[GRTV] Sam Dickie's 2020 outlook

Susan Edmunds speaks to Sam Dickie senior portfolio manager from Fisher Funds about their recent Good Returns Fund Manager of the Year recognition; and gets the low-down on Fisher Funds' investment philosophy and approach for the year.

Monday, February 24th 2020, 6:36AM

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Sam Dickie

Valuations are elevated – but not too unrealistic levels, one fund manager says.

Sam Dickie, a senior portfolio manager at Fisher Funds, said the team was “super focused on beating the market”.

Despite strong growth over recent years, he said equity valuations were not cause for alarm.

“I think we're always worried about valuations. It's one element of our investment process, our steep process that Carmel set up 21 years ago. Headline multiples are stretched. We all know that. I'm sure a lot of your listeners will think that as well. I guess the only point I'd make there is you've got to look at equity valuations in the context of the prevailing level of interest rates, and when you compare bond yield earnings, yield gaps, or whatever you want to do to compare equity valuations to interest rates, valuations are not super elevated.”

He said Fisher Funds’ focus on active management had paid dividends.

“I mean, if we think about our flagship fund and one of our oldest funds, New Zealand Growth Fund, which Carmel set up 21 years ago, if you'd invested $100,000 in that 21 years ago, that'd be worth over a million dollars today. Now, if you'd gone with a passive fund manager and just invested in the market, that'd be worth $600,000, which is not to be sneezed at, but that extra $400,000 of active return is what we think our clients really value.”

It was also boosted by its culture and its deep-dive approach to research.

“If we take Xero, for example, that we didn't invest in two years ago or three years ago, we do what every normal financial analyst does, and we painstakingly build our Excel models and we spend a lot of time with senior management, but we take it one step further or two steps further, and we spend a lot of time with the next layer of management.

“Recently, I was at Xerocon in San Diego in June of last year. And I spent a lot of time, over two days, with different layers of management. Then we also spent a lot of time with Xero's competitors and with Xero's customers, so it allows us to think more like a business owner than a typical financial analyst.”

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Full transcript of the interview available here.