If you think of Australia and New Zealand only in terms of Crocodile Dundee, Nicole Kidman, and Mad Max, think again.

In addition to its Hollywood exports, the economy Down Under is also surging. It had 0.9% growth in the fourth quarter, and an unemployment rate that is holding steady at about 5.3% despite the global economic crisis.

Yet, despite all the reasons your client may want to invest in Australia and New Zealand, the options for doing so are limited.

According to Lipper’s data, there are only four U.S. based mutual funds with a focus on Australia; one of those is a currency fund and another is a newly launched exchange-traded fund.

To be sure, there are other options to gain exposure to Australia. An investor could buy a broader, global fund that focuses on the Pacific Rim, or, since much of Australia’s economy is commodities-based, there are commodities funds.

Or, if you have a client who really wants a high focus on Australia and/or New Zealand, you could buy Commonwealth Australia/New Zealand Fund, which has posted a gain of about 48% in the 12 months ending March 31.

Robert Scharar, Commonwealth’s Texas-based fund manager, said that his fund can buy any company in Australia or New Zealand, but given what’s available, it primarily invests in small-cap and mid-cap companies. And this is precisely how he adds value because there is scarce information on most of these companies. Indeed, he said that even in the United States, the smaller companies often do not get much analyst coverage.

Australian investments will continue to benefit as China and India grow, Scharar said, since much of Australian’s exports head to those countries. China and India are currently second and fourth, respectively, on Australia’s export destinations. (Japan and Korea are first and third). China is also Australia’s biggest import source, further entangling the two nations economically.

Given the import/export situation in Australia, the ports that have become privatized offer attractive investments, Scharar said. Overall, the biggest areas for the fund’s investments are transportation (20.8% of assets) and materials (15.4%).

Another issue for the fund is dealing with the cyclical nature of Australia’s economy. Scharer said that the conventional wisdom holds that cyclical investments are fully valued at the moment and therefore Australia is at the top of its potential value. And while the first part of that (cyclicals being fully valued) may be true, he said, there are still some non-cyclical investments that will see some gains. He cited example such as agriculture and water resources, especially in New Zealand.

He also said that there are attractive investments in the construction industry in the region. Australia earmarked about $25 billion of its government stimulus package to rebuild their schools, of which about 30% still has not been spent, he said.

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