Three investment ideas for a diversified portfolio

Three investment ideas for a diversified portfolio

A diversified portfolio is an investor’s best friend when aiming for consistent returns. Too much of one type of investment, or omitting another sector entirely, could see them overexposed should the unexpected happen.

With 2020 – and potentially 2021 – still able to throw investors some curveballs, here we have collated three investment ideas that could help spread a portfolio’s risk and return drivers across both a range of sectors and geographical locations.

From digital working to traditional, pre-pandemic leisure activities, and not forgetting forward-looking recovery targets, have a read over where we think could be interesting for investment portfolios – and see if they could work for you.

Salesforce

It has been quite a few years since digital solution Salesforce began replacing sales teams’ little black books. The online portal can keep track of everything from cold leads to hot client dinners, making overall company forecasting more efficient than ever before.

But in the digital world, there’s always someone bigger looking to take a bite from your pie – and in this case, Salesforce has been in battle for market share with Microsoft since it acquired LinkedIn in 2016.

The latest shot fired in this battle is Salesforce’s acquisition of digital team organising solution Slack which it announced early December, 18 months after the tech platform’s questionably successful float. Unlike other digital solutions, such as Zoom and WebEx, Slack’s share price has not had such a great 2020. This means Salesforce could pick it up for just $7bn more than its $20bn listing.

This acquisition lets Salesforce face down Microsoft’s similar and more popular Teams tool, and potentially build on an already decent 2020. At the start of December, Salesforce announced record third quarter revenue, up 20% over 2019 at $5.42bn, and raised its outlook for the 2021 financial year to $21.1bn – up 23% on the previous year.

Its shares were up more than a third at around $225 by early December, and there could be more room to grow.

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Cineworld

This has been a year of despair for cinemas. Not only have they been made to close for much of the pandemic, but when they have been allowed to open, the few customers permitted to enter have had precious few new releases to watch.

The latest blow for the silver screen sector is the announcement by Warner Bros that its entire 2021 “slate” of films will be made available for home viewing at the same time as their cinematic release. This approach aims to get already produced films out to impatient fans – but it could spell further disaster for movie houses.

Cineworld, which operates large cinema chains in the UK and US, responded calmly to the announcement, voicing its hopes that Warner Bros would come to the negotiating table to discuss.

It also reminded the cinema-going public that blockbusters are better on the big screen – even if the popcorn is more expensive – and that the growing number of vaccines may open venues back up safely relatively soon.

With its share price in mid-December around 70% lower than the start of the year, if investors think audiences will flock back in 2021, Cineworld could offer some portfolio entertainment.

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NZD strength

It might sound odd, but New Zealand has had a relatively good pandemic. By losing down early and entirely, the nation of five million suffered just 28 deaths attributed to Covid-19. Now back up and running, pretty much as before, its economy has taken less of a beating than many others around the world.

Its quick action has been noted by global business leaders. In October, a survey of 700 of them by Bloomberg ranked New Zealand as the nation they would be most confident investing in.

But New Zealand has other qualities, too. Geographically it is close to China, which has been increasingly looking outside its borders for agricultural goods to feed its growing middle class, and it is on great terms with the UK and EU, as well as being a trading cousin of Australia.

All these positives have meant confidence in the country is high – and when the market is confident, a nation’s currency is buoyed as a result.

Over the fourth quarter of 2020, the New Zealand dollar has soared against its US counterpart to the highest level for at least two and a half years. And while everywhere is getting a “bump” thanks to the arrival and deployment of vaccines, New Zealand may be starting from a more secure footing than others.

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