Super Fund eyes up-and-comers

By ELLEN READ

Smaller listed companies - including those on the new AX board - have received a boost with news that the New Zealand Superannuation Fund (NZSF) has appointed a fund manager to start investing in them.

Fisher Funds Management will receive 1.25 per cent of the fund's total assets, or about $120 million by the end of 2006, to buy stakes in locally listed companies outside the NZSX Top 10.

Buying is under way. Fisher managing director Carmel Fisher would not say in which stocks as the company is still in the market.

"But we've been pleased with the success we've had so far," she said.

"The core of it are stocks that Fisher Funds are known for in our other funds."

The Fisher Fund NZ Growth Fund has investments in mid-sized stocks, including Waste Management, Briscoe Group, Michael Hill, Metlifecare, Ryman Healthcare, Turners Auctions and Freightways.

Fisher said her portfolios were generally quite concentrated - holding 15 to 20 stocks.

She said no direction had been given on ethical investing - a policy NZSF is working on - but that Fisher Funds had its own guidelines.

These involved only buying established companies with proven track records, in companies that were forecast to increase earnings faster than the market average, and in those with a sustainable competitive advantage and good-quality management.

NZSF chief executive Paul Costello said the appointment of Fisher Funds reflected the view that there were some excellent investment opportunities in smaller New Zealand companies.

It also complemented the NZSF holdings of AMP Capital and Brook Asset Management, the portfolios of which tended towards larger companies, and meant the fund's money was well-spread across New Zealand equities, he said.

The stock exchange is also pleased.

Chief executive Mark Weldon said many of NZX's smaller firms have been outstanding performers in the last few years.

"The additional attention and capital flows directed to these companies is very positive," he said.

The NZSF has also appointed Allianz Dresdner Asset Management to manage a portfolio of international equities, with an initial allocation of $250 million.

Allianz Dresdner is an active manager and will complement Barclays Global Investors, which manages a portfolio more focused on global sharemarkets.

Several more active international managers are expected to be appointed this year.

The NZSF, already worth almost $2.5 billion, will build to $100 billion in 20 years.

Its performance target is to beat the cash rate, pre-tax, by at least 2.5 per cent over 20-year blocks.

New Zealand shares receive 7.5 per cent of the total fund, local fixed-interest gets 10 per cent and local growth assets the remaining 4.5 per cent.

The Super Fund

* NZ Superannuation Fund was created by the Labour Government. It was an election pledge in 1999.

* Expected to total $100 billion in 20 years.

* Aims to partly pre-fund the pension payments required when baby-boomers reach retirement.

* Invests 78 per cent of its money flsoverseas. Began investing late last year.

* Investment managers include AMP Henderson Global Investors, Brook Asset Management, Vanguard Investments Australia, Barclays Global Investors and ING (NZ).

* Appointed yesterday: Fisher Funds Management, Allianz Dresdner Asset Management.