The funds, worth an aggregate £1.7bn, are both managed by Aled Smith. Hargreaves Lansdowne said the investment strategy, which bases investment decisions on the prospects of individual companies rather than the wider economic environment, has not suited the current economic picture.
His view also takes a more long-term approach, recognising that it can take time for invested capital to translate to larger profits. However, investors are often focused on short-term company earnings and in many cases his favoured companies have lagged those viewed as more stable by investors.
Few managers in the US market have consistently outperformed across the market cycle, which has impacted the American Fund, while around 50% of the Global Leaders Fund is invested in the US market so has been plagued with the same problems.
Analysis from Hargreaves Lansdowne shows stock selection across the funds has been weak for a number of years, and performance has been affected as a result. The America Fund currently sits in the third quartile in the IMA North American sector over three years, having returned 34.9% compared to a sector average of 38.9%. The Global Leaders Fund meanwhile is in the fourth quartile, with returns of 21.5%, four percentage points below the sector average.
Kate Thompson, analyst at Hargreaves Lansdowne, said: We are firm believers that investors should take a long-term view when investing with active fund managers. Unfortunately, it is over longer periods where fund managers investing in larger US companies seem to struggle.
"We will continue to look for funds investing in this area that we believe can add value against the market. In the meantime, we feel it is prudent to remove the M&G American Fund from the Wealth 150. Furthermore, due to similarities with the M&G Global Leaders Fund and the higher conviction we hold in other funds in the Global sector, this fund has also been removed."
