Ideally one of the first fundamental lessons an investor learns about the stock market is the benefits of diversification. Owning a diversified portfolio doesn't mean you need to hold 100 stock positions, however it does mean owning enough stocks to not overly concentrate the risk in your portfolio.
There are lots of ways to spread the risk and diversify your portfolio. Last year, arguably one of the best ways was via exposure to the New Zealand economy and share market.
The strength of NZ exposure can be seen from the following data points:
Firstly, the NZ dollar is trading near its highest level against the Aussie dollar since our domestic currency floated in 1983.
Secondly, while the Australian share market struggled to gain ground in 2014, the NZ market charged close to 20% higher and hit a new record high in the closing days of 2014.
In recent years it has become particularly easy for Australia-based investors to buy NZ-based companies thanks to a number of NZ businesses creating secondary listings on the ASX.
Given the momentum in the NZ economy it could still be worthwhile investors seeking out opportunities across the Tasman Sea in 2015. Here are a few to consider…
Fisher & Paykel Healthcare Corp Ltd (ASX: FPH) is often (and not unjustly) likened to ResMed Inc. (CHESS) (ASX: RMD) due to its operations in the design and manufacture of products for use in respiratory care, acute care and obstructive sleep apnea.
NZ can also lay claim to a growing IT sector
XERO FPO NZ (ASX: XRO) is making significant headway in growing its client numbers who are utilising its cloud-based accounting software platform. In a seemingly short space of time, Xero has grown into a $2 billion company.
Gentrack Group Ltd (ASX: GTK) is a niche provider of software solutions to the electricity, gas, water and airport industries.
Vista Group International Ltd (ASX: VGI) is a leading provider of software to the global film and cinema exhibition industry.
