The Swiss national flag atop of the embassy in Germany is pictured with a German national flag atop of the Reichstags building in Berlin, February 3, 2010. Germany should do everything in its power to obtain data to fight tax evasion, Chancellor Angela Merkel said on Monday after a whistleblower offered to sell German authorities secret Swiss bank data. The informant has offered data of up to 1,500 possible tax evaders with accounts in Switzerland which could lead to 100 million euros for state coffers, media reported. REUTERS/Fabrizio Bensch (GERMANY - Tags: POLITICS BUSINESS)
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With gold setting new dollar prices and the rand tentatively responding to finance minister Pravin Gordhan's further relaxation of exchange controls by weakening against the dollar, is this the moment to be buying into one or other of the 16 South African resource-based unit trusts?

Or should investors see opportunities or risks in the fact that the prices of commodities such as oil and platinum are still standing at just over half of the levels they reached before the bubble burst?

The answers depend on what you want. Do you want protection against the rand tanking or inflation taking off, or do you simply believe that with most commodity prices still only around the levels they hit at the peak, improvement has to be imminent? Or are you confident that a fund manager can actively and profitably trade both sides of the commodities market?

But to get back to the main question: no is probably the answer if you are a risk-averse investor looking for broadly based longer-term growth - the sort of person who would rather leave asset allocation to the financial experts.

Henk Groenewald, Coronation's Resources Fund manager, is frank. The ordinary, non-specialist investor hoping to build wealth through mutual funds is probably best advised to invest regular amounts into one or other of the dozens of balanced funds that are available, leaving the specialists to allocate assets across a spread of industries and sectors. That way one tends to ride out market fluctuations and short-term sectoral bubbles.

Groenewald was not talking against his own book - his remit is to outperform the resources index, which he believes is possible over time, if not daily. But he makes the valid point that resources and commodity funds are very specialised, and those that focus principally on South African equities have comparatively restricted investment options.

Exchange controls restrict mutual funds to holding no more than 20% of their assets in foreign stocks. Fund managers can circumvent this to an extent by holding foreign-registered but dual-listed shares such as Anglo American or BHP Billiton. But the days are long gone when Johannesburg's stock exchange offered a broad span of direct mining investments - mining houses, coal, diamonds, copper, gold and even tin or asbestos - with varying risk profiles. These days there are far fewer to choose from, while outside mining, investment choices are restricted to the likes of Sasol, AECI or Hulamin.

Sanlam's Shoiab Vayej agrees that investors should take medium- to long-term views, taking into account that while commodity bubbles will always come and go, in the medium term physical reserves and supplies of virtually all commodities are not restricted. They will respond to demand signals.

Taking the example of gold, Vayej says the important variable of the gold price is the marginal cost of producing the last ounces of the metal. Marginal producers might prove to be stock exchange darlings when prices are rising, but for the longer term, investment managers are best advised to focus on quality shares such as AngloGold Ashanti.

He argues that fundamental in-house investment research is more appropriate than that from outside if the latter simply tends towards consensus forecasts. In sum, the best long-term performance will derive from fundamental investment research founded on realistically sustainable prices and production costs of resources.

On another tack, Vayej makes the point that mutual funds that look abroad have a far wider choice of companies to invest in than do those that simply follow the shares quoted in Johannesburg.

But there is more than one way of skinning a cat. Old Mutual's Anwaar Wagner believes that sustainable index-beating performance can be achieved despite the limitations of exchange controls. When prices were peaking he shorted commodities such as oil and copper, using perfectly acceptable investment instruments from off-shore exchange-traded funds that paid off when, for example, oil prices halved.

Those sorts of trades are not available in South Africa, though they are possible within the 20% foreign investment allowances that are permitted.

But he also looks at the fundamentals - South Africa's deep-level and labour-intensive gold mines are under pressure from the threat of soaring electricity tariffs and sharp wage increases. Better, perhaps, to be invested in other minerals.

Where does this leave us? Back with the same fundamentals that should best underpin any long-term portfolio strategy. Choose the mutual fund that best reflects your appetite for risk. And, if you really want as direct a focus as possible on South Africa, there's always the Satrix Resi 20 tracker fund that does no more and no less than track an index that includes quality shares and several rats and mice. And if you really want an exposure to gold without the risks associated with mining, there are always gold-exchange traded funds.