Ben Yearsley: Midas can rediscover its winning touch

It is always interesting to see fund managers' reaction to a period of poor performance. It either leads to obstinacy and a period of "sticking to their guns", or to a period of soul-searching and an admission that changes need to be made. With Midas Balanced Growth and Midas Balanced Income it fell into the latter camp.

For a number of years Midas was the company no one had heard of apart from a select few in the City. Founded by four partners, including Simon Edwards and Alan Borrows, Midas started life managing money for the Merseyside pension scheme, specialising in multi-asset investing. They set out to be the antithesis of a tracker fund. If they liked something, regardless of what it was, they invested in it. Government bonds, equities, overseas equities, fixed interest, property, structured products, alternative assets – you name it, they probably considered it.

The funds were successfully managed by Edwards and Borrows for a number of years, and performance up until 2007 was excellent. So much so they attracted a wider following. The combination of top performance and a diversified approach was clearly a winning one.

In the past, diversified portfolios have been able to weather recessions reasonably well, so in theory the funds should have been well-equipped to weather the credit crisis of 2007-08. Yet this was no ordinary crisis. Pretty much every asset class fell sharply, and in hindsight it was evident that the managers were carrying too much risk. The more esoteric holdings in the fund suffered from a lack of liquidity, and years of hard work and top performance were undone in the space of a few turbulent months.

In addition to this difficult period of performance, there was the potential upheaval of a merger of the business with Miton, another niche fund management house, to ultimately create MAM Funds.

At Hargreaves Lansdown we had always held both companies in high regard, and each was a successful, profitable business. However, as part of the merger process, a large amount of debt was taken on at precisely the wrong time.

Turn the clock forward to today and I am pleased to say that these issues seem to be over. After a fresh round of financing sought by the new managing director, Gervais Williams, the former smaller companies fund manager at Gartmore, the group is on a sound footing and highly focused.

The most recent chapter in this potted history of Midas is the decision of Simon Edwards to step down to pursue other interests. This is undoubtedly a blow because Borrows and Edwards have been the driving force of Midas over the years. Indeed, the two were co-managers of these funds. However, the appointment of Simon Callow as lead manager on Midas Balanced Growth, while Alan Borrows takes full charge of the Income fund, is a satisfactory outcome for investors. Whilst relatively unknown, Callow has been at Midas for nearly six years and his experience, combined with Borrows and the remaining Midas team, should bode well for the future. They also have the Reading-based Miton team, with whom they can share ideas and opinions on markets, funds and investments, as well as Gervais Williams, who adds a new dimension with his smaller company experience.

Arguably, Midas was the first true multi-asset fund management house, and for a long time it was the best. There are now many imitators, but it is very difficult being the master of all investments without ending up the jack of some, and I believe the Midas team are still one to back.

Going forward, Borrows admits that the funds won't be as racy as they were in the Noughties. Essentially they are looking to achieve consistent second quartile performance and returns of 7 per cent to 10 per cent per annum. Obviously there is no guarantee of this, but it is interesting to note the admission of the managers' shortcomings and desire to return to more consistent, less volatile performance.If the Midas team can deliver once more, these should be core additions to any portfolio for thelong term.

Ben Yearsley is investment manager at Hargreaves Lansdown, the asset manager, financial adviser and stockbroker. For more details about the funds included in this column, visit www.h-l.co.uk/independent

Independent Partners; Do you need financial advice on your investments, pension or insurance? Book a free consultation with an independent Financial Adviser at VouchedFor.co.uk

PROMOTED VIDEO
Arts and Entertainment
film
Arts and Entertainment
Preening: Johnny Depp in 'Mortdecai'
filmMortdecai becomes actor's fifth consecutive box office bomb
News
peopleWarning - contains a lot of swearing
Travel
travel
Arts and Entertainment
arts + ents
Finacial products from our partners
Property search
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

ES Rentals

    iJobs Job Widget
    iJobs Money & Business

    Ashdown Group: Client Services Manager - Relationship Management - London

    £30000 - £32000 per annum + benefits : Ashdown Group: A highly successful, int...

    Recruitment Genius: Credit Controller / Customer Service

    £18000 - £20000 per annum: Recruitment Genius: This rapidly expanding business...

    Guru Careers: In-House / Internal Recruiter

    £25 - 28k + Bonus: Guru Careers: An In-house / Internal Recruiter is needed to...

    Recruitment Genius: Tax Assistant

    Negotiable: Recruitment Genius: A Tax Assistant is required to join a leading ...

    Day In a Page

    Syria crisis: Celebrities call on David Cameron to take more refugees as one young mother tells of torture by Assad regime

    Celebrities call on David Cameron to take more Syrian refugees

    One young mother tells of torture by Assad regime
    The enemy within: People who hear voices in their heads are being encouraged to talk back – with promising results

    The enemy within

    People who hear voices in their heads are being encouraged to talk back
    'In Auschwitz you got used to anything'

    'In Auschwitz you got used to anything'

    Survivors of the Nazi concentration camp remember its horror, 70 years on
    Autumn/winter menswear 2015: The uniforms that make up modern life come to the fore

    Autumn/winter menswear 2015

    The uniforms that make up modern life come to the fore
    'I'm gay, and plan to fight military homophobia'

    'I'm gay, and plan to fight military homophobia'

    Army general planning to come out
    Iraq invasion 2003: The bloody warnings six wise men gave to Tony Blair as he prepared to launch poorly planned campaign

    What the six wise men told Tony Blair

    Months before the invasion of Iraq in 2003, experts sought to warn the PM about his plans. Here, four of them recall that day
    25 years of The Independent on Sunday: The stories, the writers and the changes over the last quarter of a century

    25 years of The Independent on Sunday

    The stories, the writers and the changes over the last quarter of a century
    Homeless Veterans appeal: 'Really caring is a dangerous emotion in this kind of work'

    Homeless Veterans appeal

    As head of The Soldiers' Charity, Martin Rutledge has to temper compassion with realism. He tells Chris Green how his Army career prepared him
    Wu-Tang Clan and The Sexual Objects offer fans a chance to own the only copies of their latest albums

    Smash hit go under the hammer

    It's nice to pick up a new record once in a while, but the purchasers of two latest releases can go a step further - by buying the only copy
    Geeks who rocked the world: Documentary looks back at origins of the computer-games industry

    The geeks who rocked the world

    A new documentary looks back at origins of the computer-games industry
    Belle & Sebastian interview: Stuart Murdoch reveals how the band is taking a new direction

    Belle & Sebastian is taking a new direction

    Twenty years ago, Belle & Sebastian was a fey indie band from Glasgow. It still is – except today, as prime mover Stuart Murdoch admits, it has a global cult following, from Hollywood to South Korea
    America: Land of the free, home of the political dynasty

    America: Land of the free, home of the political dynasty

    These days in the US things are pretty much stuck where they are, both in politics and society at large, says Rupert Cornwell
    A graphic history of US civil rights – in comic book form

    A graphic history of US civil rights – in comic book form

    A veteran of the Fifties campaigns is inspiring a new generation of activists
    Winston Churchill: the enigma of a British hero

    Winston Churchill: the enigma of a British hero

    A C Benson called him 'a horrid little fellow', George Orwell would have shot him, but what a giant he seems now, says DJ Taylor
    Growing mussels: Precious freshwater shellfish are thriving in a unique green project

    Growing mussels

    Precious freshwater shellfish are thriving in a unique green project