UK shares are a good option to consider to diversify your portfolio. I think the two picks in this article would be fit for the Queen’s portfolio.
We can thank the UK for today’s public holiday. So in honour of that, I thought I’d share two of my favourite UK share picks that we can buy on the ASX:
Betashares FTSE 100 ETF (ASX: F100)
I think the best way to invest in UK shares is with this exchange-traded fund (ETF). This is offered by BetaShares. It gives exposure to the biggest 100 businesses on the London Stock Exchange.
Some of the biggest share holdings are Astrazeneca, HSBC, GlaxoSmithKline, British American Tobacco, BP, Diageo, Royal Dutch Shell, Rio Tinto, Unilever and Reckitt Benckiser.
One of the great things about UK shares is that they are pretty similar to Australian businesses. The UK also has similar rules of law.
Many of the names I mentioned are global businesses with long histories of earnings. Many of them also have attractive dividend payout policies.
UK shares can offer very good diversification to Australian shares. At the end of April 2020 the ETF had a trailing dividend yield of 5.86%, which looked pretty good in this period of very low interest rates.
Virgin Money UK Plc (ASX: VUK)
This UK share was formed from a combination of CYBG and Virgin Money. The idea is that the combined business will have strong cost synergies and be able to offer clients a better service.
The share price has been very volatile over the past year with Brexit fear, the Brexit solution and now the coronavirus economic damage. Since 21 February 2020, the Virgin Money UK share price has fallen by almost 50%.
UK shares are justifiably down because the coronavirus has spread far more in the UK than in Australia, causing more economic pain. The UK is being rightfully more cautious about opening up.
This could be a longer-term opportunity to buy this UK bank whilst the price is low. I don’t expect a quick recovery, but over the next few years it could make solid returns.
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More reading
- How to replace your entire wage with dividends
- ETFs I’d pick to build a passive portfolio
- These 5 ASX 200 shares were last week’s biggest winners
- 5 ASX 200 winners and 3 losers from last week
- ASX 200 Weekly Wrap: Surging bank shares push ASX toward 6,000
Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.
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