1 June 2006

Funds: Bullish on mining despite slide - Marketplace by Bloomberg - International Herald Tribune

Funds: Bullish on mining despite slide - Marketplace by Bloomberg - International Herald Tribune: "Simon Shields, Australia's biggest fund manager, is not concerned by last month's global sell-off in mining shares. He is betting it was a blip in a multidecade rally sparked by China's industrialization.

BHP Billiton and Rio Tinto Group, two of the world's biggest mining companies, tumbled more than 10 percent in the week after reaching records last month as commodities posted big declines. For Shields, the plunge made the two mining stocks even more attractive.

'BHP and Rio are extremely undervalued by the market,' Shields, of Colonial First State in Sydney, said during a recent interview. 'What we're seeing now is a long-term upswing that could last 20 to 30 years. We're buying shares that are unashamedly geared toward a tectonic shift in global growth.'

BHP has recovered 2.8 percent since its recent low last Thursday, while Rio has bounced 4.6 percent from its May 23 low. BHP and Rio are up 69 percent and 83 percent over the past year, more than triple the 22 percent gain in Australia's benchmark S&P/ASX 200 index. They have also helped make Shields's team of investors the best performers in Australia over the past three years.

Colonial's $4.9 billion Geared Share Fund, managed by Jim Taylor, has climbed 54 percent every year for the past three, making it the best-performing Australian equities fund for the period among 589 major funds. This year it is up 15.9 percent, compared with a 5 percent gain in the S&P/ASX 200.

Three other Colonial funds, overseen by Shields, are among the top 10 performers over the past three years. Colonial manages a total of 113 billion Australian dollars, or $85 billion.
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