Peter Hargreaves defends Blue Whale as losses mount

Peter Hargreaves has urged investors to look through Blue Whale’s performance woes as losses at the tech-heavy fund climb.

Blue Whale Growth was launched by manager Stephen Yiu (pictured left) four and half years ago with £25m of seed capital from Hargreaves (pictured right).

Over that time, Yiu’s concentrated portfolio of high-quality growth companies, many of which are in the tech sector, has delivered huge gains against rival funds and seen assets surge.

But recently the £907m fund has seen a sharp reversal of fortunes as tech stocks sold off sharply due to fears around rising inflation and higher interest rates.

Year-to-date the fund has fallen 22.3%, according to FE Fundinfo, nearly triple the losses of the average IA Global fund (-8.2%).

Blue Whale Growth performance vs IA Global (%)

Source: Trustnet

Though Yiu fortuitously ditched his holdings in Meta, formerly Facebook, and Paypal before both saw their share prices tank, some of his largest holdings, including Google parent Alphabet and ASML have lost 20% or more in the sell-off.

Nvidia, which makes graphics chips used in gaming and crypto mining, has fallen 35% year-to-date, rivalling Meta’s 37% drop.

See also: Peter Hargreaves refutes ‘speculative’ Blue Whale claims

‘The time to have sold would have been six months ago’

Despite not knowing whether stock markets will fall further, Hargreaves said investors are better off not selling out.

“The time to have sold would have been six months ago,” he said in a performance update to shareholders.

“All I know for certain is I have not witnessed many investors making a timely liquidation of their portfolios, much less re-investing before a recovery. Invariably remaining invested has proved the least harmful strategy, albeit the speed of recovery of the markets has varied over the years. This reinforces the message that equity investors should have a five-year time horizon.”

Years after setting up Hargreaves Lansdown, he recalled receiving “a very angry call” from an investor in Anthony Bolton’s Fidelity Special Situations fund, who had bought in after a good period of performance only to watch its value decline.

“Having expressed my confidence in the manager the client unfortunately slammed the phone down in anger. I have no idea whether he sold or not, but the fund did re-establish itself at the top of the performance charts within the year.”

Referring back to the client mentioned above who bought into Bolton’s fund right before a period of poor performance, “my opinion today remains the same as it did back then, only pertaining to a different fund manager”, he continued.

“For me it is serendipitous I have first-hand experience of Stephen, the team, their competence, and work ethic. Regardless of this, I do feel there is little to gain from selling securities now.”