Fund of the week: Britain’s Mr Goldfinger

published 4 January 2006

Graham Birch, manager of Merrill Lynch's £600m Gold & General Fund, has had quite a year, says Patrick Collinson in The Guardian.

Birch, "Britain's Mr Goldfinger", is probably the biggest buyer of gold shares in the world and, thanks to the bull market in the gold price (gold is trading at 25-year highs), his fund is performing "obscenely" well. It's up nearly 50% in the past six months alone, and has seen an average annualised gain of 33.9% over the past five years.

Birch tends to invest not in the metal itself, but in the shares of the miners, as they can often offer more upside. If you just buy gold, he says, you are simply betting on the price. But buy the shares and you can profit from currency changes around the world, the different technical skills of different miners and shifts in political risk in gold-mining countries. And there is endless opportunity here: the gold-mining business was once very South Africa focused, but in the last decade it has become "truly global". One of the funds biggest holdings is Minas Buenaventura, which, with Newmont Mining, controls the world's largest gold mine, Yanacocha, in Peru.

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Birch expects the bull market in gold to keep running (for the simple reason that demand outstrips supply), but he is also excited about the non-gold part of the portfolio (20% of assets). Soon he expects to see an "amazing" spike in the price of rhodium (part of the platinum family) push up the share prices of relevant mining firms.

Contact: 0845-740 5405, www.mlim.co.uk

Name of holding % of assets

Newcrest Mining 7.1%

Anglo Gold 5.6%

Placer Dome 5.6%

Harmony 4.7%

Gold Fields 4.4%

Lihir Gold 4.4%

Newmont Mining 4.4%

Zijin Mining 4.2%

Goldcorp 4.1%

Minas Buenaventura 3.8%

Emma is a former digital journalist with more than 15 years of experience in national news in the UK and overseas. She was an assistant editor at MoneyWeek, covering property, funds, alternative investments and the share tips pages, then Emma moved on to The Daily Telegraph, first as a personal finance reporter and then as a business reporter.

Emma also worked as a finance correspondent for Ninemsn (Australia’s Channel 9 online) in Sydney, Australia for just over a year, and since then Emma has worked at Channel 4 News as a reporter and producer, and she spent more than 4 years at BBC online. At present Emma is a senior manager for content and thought leadership at PwC.