Savings Product Review: Fisher Funds Equity Income Fund

Wednesday 1st February 2006

What is it called and what sort of savings product is it?
The Fisher Funds Equity Income Fund is a managed fund which buys shares which pay high dividends.

Who is the company behind it?
Fisher Funds is a locally-owned company which has made a name for itself as a New Zealand share manager. It currently has $370 million in funds under management in a range of funds, plus it looks after some money for the New Zealand Superannuation Fund.

Who is the target market?
The Equity Income Fund is designed for investors seeking income and as an alternative to finance companies and bank deposits.

What return does it offer?
As this is a new fund it doesn't yet have a track record. However Fisher has run a income mandate like this for a private client. In the past two year it has generated a gross annual return of 11.9%, made up of 4.4% capital growth and 7.5% income.

When was it launched?
The fund was launched in November 2005.

What other products is it like or is it competing with?
This is the only income share managed fund run by a fund manager, however most sharebrokers put together income orientated portfolios for clients. The Fisher fund is an alternative to other sort of fixed interest investments and appeals to investors who are happy with some sharemarket exposure.

Is it long term, short term or medium term?
It is a medium to long-term investment.

What is the unique selling point?
Besides generating good income flows from the dividends the fund invests in there is also the potential for capital growth through rising share values.

How strong a stomach do you need for it?
Moderate.

What's the hitch?
The biggest hitch is the possibility that companies the fund invests in cut their dividend. These sort of events often come as surprises, rather than being predictable. Currently the fund has seven stocks; Cavalier, Freightways, Hallenstein Glasson, Kiwi Income, National Property Trust, Sky City and Steel and Tude.

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