The balanced growth fund had a difficult 2008 but finished 2009 in the top quartile, ranking 11th out of 166 in the IMA Balanced Managed sector over one year.
Fund manager Simon Edwards says the fund is up 33 per cent over the last 12 months, compared to the sector average of 23 per cent. He has added the Better Capital private equity fund and the F&C private equity trust zero dividend preference shares to the portfolio.
Better Capitalis a feeder fund that invests in the Guernsey-based BECAP fund,managed by Jon Moulton, the former head of private equity group Alchemy Partners. Through the BECAP fund, the Aim-listed Better Capital fund aims to profit from improving companies in distress.
Edwards has known Moulton since the mid 1990s and says Midas rates him highly. Moulton has millions of his own money invested into the fund and Midas believes this will give him an extra incentive to perform well.
Edwards says: “Jon is one of the best private equity players in Europe, with a strong track record in private equity, particularly in turnaround deals, difficult deals and messy deals, This is the right economic environment for such deals and this is Jon’s investment sweet spot. He will also be keen to make his mark at his new business.”
Edwards is also holding zeroes in the F&C private equity trust due to the tax efficiency of returns. He says: “This is a fixed-interest instrument that was under-priced when it came to the market and it has already picked up 3 per cent since we bought it.
“All the yield is by way of capital gain. It is not treated as income, so is taxed at 18 per cent, not 40 or 50 per cent. On a tax-equivalent basis, an alternative investment would have to attain double figures to reach that.”