do this, which is why it’s a good long-term investment.
It’s currently trading at 35x FY18’s estimated earnings.
Auckland International Airport Ltd (ASX: AIA)
Auckland Airport is the main gateway into New Zealand for most international passengers, which is why every month it updates the market with high single digit passenger growth compared to last year.
New Zealand is going through a tourism boom at the moment and Auckland Airport is one of the main beneficiaries of this boom. If the airport continues to offer more amenities then higher profit should be relatively simple for the Kiwi company.
It’s currently trading at 30x FY18’s estimated earnings.
BetaShares Global Agriculture ETF (ASX: FOOD)
This is an exchanged-traded fund (ETF) offered by BetaShares which focuses on some of the biggest agricultural businesses in the world.
The ETF has a reasonably low management fee of 0.57% per annum whilst its trailing distribution yield is 1.1%.
Around 7.8% of its holdings is invested in Deere & Co, 7.6% is invested in Archer Daniels Midland Co and 7.4% is invested in Kubota Corp.
Both CSL and Auckland Airport are trading at expensive multiples of their earnings, I couldn’t justify a buy today even though they are quality businesses. However, the FOOD ETF looks interesting, particularly with the global population predicted to continue rising.
Where to invest $1,000 right now
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Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. 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.