Midas Income & Growth, managed by Alan Borrows (pictured) and Simon Callow has released its results for the year that ended on 30 April 2014. The total return on the net asset value for the year was 7.2% – well ahead of the company’s benchmark (LIBOR +3%) which, because LIBOR is so low, returned 3.6%. The Board say that they are reviewing the suitability of the benchmark and the investment objective (which is to beat the benchmark with low volatility and the prospect of income and capital growth by investing in a multi-asset portfolio).
The discount narrowed from 8.6% to 6.5% over the period and this helped generate a return to shareholders of 9.9%. The Board wants to grow the trust and thinks that it should introduce a discount control mechanism of some description alongside the expansion of the company. In the meantime, in advance of the forthcoming continuation vote at least, they have said they will not adopt a discount control mechanism for fear of shrinking the fund and pushing up the ongoing charges ratio.
The dividend was increased by 3.2% for the year and the quarterly run rate is currently 1.4p per share – the Board has said that, barring unforeseen circumstances, it intends to at least maintain that quarterly rate for the coming year.
The ownership of the management group changed during the period and the Board is proposing to change the name of the company from Midas Income & Growth Trust to Seneca Income & Growth Trust to reflect this. The manager has also agreed that their fee will be cut on a market capitalisation in excess of £50m – so that up to £50m the fee remains at 0.9% but beyond £50m the fee will be 0.65%.
Within the UK equity portfolio, the strongest contributions to performance came from National Express, Kier Group and SEGRO. Within the funds portfolio, the strongest contributions to performance came from Macao Property Opportunities and Henderson European Focus Trust. Holdings in Standard Chartered and Aberdeen Latin American Income Fund detracted from performance.