Intrigued by cheap Utilico's focus

It is trading at a meaty 33 per cent discount to net asset value (NAV), it is effectively owned and controlled by one single pension fund, its gearing is up at 200 per cent, its performance hasn’t been stunning in the last few months and it is heavily invested in just three underlying holdings, one of which is actually another fund controlled by the managers.

So Utilico Investments isn't exactly going to leap off the page at the average cautious investor, but I admit to being quite intrigued. This is a very focused play on just three assets, all of which I like the look of on first inspection. The first is Australian-listed, African-focused gold miner Resolute Mining - 27 per cent of net assets. I've wanted to buy into more gold miners for quite some time and Resolute is a respected gold miner with quality assets which I'd actually looked at buying before I encountered Utilico. As its mission statement explains: "Resolute is an unhedged gold producer with three operating gold mines in Australia and Africa" - the more important bit is that it’s solidly profitable, has been quietly repaying debt and is also repurchasing its shares (market cap is A$900m (£591m) with a PE ratio of nine). There are some obvious downsides including investments in Mali (experiencing more than its fair share of political turmoil), as well as that unhedged exposure to an underlying asset (gold) that hasn’t been performing well plus the systemic underperformance of mining shares relative to spot prices. But Resolute looks a high-quality, long-term play with room to grow and solid financials, so the Utilico fund looks like a cheap way into that particular asset.

The second underlying holding is Utilico Emerging Markets investment trust. This is already one of my main holdings and I had considered buying some more of its shares, so UTL looks like another cheap way to buy a quality asset.

Last but by no means least, Utilico Investments has a chunky stake in Aussie infrastructure operator Infratil, which looks a decent, even boring, but valuable asset. I'd also note that Utilico has started buying shares in Augean, a UK-based hazardous waste company that's also been on my radar for quite some time as a under-valued company with a great business. So, all in all, I reckon that Utilico Investments is worth a closer look - it is value driven, spends much of its time and money investing in the resource and infrastructure sector (which I like), is run cheaply (the total expense ratio is 0.83 per cent) and offers a big discount to NAV. Obviously I might have missed something, so if any other investors out there have an alternative opinion, I'd love to hear from you - post your comments below.

I’m also thinking of relenting on my bearish view about private equity, and investing a chunky amount of money in cheap PE funds. I'm not a big fan of the PE model moving forward and think that most managers will struggle to deliver on the operational improvements that are so necessary to justify their fees and complicated financial structure - all without the benefit of massive leverage in a new world trying to kick its addiction to debt. Most investors I talk to disagree with my bearish sentiments and reckon that well run private equity houses can deliver lots of benefits and make big profits for their shareholders over the long term - plus there's the chunky discounts on offer with many of the listed funds. I am tempted by three funds at the moment: 3i Group, where I reckon there's potential for real restructuring and value realisation; Dunedin Enterprise, which has made some canny realisations in recent months and is looking exceptionally good value; and last but no means least the standout star in the mid cap sector, HgCapital, whose shares look rather cheap given its extraordinary record to date.

My other purchases this month include an exchange-traded note that tracks the SocGen Quality Income Net Total Return Index designed by SocGen quantitative analyst Andrew Lapthorne (this is full of high-quality, good-value equities - the ticker: SGQI). I have also bought shares in natural gas services business Cape, and the Market Vectors Unconventional Oil & Gas ETF (US ticker: FRAK). I'll continue to pump even more of my pension money into the broad 'energy complex' over the next year as well buying into a few new alternative hedge funds - I bought the BlueCrest BlueLine CTA trading fund this month and next month I'll probably buy either the Catco 'C' class shares or shares in Dexions' IRIS fund, both of which are catastrophe reinsurers.