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:
Australian Ethical Investment Limited (ASX: AEF)
The bushfires, smoke and climate change discussion are causing many people to wonder what they can do to make a difference or consider what will change in the medium-term.
Australian Ethical Investment is a fund manager which focuses on various businesses that are ethical and perhaps have a focus on improving the world or the environment in some way such as renewable energy or recycling.
It’s one of the fastest growing fund managers in Australia and this investment offers something very different to other shares or even other fund managers on the ASX.
Vanguard FTSE Asia ex Japan Shares Index ETF (ASX: VAE)
There are lots of ways to directly or indirectly get exposure to ASX shares or US shares. However, not many of us have exposure to some of the best businesses in Asia. We can get exposure to Asian shares with this exchange-traded fund (ETF) with an annual management fee of 0.40% per annum, which is pretty cheap.
Asia is a region that’s growing at a much faster pace than Australia, Europe or the US. It’s inevitable that the region will see wealth created faster for Asian citizens and probably Asian businesses compared to the average US or Australian citizen. That’s why this ETF’s share holdings are seeing underlying earnings growth of more than 10%. This ETF is invested in over 1,000 Asian businesses, which means it’s very diversified itself.
With this ETF we get exposure to businesses like Alibaba, Tencent and Ping An. They’re all going to earning more in the coming years.
WAM Microcap Limited (ASX: WMI)
The best place to find fast-growing shares could be with small caps with market capitalisations under $300 million, which is exactly where the WAM Microcap investment team look.
It has performed exceptionally well over the past year, its portfolio has returned 30.6% in the year to 30 November 2019 before fees, expenses and taxes.
I believe each of these potential investments have very compelling futures. Volatility is likely to affect WAM Microcap significantly in some years, but I think it could be the best performer over the long-term.
Where to invest $1,000 right now
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Tristan Harrison owns shares of VANGUARD FTSE ASIA EX JAPAN SHARES INDEX ETF and WAM MICRO FPO. The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns shares of Australian Ethical Investment Ltd. The Motley Fool Australia owns shares of Class Limited. The Motley Fool Australia has recommended Australian Ethical Investment Ltd. 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.