Hargreaves Lansdown has removed the Midas Balanced Income fund from its fund buy-list the Wealth 150, in what it has described as a “precautionary measure”.
Meera Patel, senior analyst at Hargreaves Lansdown, says the fund has struggled during 2011 “particularly during the summer’s extreme volatility”.
She says: “Given the fund’s exposure to more defensive companies in the UK market, we would have expected it to have proven more resilient.
“However, exposure to the financial sector has weighed on returns. Although HSBC is the only bank held in the portfolio, the European sovereign debt problems have had a significant impact on other types of businesses in the financial sector and this has led to poor returns.”
Patel says performance from the fund’s overseas holdings have also been mixed, with US stocks contributing towards underperformance.
She adds: “Additionally, exposure to gilts was reduced earlier this year at a time when market volatility continued to intensify and gilt prices rose.”
Patel says the move was not a recommendation to sell, adding that existing investors should not sell out of the fund if it is meeting objectives.
To receive more relevant articles like this one, why not sign up to our briefings and breaking alerts by clicking here.