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

Arts and Entertainment
Attenborough with the primates
tvWhy BBC producers didn't want to broadcast Sir David Attenborough's famed Rwandan encounter
News
Campbell: ‘Sometimes you have to be economical with the truth’
newsFormer spin doctor says MPs should study tactics of leading sports figures like José Mourinho
Sport
football
Life and Style
Agretti is often compared to its relative, samphire, though is closer in taste to spinach
food + drink
News
Kelly Osbourne will play a flight attendant in Sharknado 2
people
News
Down-to-earth: Winstone isn't one for considering his 'legacy'
people
News
The dress can be seen in different colours
i100
Sport
Wes Brown is sent-off
football
Voices
Lance Corporal Joshua Leakey VC
voicesBeware of imitations, but the words of the soldier awarded the Victoria Cross were the real thing, says DJ Taylor
Life and Style
Alexander McQueen's AW 2009/10 collection during Paris Fashion Week
fashionMeet the collaborators who helped create the late designer’s notorious spectacles
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

    SThree: HR Benefits Manager

    £40000 - £50000 per annum + pro rata: SThree: SThree Group have been well esta...

    Recruitment Genius: Office Manager / Financial Services

    £30000 - £37000 per annum: Recruitment Genius: Established in 1999, a highly r...

    Jemma Gent: Year End Accountant

    £250-£300 Day Rate: Jemma Gent: Are you a qualified accountant with strong exp...

    Jemma Gent: Management Accountant

    £230 - £260 Day Rate: Jemma Gent: Do you want to stamp your footprint in histo...

    Day In a Page

    War with Isis: Fears that the looming battle for Mosul will unleash 'a million refugees'

    The battle for Mosul will unleash 'a million refugees'

    Aid agencies prepare for vast exodus following planned Iraqi offensive against the Isis-held city, reports Patrick Cockburn
    Yvette Cooper: We can't lose the election. There's too much on the line

    Yvette Cooper: We can't lose the election. There's too much on the line

    The shadow Home Secretary on fighting radical Islam, protecting children, and why anyone in Labour who's thinking beyond May must 'sort themselves out'
    A bad week for the Greens: Leader Natalie Bennett's 'car crash' radio interview is followed by Brighton council's failure to set a budget due to infighting

    It's not easy being Green

    After a bad week in which its leader had a public meltdown and its only city council couldn't agree on a budget vote, what next for the alternative party? It's over to Caroline Lucas to find out
    Gorillas nearly missed: BBC producers didn't want to broadcast Sir David Attenborough's famed Rwandan encounter

    Gorillas nearly missed

    BBC producers didn't want to broadcast Sir David Attenborough's famed Rwandan encounter
    Downton Abbey effect sees impoverished Italian nobles inspired to open their doors to paying guests for up to €650 a night

    The Downton Abbey effect

    Impoverished Italian nobles are opening their doors to paying guests, inspired by the TV drama
    China's wild panda numbers have increased by 17% since 2003, new census reveals

    China's wild panda numbers on the up

    New census reveals 17% since 2003
    Barbara Woodward: Britain's first female ambassador to China intends to forge strong links with the growing economic superpower

    Our woman in Beijing builds a new relationship

    Britain's first female ambassador to China intends to forge strong links with growing economic power
    Courage is rare. True humility is even rarer. But the only British soldier to be awarded the Victoria Cross in Afghanistan has both

    Courage is rare. True humility is even rarer

    Beware of imitations, but the words of the soldier awarded the Victoria Cross were the real thing, says DJ Taylor
    Alexander McQueen: The catwalk was a stage for the designer's astonishing and troubling vision

    Alexander McQueen's astonishing vision

    Ahead of a major retrospective, Alexander Fury talks to the collaborators who helped create the late designer's notorious spectacle
    New BBC series savours half a century of food in Britain, from Vesta curries to nouvelle cuisine

    Dinner through the decades

    A new BBC series challenged Brandon Robshaw and his family to eat their way from the 1950s to the 1990s
    Philippa Perry interview: The psychotherapist on McDonald's, fancy specs and meeting Grayson Perry on an evening course

    Philippa Perry interview

    The psychotherapist on McDonald's, fancy specs and meeting Grayson Perry on an evening course
    Bill Granger recipes: Our chef recreates the exoticism of the Indonesian stir-fry

    Bill Granger's Indonesian stir-fry recipes

    Our chef was inspired by the south-east Asian cuisine he encountered as a teenager
    Chelsea vs Tottenham: Harry Kane was at Wembley to see Spurs beat the Blues and win the Capital One Cup - now he's their great hope

    Harry Kane interview

    The striker was at Wembley to see Spurs beat the Blues and win the Capital One Cup - now he's their great hope
    The Last Word: For the good of the game: why on earth don’t we leave Fifa?

    Michael Calvin's Last Word

    For the good of the game: why on earth don’t we leave Fifa?
    HIV pill: Scientists hail discovery of 'game-changer' that cuts the risk of infection among gay men by 86%

    Scientists hail daily pill that protects against HIV infection

    Breakthrough in battle against global scourge – but will the NHS pay for it?