I believe maintaining a diversified portfolio is one of the keys to success when investing.
While a diverse portfolio won't necessarily protect you from market crashes like we experienced earlier this year, it will limit the damage of them.
This is because it means you won't be over exposed to sectors that are hit harder than others. The travel sector is a great example of this in 2020.
In light of this, I have picked out three top shares in three different sectors which I think could be great additions to most portfolios. They are as follows:
Financial sector – Commonwealth Bank of Australia (ASX: CBA)
Investors that don't already have exposure to the banks might want to consider Commonwealth Bank. I think the pullback its share price this year has left it trading at a very attractive level for a long term and patient investment. Especially if, like me, you're optimistic the worst is now behind the banks and better days are ahead. Another reason to consider Commonwealth Bank is its dividend. I expect a final dividend cut in FY 2021 down to approximately $3.70 per share. This equates to a fully franked 5.3% dividend yield.
Healthcare sector – ResMed Inc. (ASX: RMD)
In the healthcare sector I think ResMed is worth considering. It is a medical device company which manufactures ventilators and sleep treatment products. It is the latter products that I believe will be the key drivers of growth during the 2020s. This is because of the proliferation of sleep apnoea globally, which is leading to increasing demand for solutions. I believe the quality of its CPAP portfolio and its growing software businesses have positioned it perfectly to capture a growing slice of this market and deliver further strong earnings growth for many years to come.
Tech sector – Appen Ltd (ASX: APX)
Finally, I think Appen is one of the best options in the tech sector right now. The language data company looks well-positioned to continue growing its earnings at a strong rate over the next decade thanks to the increasing importance of artificial intelligence (AI). Appen has exposure to the AI market through its million-plus team of crowd-sourced experts that prepare the data that goes into machine learning models. It has worked with the likes of Facebook, Microsoft, and Apple. I believe this is a testament to the quality of its services.
