The stock market crash has thrown up plenty of bargain opportunities, but I don’t think gold or cryptocurrency number among them. I’d prefer to buy the Phoenix Group Holdings (LSE: PHNX) share price instead. This crashing FTSE 100 share has got caught up in the general sell-off, but remains a strong business paying a generous yield.
If I had £5k to invest right now, or any other sum, I’d be looking to buy solid blue-chip businesses like Phoenix. Indeed, ratings agency Fitch recently praised the company for its “very strong capitalisation and leverage,” as well as strong debt service capabilities, earnings, and business profile. That’s exactly what you need right now.
I wouldn’t buy Bitcoin today, even though the price has crept up to almost $7,000. It fell even faster than shares during the stock market crash, as investors dumped their cryptos to cover losses elsewhere. Bitcoin isn’t a safe haven, it’s a speculative tool, and that’s that. I’m holding the one coin I have, but I’m not adding to it. There’s a crashing FTSE 100 share I’d prefer.
I’d buy this crashing FTSE 100 share
Gold has its place in a balanced portfolio, as a diversifier. I wouldn’t hold more than 5% or 10% in a portfolio, to spread risk. I’d also advise against loading up on the precious metal today, as the price jumps beyond $1,700 an ounce. It could fall back as the lockdown eases. Also, gold doesn’t pay any interest.
I’d prefer to take advantage of a crashing FTSE 100 share like Phoenix. It’s fallen 25% in the stock market crash, broadly in line with the market, as investors dump good stocks with the bad.
Phoenix is a closed life insurance and pension fund consolidator. This means it effectively buys existing ‘heritage’ funds from other pension managers, and cracks on with the job of managing them on behalf of members.
The Phoenix share price tempts
It benefits from economies of scale and now has 10m policyholders and £248bn of assets under administration across the UK, Ireland and Germany. It will scale up following the recent acquisition of ReAssure Group, which should boost total assets to increase to around £329bn, making it the third-largest insurer in the UK.
Its closed business, the bulk of its operations, has relatively low exposure to the Covid-19 crisis. People still need their pensions. Its sophisticated hedging programmes should limit exposure current risks, as interest rates fall and equities remain volatile, in the wake of the stock market crash.
Phoenix does also have a smaller open business, which manufactures and underwrites workplace pensions and SIPPs. This operates via strategic partnership with Standard Life Aberdeen, while its brand SunLife sells a range of products to the over 50s market. These will be affected, as people lose their jobs and look for ways to cut back on spending
Today, this crashing FTSE 100 share yields a tasty 7.81%. While other insurers such as Aviva axe their dividends, Phoenix has kept quiet about its intentions. No share is without risk today.
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Harvey Jones has no position in any of the shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.