Diversification is one of the key parts to an investment strategy with ASX shares. 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:
Rural Funds Group (ASX: RFF)
Rural Funds is a real estate investment trust (REIT) that owns farmland property and leases them to quality tenants like Select Harvests Limited (ASX: SHV) and Treasury Wine Estates Ltd (ASX: TWE). It has farms in many sectors including cattle, cotton, vineyards and almonds.
I believe over the long-term this REIT will prove to be the best out of the current REIT options on the ASX. It generates reliable rental income and this allows Rural Funds to pay a nice quarterly distribution to unitholders. It has a yield of 5.04% for FY19 and management forecast 4% annual growth of the distribution.
BetaShares Asia Technology Tigers ETF (ASX: ASIA)
The ongoing trade war, rising interest rates and company-specific problems have led to some of the best Asian technology businesses fall to very attractive valuations compared to some of the brightest western tech shares.
Tencent, Alibaba, Baidu and Samsung are just a few of the names that should attract you to this Asian technology exchange-traded fund (ETF) for the long-term. The short-term may be bumpy.
According to BetaShares, at the end of September 2018 it was trading with a price/earnings ratio of 12.8x and a dividend yield of 1.39%. It is likely now even better value after another fall in the share price.
REA Group Limited (ASX: REA)
The market-leading property business owns realestate.com.au, which takes a slice of advertising revenue for every property listed on the site. Indeed, property owners would be silly not to list on the site.
Its share price has fallen by over 15% in just the last month thanks to rising interest rates and weakening property prices. I think that provides an opportunity to buy this quality business at a discounted price.
It’s now trading at 29x FY19’s estimated earnings with a grossed-up dividend yield of 2.2%.
I’d be happy to acquire shares of all three businesses at the current prices, particularly the Asian Technology ETF. Things would have to deteriorate a lot more between the US and China for it to become much lower from this already-low level.
Another share that could nicely diversify your portfolio is this industry leader from the auto world that is now expanding to Asia.
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 BetaShares Asia Technology Tigers ETF and RURALFUNDS STAPLED. The Motley Fool Australia owns shares of and has recommended RURALFUNDS STAPLED. The Motley Fool Australia has recommended REA Group Limited and Treasury Wine Estates 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.