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:
Apiam Animal Health Ltd (ASX: AHX)
Apiam is a regional veterinary business that owns 42 clinics and one joint venture equine clinic.
There are three ways that Apiam is growing.
It is growing nicely though organic growth which it reported was 4.3% to May 2018. This is being helped by a growing market for livestock services, which could increase as food exports rise.
Apiam is growing through acquisitions, it added six clinics during FY18, which was a 17% increase in the number of clinics.
The final growth avenue is opening vet clinics inside regional Petstocks, such as in Bendigo.
Apiam has provided guidance that FY18 revenue will be 8.7% higher and the earnings before interest, tax, depreciation and amortisation (EBITDA) margin is going to increase from 9% to 9.4%.
MFF Capital Investments Ltd (ASX: MFF)
MFF Capital is an international-focused listed investment company (LIC). It has been one of the highest-performing LICs by investing in some of the world’s best businesses.
Its top holdings are likely to continue to perform for MFF Capital. For example, Visa and MasterCard together made up 27.4% of MFF’s assets at the end of June 2018. The world is increasingly going cashless and this is going to help the two card companies continue to grow.
I think nearly every Australian investor needs more exposure to international shares.
MNF Group Ltd (ASX: MNF)
MNF is a leading voice over internet protocol (VoIP) provider that is winning important, long-term customers to its systems. Two of its major customers includes Skype and Uber.
The company is experiencing impressive organic growth but it is also making moves to expand into other areas. It recently acquired a Singapore business so that it can expand there and it’s launching an over-50 telco brand called Pennytel.
Investors don’t seem to like the Pennytel idea, but it could turn into a good segment for MNF if it takes off and generates a profit.
These three shares are very different to the normal holdings you’d find at the large end of the ASX index. I believe all three will soundly outperform the index over the next five years due to the relatively little growth on offer by the index’s largest constituents.
Another way to diversify your portfolio would be to invest in this top share which is the leader in its industry and is expanding into Asia.
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Motley Fool contributor Tristan Harrison owns shares of Apiam Animal Health Ltd and Magellan Flagship Fund Ltd. The Motley Fool Australia owns shares of and has recommended MNF Group 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.