Getting diversification right for your ASX 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 ASX shares that I think would help diversify a portfolio:
InvoCare Limited (ASX: IVC)
InvoCare certainly operates in a different industry to most other businesses, it’s Australia and New Zealand’s largest funeral operator.
Death volumes are expected to grow by 1.4% per annum between 2016 to 2025 and then increase by 2.2% per annum from 2025 to 2050. It’s a very long-term tailwind which should help organically grow earnings and profit for InvoCare over the next few decades.
It’s currently trading at 24x FY21’s estimated earnings with a grossed-up dividend yield of 4%.
BetaShares Asia Technology Tigers ETF (ASX: ASIA)
Asia is home to plenty of fast-growing technology businesses which are at least equal to some of the best western tech businesses. It might be hard to know which one to go for, so you could just go for a large group of them with this exchange-traded fund (ETF).
Some of the biggest holdings are Alibaba, Tencent, Samsung, Infosys and JD.com. It’s a high-quality list with lots of growth potential.
Over the past year this ETF has returned 27%, which shows you the types of returns that this ETF can be produced when the trade war isn’t weighing on the index too much.
Pushpay Holdings Ltd (ASX: PPH)
Donation payment business Pushpay is one of the brightest tech prospects on the ASX in my opinion.
It facilitates electric donations from givers to not for profits like churches. Indeed, Pushpay’s biggest clients are US-based churches with huge congregations.
As Pushpay’s annual donation rises it increases its own revenue at a higher net profit margin. This is the type of business which can be very scalable because of its relatively low cost base.
I think InvoCare is certainly the most defensive business of the three options. Its long-term growth will be slow and steady. To try to beat the market I’d go for Pushpay, it is a market leader in a niche area with plenty of good growth prospects.
These 3 stocks could be the next big movers in 2020
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Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns shares of PUSHPAY FPO NZX. The Motley Fool Australia owns shares of and has recommended BetaShares Asia Technology Tigers ETF. The Motley Fool Australia has recommended InvoCare Limited and PUSHPAY FPO NZX. 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.