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Midas touch on investment trust

Liverpool-based Midas Capital Partners is raising 20- 35m in C shares for the Midas income & growth trust, the investment trust mandate it took over from Aberdeen last August.

The trust, formerly the Taverners trust, originally focused on the restaurants, pubs and breweries sub-sectors of the leisure and hotel sector but its performance was suffering due to its narrow investment focus.
Midas Capital Partners widened the remit of the trust, turning it into a multi-asset class portfolio run on an absolute return basis using the a hybrid multi-manager investment strategy.

Like the companys two unit trusts, Midas income & growth trust invests directly in UK equities and fixed interest securities, while gaining exposure to overseas equities, property, alternative asset classes and structured products through other investment funds

Midas believes that the changes it has made to the trust has made it more attractive investment proposition and that this has led to a demand for new shares. But it decided to offer a C share issue, which is initially segregated from the existing ordinary share portfolio, rather than additional ordinary shares to ensure existing shareholders do not bear any costs associated with the new issue. The C shares will eventually be converted to ordinary shares, which will increase liquidity and reduce the companys fixed operating costs as they will be spread over a wider asset base.

The trusts initial target yield is 4.25 per cent a year and this will be achieved by investing in the managers best ideas, which will be funds or companies that are expected to do well as a result of top-down themes driving the market.

The equity element focuses on the top 350 companies in the UK with strong balance sheets, cash flow and dividend growth. Overseas equity exposure will come through other investment funds and will provide an alternative source of income as well as growth. Exposure to property and fixed interest provide income security and capital preservation.

The hybrid multi-manager style. along with the trusts focus on multi-asset classes distinguishes this from other trusts in the market. However, some IFA who like Midas investment strategy may prefer to access it through the companys open-ended funds rather than the investment trust.


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