I believe having a diversified portfolio is very important. After all, you only need to look at how certain areas of the market have performed this year in comparison to others.
If you were overweight with travel and bank shares, your portfolio would be down materially this year.
Whereas by spreading your investments across a number of sectors and geographies, you would have fared significantly better.
The good news is that diversification isn't that hard to achieve. The ASX has many different sectors for investors to choose from and a wide range of exchange traded funds (ETFs) to lend some support.
Three options for investors to consider for diversification are listed below:
BetaShares Asia Technology Tigers ETF (ASX: ASIA)
If you're interested in investing internationally you could check out the BetaShares Asia Technology Tigers ETF. This exchange traded fund gives investors exposure to some of the largest tech companies in this region. BetaShares describes these as "companies that are revolutionising the lives of billions of people in the Asian region." This includes the likes of Alibaba, Baidu, and Afterpay Ltd (ASX: APT) shareholder and WeChat owner, Tencent Holdings.
ResMed Inc. (ASX: RMD)
If you don't have exposure to the healthcare sector then ResMed could be a good option. ResMed is a leading medical device company which specialises in sleep treatment products and software. I believe it is destined for strong long term growth thanks to its exposure to the proliferation of obstructive sleep apnoea (OSA). Only an estimated 20% of OSA sufferers have been diagnosed at this point, which gives ResMed a significant runway for growth over the next decade and beyond.
Wesfarmers Ltd (ASX: WES)
This conglomerate could be another option for investors to consider. I think it would be a good option due to the diversity of its portfolio of businesses. Especially given how the majority of them have positive outlooks and should underpin solid earnings and dividend growth in the coming years. In addition to this, the company is sitting on a hefty cash balance which is likely to be used for acquisitions in the near future. Historically Wesfarmers has a strong track record of making earnings accretive acquisitions, so this bodes well for the future.
