Australia is one of the richest countries in the world. However, diversification is not utilised by a lot of Australian investors. Most people have a lot of their wealth tied up in one or a handful of properties plus bank shares. Arguably, the bank shares are also heavily linked to the property market.
Therefore, I think it's very important for every investor to diversify away from these two areas.
Here are three ideas to do that:
Betashares Global Cybersecurity ETF (ASX: HACK)
This is an exchange-traded fund (ETF) offered by BetaShares. I'm sure readers have seen the increased number of hacks and DDoS attacks that have plagued high profile organisations in recent times like Sony a few years ago. Governments and businesses will need to increase their online security is time goes on.
The ETF gives exposure to both global giants and emerging leaders of the cybersecurity world like VMware, Cisco Systems, Palo Alto Networks, Symantec and Splunk.
Over the past year this ETF has gone up by 26.88%.
Propel Funeral Partners Ltd (ASX: PFP)
Propel is the second largest funeral operator in Australia and New Zealand. I regularly write how death volumes are expected to grow by 1.4% per annum between 2016 to 2025 and then increase by 2.2% per annum from 2025 to 2050. This should benefit Propel as much as InvoCare Limited (ASX: IVC).
However, Propel shares may do better than InvoCare in the medium-term simply because Propel is smaller. It can acquire other funeral providers that already exist, thus allowing Propel to expand into other geographical areas.
It's currently trading at 24x FY18's estimated earnings.
Magellan Global Trust (ASX: MGG)
Another way to diversify your portfolio is by investing into overseas shares. It can be a bit of a Pandora's Box trying to research thousands of other shares. It could be a better idea just to leave the investing to a high-performing investment manager.
This is a listed investment trust (LIT) that invests in some of the world's highest quality businesses. Some of its top holdings include Alphabet (Google), Apple, Facebook, HCA Healthcare, Kraft Heinz, Lowe's, MasterCard, Starbucks, Visa and Wells Fargo.
Since inception in October 2017 it has outperformed its benchmark, the MSCI World Net Total Return Index, by 1.4% after all the fees have been applied despite holding a good amount of cash.
Foolish takeaway
All three shares are good ways to diversify your portfolio in my opinion, which is why I happily own Propel and Magellan Global Trust in my portfolio. At the current prices I'd probably go for Propel, I think it can acquire a lot of growth over the next two to three years.
