The July to September quarter demonstrated yet again why diversification is such a successful tool for long term investing. The third quarter of 2014 saw portfolio investors enjoy their fifth positive quarter in a row, and in each quarter this year (from a New Zealand investor perspective) we have seen a different asset class leading the way.
In January to March, New Zealand equities was the best performing asset class; over the second quarter, local and international property assumed the top spot; in the recent quarter it was the turn of unhedged international and emerging market equities.
Why did unhedged equities in particular do well? Primarily because, following a sustained period of strength, the value of the New Zealand dollar finally weakened - particularly against the US dollar - over the quarter.