Kiwi investors should aim for a globally exposed portfolio: van Eyk

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Risk-averse investors looking to reduce their exposure to risk and enhance their prospects for greater returns should consider an actively managed and globally exposed portfolio, according to van Eyk New Zealand manager Luke Fitzgerald.

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Van Eyk recently established in New Zealand and took a fresh look at the way a retail investor might invest across traditional asset classes, considering macro-economic factors, capital market prospects, and tax and currency implications for local and overseas investments.

“Once we dug into the mathematics of portfolio construction, the changes for a New Zealand investor were potentially startling,” said Fitzgerald.

“Investors need to understand the importance of diversifying their sources of portfolio return. By doing this they reduce risk and enhance their capacity to capture any upside when any market (anywhere, at any time) performs — especially at a time when capital markets are experiencing increasing volatility.”

Fitzgerald said investors should take note of emerging markets as, in equities for example, there are overseas opportunities for better diversification in areas such as resources, energy, healthcare, financials and IT that are not available in the same depth in the local market.

“The ebb and flow of the New Zealand economy is more than ever linked to the prospects of our trading partners, which are mostly other developed economies,” said Fitzgerald. “The public feels the effect of this correlation in both their pay packets and their household budgets, but it doesn’t have to be the same with their investments.

“By prudent diversification away from developed economies and an increased exposure to faster growing emerging economies, they can circumvent this inevitability of fortune.”

Fitzgerald said van Eyk is liaising with A-rated investment product providers who are willing to establish a New Zealand presence, while also consulting with fund managers to establish retail offerings for the best investment opportunities that are usually only made available to wholesale investors.