Hargreaves Lansdown under fire over Wealth 150 list

Britain’s biggest financial adviser, Hargreaves Lansdown, has slashed the fund offerings on its highly influential buy-list, controversially excluding top manager Terry Smith while keeping faith with rival Neil Woodford.

The Hargreaves Lansdown Wealth 150 list of funds is regarded as the most powerful buy-list in the asset management industry, driving huge flows in and out of fund firms.

Hargreaves has catapulted itself into the FTSE 100 of Britain’s biggest companies, with 1.1 million clients investing nearly £100bn through the company’s fund selections.

In an overhaul of its approach to fund recommendations, Hargreaves has decided to replace the Wealth 150 list with a new list called the Wealth 50, although initially it will have closer to 60 funds.

The biggest surprise has been the continuing inclusion of Woodford Equity Income, run by Woodford.

Woodford became the darling of the investment industry, enjoying stellar performance at Invesco Perpetual before opening his own company in 2014. But while the performance of his new fund was initially strong, it has since lagged badly, giving investors a -8% return over the last three years.

Meanwhile, the baton of Britain’s No 1 manager has passed to Smith, whose Fundsmith Equity fund has given investors a gain of 66% over the last three years.

Billions of pounds have poured into Smith’s coffers, with the fund now the largest in the UK at about £16bn. Yet Hargreaves Lansdown has decided not to put Fundsmith Equity on its Wealth 50 buy-list.

Hargreaves regularly obtains discounts from fund management groups when it includes their funds on its buy-list, which it passes on to clients.

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But this has opened it to accusations that if managers such as Smith refuse to offer a discount, then Hargreaves will not recommend the fund.

Mark Dampier, the investment director of Hargreaves Lansdown, denied Smith had been left off Hargreaves’ buy-list because of a refusal to reduce fees.

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“Fundsmith is a very good fund. But on our list we have included Lindsell Equity Global Equity, run by Nick Train. He has done as good or even better job than Terry Smith, and runs his fund with a very similar style.

“But Smith charges around 100bps [basis points], and Train is on half that. Maybe the question journalists should ask is: why is Terry Smith still charging 1%?”

Dampier added that in regard to Woodford, he is a “patient investor”. He said: “We have known Neil Woodford for a very long time. And we have had some tough times with him in the past. He has now been through two poor periods in his career. The easy thing would be to take him off the list. That would actually be less hassle for us. We are long-term conviction investors.”

Hargreaves also revealed that it is to push further into savings accounts rather than just offering fund or stock market services, with the launch next month of an easy access savings account.



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