Apparently, Telstra Corporation Ltd (ASX: TLS), BHP Billiton Limited (ASX: BHP) and major bank stocks are off the table, according to one very successful manager.
Indeed, today's Australian Financial Review says former Perpetual Limited (ASX: PPT) fund manager, Charlie Lanchester, will focus on just 20 small and mid-sized industrial stocks in his new position at BlackRock, the world's largest asset manager.
He notes that since these few select blue chip stocks take up such a large part of the S&P/ASX 200 (Index: ^AXJO) (ASX: XJO), investors are essentially paying fund managers for passive performance.
"I have no interest in being big, I'd rather be good," he was quoted as saying.
Time to avoid Telstra?
For retail investors like us, there is certainly good reason to trawl through the ASX stocks outside the ASX50. You only need to look at the yearly performance of companies like Bellamy's (up 470%) and Domino's Pizza Enterprises Ltd. (ASX: DMP) (up 49%) to see the opportunities that may lie outside the usual suspects.
Indeed, an investor should never sacrifice a favourable risk-return investment proposition for the sake of being too small or too big.
However, it is important to remember a share portfolio is merely an investment vehicle that facilitates a better lifestyle. To that end, holding quality blue chip stocks can be integral to investors who need, for example, income from their shareholdings.
In my opinion, Telstra is one of the best companies on the ASX for income. While I'm on record as saying Telstra shares would be a good buy at, or around, $5; for those seeking income in a low-interest rate environment there is a lot to like about Australia's largest telecommunications company.
Long-term tailwinds from rising data usage, expansion into Asia, and a generous dividend bode well for current shareholders.
Therefore, in addition to holding some 'growth' businesses as part of a well-diversified portfolio, Telstra is worthy of closer inspection.
