Does Peter Hargreaves have a whale of an opportunity for UK investors?

The man who co-founded the investment company Hargreaves Lansdown above a firm of estate agents in 1981, and is now worth £2bn after floating it on the stock exchange, is launching a fund management group called Blue Whale.

Peter Hargreaves is backing the new fund group with £25m of his own money, and opening the doors to anyone with at least £1,000 to invest as a lump sum, or less if investing on a regular monthly basis.

After three decades of handling billions in investments by small savers, Hargreaves believes the average UK investor is seriously underinvested in the US. The fund, called CF Blue Whale Growth, will initially have about 60% of its money in US shares, with another 29% in UK shares and 6% in Europe.

“I’ve felt for some time that the British public is in general too lightly invested in the USA. The story for the last couple of decades has been all about income funds, and it’s been a great story – investors have done well. But I think it’s time for a fund that is purely focused on capital growth.”

The money will be managed by Stephen Yiu, who Hargreaves first met when he worked for Hargreaves Lansdown as a fund picker. “Of all the people who ever worked at Hargreaves Lansdown, I never met anyone who was so industrious and talented at the same time,” says Hargreaves.

Peter Hargreaves

Peter Hargreaves: ‘99% of my assets are in equities’.

Yiu’s approach to picking investments is to thoroughly research a company and its profit prospects, then fixing a price that he thinks the company’s shares should be worth. Only then does he look at the actual share price. “Let’s say his analysis shows the share price should be $22. It’s trading at $14 so it’s an obvious buy. Or it’s at $42 so not worth buying. That’s not to say it’s not a great company, it’s just that it’s too expensive to buy the shares. Finding good companies is not actually that difficult – there are hundreds of them. What’s not so easy is buying them at a price where you are then going to make money,” says Hargreaves.

The billionaire will be familiar to some as the biggest financial backer of the Brexit campaign, making a £3.2m personal donation to the Leave.EU group that paid for an anti-EU mailshot to one in three homes in the country. He says that while he was overjoyed with the result of the referendum, he is disappointed that government or party officials have not sought his views on what shape a post-Brexit Britain could take. In May he called on Theresa May to unilaterally guarantee the rights of millions of EU nationals already in Britain. He adds that a very senior member of the Conservative party rang him personally to solicit a large donation, but he turned him down. “I’ve never donated money to a political party,” he says.

Despite his vast wealth – Hargreaves regularly appears in rich lists among the top 50 wealthiest people in the UK – he says he lives a relatively modest life by billionaire standards. He owns no property abroad and argues that investing in property is nowhere near as attractive as many people claim. “My total property ownership is around £15m. Even as a 70-year-old, 99% of my assets are in equities. I hate investing in property. It’s too much hassle. If you put your money in a unit trust, someone else is looking after your money.”

He does, though, admit to one major extravagance. “I was once told by another very rich man to remember the four Fs. If it’s foreign, floats, flies or fucks, then rent, don’t buy. But I have done one of the Fs. I own a private jet.” His Embraer jet is based at Bristol airport and he says it can fly him non-stop to Dubai if the weather is looking a little iffy in the West Country at the weekend.

Hargreaves is at pains to point out that Blue Whale is not designed to be a rival to Hargreaves Lansdown, where he remains the biggest shareholder but is no longer an executive in the company or on the board. Hargreaves Lansdown will sell the Blue Whale fund but will not make any special promotion of it.

A spokesman for Hargreaves Lansdown said it won’t be specifically recommending the Blue Whale fund because it does not have a sufficiently long track record: “The Blue Whale fund will not be on the Wealth 150 recommended list. The Wealth 150 is our selection of the best funds available to UK investors, and to be considered we require a fund manager to have a demonstrable track record across a range of market environments. Once a manager has the right track record we will then consider the fund for inclusion.”

The independent fund adviser Brian Dennehy of says he won’t be recommending the fund now, but will look at it after six to 12 months of performance. “It makes no difference one way or the other to me that Peter Hargreaves is putting in £25m of his own money. In my career I’ve seen a lot of very reputable people backing funds that then don’t turn out the way they thought they would. That said, a blank sheet for a fund manager is a good thing – he or she can buy all their best ideas, and clear out any of the old baggage from funds they have run in the past. Some advisers won’t touch a fund until it has a three-year track record, but if this fund does well in its first six or 12 months then we’d be inclined to back it.”


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