There is a secret investing trick your stock broker probably does not want you to know.
It's a simple trick, but one which could save you hundreds, even thousands of dollars on brokerage while diversifying your portfolio across fast-growing ASX listed companies like Slater & Gordon Limited (ASX: SGH), Mayne Pharma Group Ltd (ASX: MYX), and property growth company Cedar Woods Properties Limited (ASX: CWP).
The "secret"
The "secret" is in fact ASX-listed investment company Contango MicroCap Limited (ASX: CTN), and in my view the many positive features of the company earns it a place in almost every top investing portfolio.
Contango MicroCap runs a diversified portfolio of between 60 and 90 small and micro-cap companies, generally with market capitalisations of up to $350 million. Buying shares in the portfolio means gaining diversification across a wide number of fast-growing businesses in just one transaction.
Trying to buy even 20 of these companies yourself (at $30 brokerage each) would cost $600; and this is money that is far better being put to work to grow. For smaller investors this makes Contango a simple and extremely cost effective way to add diversification.
Impressive track record
Contango MicroCap boasts an impressive track record. After smartly navigating the Global Financial Crisis its investment portfolio performance has averaged 16.9% per annum over the last 10 years.
The value of the company's investments jumped to $175 million in the 2014 financial year and helped deliver an 8.6 cent per share dividend, or a 7.9% yield at the current share price.
Strong performers
It's impossible to say that this performance will continue, but a look at some of the companies Contango MicroCap holds in its portfolio suggests the outlook could be promising.
As of 30 September, Mayne Pharma Group Ltd made up 2.4% of the portfolio. The pharmaceutical company has strong growth prospects and is the company I recently mused could be the best value healthcare stock around.
Slater & Gordon, which makes up a further 4.2% of the portfolio, is also impressing investors with its aggressive growth and has seen its share price rise 63% in the last 12 months.
