Investment choiceMost of the big listed investment companies...

Investment choice

Most of the big listed investment companies have shunned all but the resources blue chips. Milton Corp, for example, holds Alumina, BHP Billiton, Rio and Santos, but the portfolio is heavily weighted towards the industrials and financials.

You could make the case that LICs like Milton and Argo Investments have missed out some big capital gains by taking such a conservative view of the commodities business. Among the small group of ASX-listed funds with their feet firmly in the mining world are LinQ Resources Fund, Lion Selection Group and Global Mining Investments.

LinQ reported a 271 per cent hike in profits for fiscal 2007 and its portfolio has large positions in companies such as CopperCo, Atlas Iron, Oilex and Riversdale Mining.

Lion Selection has picked companies that have either been close to production or with advanced exploration.

Its Australian portfolio includes Allegiance Mining (producing nickel in Tasmania), De Grey Mining, Exco Resources (one of the most advanced of the Cloncurry copper explorers) and View Resources (which is reviving the once large Bronzewing gold mine in Western Australia).

Lion also holds stock in companies developing projects in Zambia, the Philippines and Indonesia and last week took a slice of Toronto-listed Mindoro Resources.

By far the most diversified portfolio is that of Global Mining Investments. It holds BHP, Alumina, Zinifex and Rio, of course, but also companies that are beyond the reach of many Australian investors because they are not listed here: CVRD, Impala Platinum, Xstrata, Zijin Mining, Kumba Iron Ore, Anglo American and China's largest coal producer, China Shenhua Energy.

GMI chairman John Robinson says both BHP and Rio offer diversification within their operations.

But owning BHP, for example, does not give you exposure to platinum or zinc.

Xstrata is extremely active in Australia, but you can't buy its shares here. CVRD is the fastest growing major in the world -- it's not listed here either. And he believes in diversifying.

GMI's portfolio is managed out of London by one of the world's leading investment funds, BlackRock, but Robinson knows the local mining world backwards.

He is a metallurgist by training and was CEO at diamond producer Ashton Mining (now part of Rio Tinto) for eight years.

He has also worked for Newmont, the old Western Mining and Aberfoyle. He says GMI has served its shareholders well, the portfolio's value rising 77 per cent over 12 months and well ahead of the HSBC global mining index.

One investment, Hong Kong-listed and Fujian province-based Zijin Mining (one of the 10 largest gold producers in the world) has appreciated 1550 per cent since GMI bought in).

Robinson is also bullish on certain commodities. He likes the bulks -- iron ore and coal -- as well as the precious metals, platinum and gold.

Platinum because of its use in catalytic converters in vehicles. On the subject of the yellow metal, he is firm: "World mine production is falling away and there are no new major projects.''

Rohan Edmonson, client adviser at Perth investment house Indian Ocean Capital, is one of the believers in another leg up for resources.

"Yes, there's more coming,'' he says.

He hears the Rio ads on morning radio, sees the Qantaslink flights linking Perth to Karratha and Port Hedland always being fully booked and, then, China rebuilding.

"This can't be just turned off,'' Edmondson says.

But he admits it is hard for the individual investor; this market never levels off, it is always moving one way or the other.

He also likes coal and iron ore, followed by copper, gold and zinc.