Slim pickings among second-tier New Zealand stocks have persuaded boutique funds manager Fisher Funds Management to widen its investment criteria.
The Fisher Funds Growth Fund, which invests in small and medium sized companies, previously focused on stocks with a profit history of at least three years or unlisted stocks likely to join the main board within three months.
But managing director Carmel Fisher says she will now look at stocks with a two-year profit history and companies with the potential to list in the foreseeable future. However, stocks included under the broadened criteria will make up only a small percentage of the fund until they prove their worth, she says.
Fisher says it is becoming increasingly difficult to find suitable investments for the portfolio. New blood is needed because most of the core holding is fully valued and unlikely to rally much further in 2002. Without it, the fund might struggle to meet its internal goal of an 8% return to unitholders, she says.
The first investment made under the broadened criteria is in Restaurant Brands.
Fisher says a recent newsletter outlining the difficulty of finding new stocks was not an attempt to damp down the expectations of fund investors. She says she has no reason not to expect the fund to make the 8% goal this year.
It is always difficult to predict how the market is going to perform, she says.
"If you’d asked me this time last year how things were going to go I’d have said we’d be lucky to get a positive return. But we ended up making 13% for the year."
Fisher says the decision to revise the criteria doesn’t mean her original investment rules were wrong. All funds managers have investment criteria that they constantly refine.
Fisher says the fund will continue to invest in New Zealand companies. It won't, like many other NZ equity funds, invest in Australian stocks.
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