Diversification is the name of the game in the wake of the Reserve Bank's half a point cut in the official cash rate, but fund managers said investors would need to take on more risk or accept lower returns as interest rates head south.

With interest rates at record lows and share markets running at record highs, now is not an easy time for investors and fund managers alike.

Reserve Bank Governor Adrian Orr surprised the financial markets on Wednesday by slashing the bank's official cash rate to 1.0 per cent.

"There is a strong message here - he is

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