Investment Strategies

Diversified’s Investment Methodology

Diversified’s Investment Strategies work on what has become known as “Modern Portfolio Theory”.  Our process and all model strategies thus adhere to four key principles of design:

1. The measure of wealth is the valuation of an investor’s whole investment portfolio, marked-to-market (real current values).
2. The security of a portfolio of investments is enhanced by ensuring a mix with different attributes and performances.  This is achieved through systematic diversification of asset classes, sectors, markets, regions, styles and issuers.
3. The merit of any single investment held in a portfolio cannot be properly assessed in isolation.  That holding may be in relation to another, or to the mix of other investments within the portfolio. (Investments which might be considered overly speculative in isolation, may be worthy in a portfolio context).
4. A Portfolio seeks to maximise Total Returns (within an acceptable level of risk), irrespective of whether these returns come from ‘income’ or ‘capital gains’ in the orthodox sense. (Investors need for Living Expenses can be best met, and most smoothly and efficiently accommodated, through drawings from the Portfolio, either capital or ‘income’).

The objective of Diversified’s advice has remained consistent and unwavering throughout the 15 years of our company’s existence:

Preservation of capital over the short to medium-term, with a competitive rate of return.

Diversified’s recommended strategies are ‘tactical’ and require ongoing monitoring to perform optimally, in either avoiding risks or capturing opportunities.  Diversified’s models are not designed for a ‘set-and-forget’ approach.  Changes to client portfolios are usually conducted in the course of regular Quarterly reviews, but may on occasion be centrally directed where greater timeliness or efficiency is necessary.

Diversified’s process is ‘fundamentally driven’ by views - formulated with a   one-year to 18-month ahead horizon - based on economic parameters and probabilities.  The process is formally updated each quarter - covering salient economics, the anticipated influence of those settings on financial markets, and a comparison of Diversified’s central strategies with industry standards. This all translates into model asset allocations in four, progressive risk profiles ranging from ‘Defensive’ to ‘Aggressive’.

Whilst directors possess skills and experience at company research, stock selection, and trading, Diversified’s analytical and research focus is on strategy (Macroeconomic forecasting, forward-looking Asset Allocation, and Investment Selection).  Proprietary Asset Allocations are internally generated. 

Our range of available individual investments to fulfill those strategies is not limited by any ‘platform dictates’; and we make use of listed or open-ended managed funds, as well as directly held securities and Exchange Traded Funds.  However, our preference is for managed funds as being best placed to benefit from shorter-term opportunities and trading.  Specifically, we favour those whose outlook or style coincides with or complements our strategic views – and most importantly can demonstrate a track-record of successfully and consistently delivering to a high standard.

These proprietary strategies are only available through Diversified and its associated Advisers.

Norman Stacey,
Director, Investment Analyst

Applied all of our Services:

1. Individually Managed Portfolios
2. Diversified's Funds and
3. The Law Retirement KiwiSaver Scheme