The world is changing at a faster pace, so it’s important to have a diversified portfolio.
If your portfolio is just a few big blue chips like Commonwealth Bank of Australia (ASX: CBA), Telstra Corporation Ltd (ASX: TLS) and BHP Group Ltd (ASX: BHP) then it could definitely be worth diversifying your portfolio.
These are some of the shares I’d think about:
BetaShares FTSE 100 ETF (ASX: F100)
Exchange traded funds (ETFs) are a great way to improve your diversification. The UK share market could be a good way to improve your diversification because Brexit has hurt investor sentiment about the UK-listed businesses, even if many of the biggest ones generate profit from across the world.
Some of the biggest 100 shares in this ETF are HSBC, BP, Royal Dutch Shell, GlaxoSmithKline (Panadol etc), Reckitt Benckiser (Durex etc) and Unilever (Dove, Lynx, Omo, TRESemme, Vaseline etc). These are all good businesses to get exposure to.
The ETF has a price / earnings ratio of under 13 and a dividend yield of around 5%. Brexit may be solved soon, which boost the UK share market.
Brickworks Limited (ASX: BKW)
Brickworks is best known for its Australian building products businesses like Austral bricks. This is a solid business, but it can be cyclical.
But it’s the other elements of the business which make it very attractive and more stable. It owns a growing portfolio of industrial properties in partnership with Goodman Group (ASX: GMG) which delivers regular rental income.
It also owns a significant portion of investment house Washington H. Soul Pattinson and Co. Ltd (ASX: SOL) which is steadily growing its dividend, earnings and underlying value.
Brickworks is trading at a much cheaper price compared to its inferred value of its assets less debt. Its expansion into the huge US market could also be an excellent move over time, particularly if Brickworks can make a few more bolt-on acquisitions.
Magellan Global Trust (ASX: MGG)
Magellan Global Trust is run by Magellan Financial Group Ltd (ASX: MFG), an internationally-focused fund manager.
It invests in some of the best growing businesses in the world like Microsoft, Alphabet, Apple, LVMH, Alibaba , Visa and MasterCard. You can’t find these types of big quality businesses on the ASX. Even Atlassian is listed overseas.
Whilst Magellan does charge a fairly high management fee, it produces consistently good returns. You can sometimes buy the Magellan Global Trust when it’s trading at an attractive (5%+) discount to the underlying value of its assets.
If you want to diversify your portfolio even further then I’d definitely think about the reliable businesses in the free report below.
Disclosure: Jaz owns shares of Magellan Global Trust and Washington H. Soul Pattinson and Co. at the time of writing, but this could change at any time.