Diversification is one of the key parts of 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 following three shares are good options for a strong portfolio:
iShares S&P 500 ETF (ASX: IVV)
This is an S&P 500 exchange-traded fund (ETF), the same S&P 500 recommended by Warren Buffett himself for most regular people. It has many of the global giants in its holdings that are driving investment returns like Apple, Facebook, Alphabet, Amazon, Microsoft and Berkshire Hathaway.
It would be possible to own just this investment because it gives you exposure to 500 of the best American/global businesses in the world.
Blackrock offer this ETF for an extremely low management fee cost of 0.04% per annum.
National Veterinary Care Ltd (ASX: NVL)
It can also be a good idea to diversify your portfolio with small caps. For example, National Vet Care is the second largest veterinary clinic operator in Australia and New Zealand.
Whilst a roll-up strategy isn’t the strongest investment case out there, this business just needs to keep acquiring additional quality clinics and maintain a good balance sheet for it to do reasonably well. Its pet membership program and management procurement business are additional avenues for growth.
It’s predicting a hefty increase in revenue in FY19 due to all of the acquisitions, which hopefully leads to a sizeable increase in earnings per share (EPS). Until National Vet Care reaches at least 150 clinics, I think there’s plenty of room for growth.
Tassal Group Limited (ASX: TGR)
Tassal is Australia’s largest fish business with its big salmon farms in Tasmanian waters, a wholesale fish business and it recently announced the acquisition of a prawn business from Fortune Group for $31.9 million.
Tassal now has strong ‘vertical integration’ in two fish categories and will unlock synergies throughout the logistics chain. Management believe the acquisition will be highly earnings accretive, planning to invest around $34 million over the next three years.
It has steadily grown operating earnings and its dividend over the past few years and could continue doing well as demand for fish increases over time due to better diet choices in Australia and overseas demand.
I’d be happy to buy shares of National Vet Care at today’s price – I believe FY19 will be a bumper year, yet the share price is lower than it has been for most of the last 12 months.
Another way to diversify your portfolio is with these top growth shares.
For many, blue chip stocks mean stability, profitability and regular dividends, often fully franked..
But knowing which blue chips to buy, and when, can be fraught with danger.
The Motley Fool’s in-house analyst team has poured over thousands of hours worth of proprietary research to bring you the names of "The Motley Fool’s Top 3 Blue Chip Stocks for 2018."
Each one pays a fully franked dividend. Each one has not only grown its profits, but has also grown its dividend. One increased it by a whopping 33%, while another trades on a grossed up (fully franked) dividend yield of almost 7%.
The names of these Top 3 ASX Blue Chips are included in this specially prepared free report. But you will have to hurry. Depending on demand – and how quickly the share prices of these companies moves – we may be forced to remove this report.
Click here to claim your free report.
Motley Fool contributor Tristan Harrison owns shares of NATVETCARE FPO. The Motley Fool Australia owns shares of NATVETCARE FPO. 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.