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Investment Insights

How can I make sure my eggs aren't in one basket?

Kiwi Invest

Written by Kiwi Invest

Keeping you up-to-date with all the latest updates at Kiwi Invest.

Wednesday 28 August, 2019

Having more than one basket? We know that's smart.

While some investment advisers prefer to focus their expertise and resources into local markets, we know the more broadly your risk is spread, the more robust, and reliable, your portfolio will be over the long term... by reducing your exposure to disruption in specific investment products, sectors, or markets.

While investing in New Zealand feels good – whether through ‘bricks and mortar’, or investing in companies here – the fact remains that our country represents less than 0.5% of the world share market. And the higher your concentration in any one market, the greater your exposure to risk. By letting offshore companies across a broad range of national markets do the ‘heavy lifting’ for you, your portfolio can tap into thousands of opportunities – some with revenue the size of small countries.

 

THE THREE STRONGEST WAYS TO DIVERSIFY YOUR PORTFOLIO ARE:

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1. DIVERSIFIED MARKETS

Spreading your risk across different countries (and sectors) – so that disruptions in some markets can be offset by the benefits they create for others.

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2. DIVERSIFIED INVESTMENT TYPES

Spreading your investment across equities, bonds, and currencies, and ‘alternative assets’ (aimed to do well, when major markets don’t) – creates many parts, generating different returns at different times.

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3. DIVERSIFIED STRATEGIES

Combining a range of active, thematic, passive, or opportunistic strategies within one portfolio, allows for different types of opportunities to deliver through changing market conditions.

 

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