KEY POINTS:
Poor performance over the past year from Fisher Fund's listed investment fund, Kingfish, has wiped out its 2007 profits.
In preliminary results out yesterday Kingfish announced a $36.6 million operating loss for the year to March 31, countering a $36.5 million profit made in the previous year.
At the same time the net asset value of its shares had dropped from $2.15 to $1.31 on March 31. Yesterday it closed at $1.06.
Kingfish chairman Rob Challinor said the fund had a relatively robust performance in the six months to September but the second half of the year had proved particularly challenging, with volatile financial markets hit by the credit crunch, finance company woes and strong New Zealand dollar.
"This has been the most challenging period in our four-year history, with the last six months reinforcing just how quickly market sentiment can change."
Challinor said Kingfish had been hit particularly hard by investments in companies with exposure to the strong New Zealand dollar, including Pumpkin Patch, Rakon and Comvita, while the share prices of its other investments had also fallen, despite the businesses remaining sound.
Carmel Fisher, chief executive of Fisher Funds, which manages Kingfish, said it was challenging to give a logical explanation as to why the New Zealand share market had performed as it had given the degree of separation between New Zealand's listed companies and United States housing or financial sectors. "Perhaps that is the point though - logic did not play a significant role in the market correction, rather emotions of fear and panic ruled resulting in irrational prices."
But Fisher remained upbeat about the investment fund's future returns, saying: "Since balance date, we have seen a rebound in world share markets, and a significant recovery in some of our Kingfish portfolio companies.
"Our view is that while markets remain timorous, the worst is behind us and the Kingfish portfolio is in excellent shape despite the last year's performance," she said.
Challinor said the Kingfish board also remained confident in Fisher Funds and had underscored its cautiously optimistic outlook with a 28 per cent lift in the dividend to 4.5 cents.
