Russian Voucher Funds
Investment Criteria

A large survey of voucher privatization funds in Russia in 1994 asked fund managers to assess the importance of various investment criteria. Fund managers were asked to rate importance as "very important", "moderately important", or "not important". The investment criteria are listed below in the order of the share of respondents rating the criterion as "very important". Clicking on a criterion will display a pie chart of the assessments of that criterion.

Investment criteria in order of importance:

Profitability
Liquidity of companies' shares
Value of real estate
Quality of production equipment
Location of company
Personal contacts with company management
Business connections with other companies in the Fund's portfolio
Expected cooperation with management to overcome employee resistance
Sales revenues
Quality of company management
Access to state credits
Large stake held by the state
Access to non-state sources of finance

Data and Source

With the exception of profitability, the most important criteria do not depend on financial information about an enterprise. The liquidity of shares, the value of real estate, the quality of production equipment, and the location of the company are factors that an investment fund can assess on its own. The importance of these criteria may reflect funds' limited ability to receive financial information from enterprise management. Inflation, uncollectable receivables, unstable tax structures, and inaccurate valuations of fixed capital can greatly distort profitability figures. Such figures, while obviously of primary importance to investors, are likely to be very difficult even for enterprise managers to calculate.