Troy fund manager Francis Brooke is among the beneficiaries of Hargreaves Lansdown redeploying its £300m pay out from Woodford Equity Income among six funds in its multi-manager range that held the beleaguered fund.
The fresh investments come amid wider change on the multi-manager range that has seen UK small-cap exposure from the likes of Merian and Marlborough reduced for funds investing higher up the market-cap spectrum.
Brooke (pictured) has landed fresh cash via a segregated mandate from both the HL Multi-Manager Income & Growth Trust and Equity & Bond Fund. The funds had the largest allocation to Woodford Equity Income in the range at 11.1% and 6.2% respectively at 30 September 2019.
Following Link’s first distribution to Woodford Equity Income holders in January, those positions are now 2.79% and 1.53% respectively. Hargreaves is estimated to have received between £298.1m and £362.6m from the distribution depending on which share class they had invested in.
Threadneedle UK Equity Alpha Income, Lindsell Train UK Equity, Jupiter UK Special Situations and JO Hambro Equity Income were among the third-party funds in which the Hargreaves range invested its Woodford cash.
Jupiter manager Ben Whitmore and Artemis’s Adrian Frost also received money into their segregated mandate for the D2C platform’s multi-manager range.
This month Hargreaves Lansdown was criticised for failing to mention in its value assessment that large chunks of the multi-manager range had been trapped in the suspended Woodford Equity Income fund.
Merian and Marlborough dumped as HL moves up the market-cap spectrum
Additionally, Hargreaves Lansdown head of investment analysis Emma Wall outlined changes to five of the multi-manager funds unrelated to the Woodford Equity Income pay out.
Merian UK Dynamic Equity and Marlborough Special Situations were sold down from the HL Multi-Manager UK Growth Fund in a move attributed to their small-cap focus. Marlborough UK Micro-Cap Growth and Marlborough Multi Cap Income were also trimmed within the £198m fund.
“The managers now feel the funds, and smaller companies in general, have less potential for growth from current levels,” Wall said.
In their place, LF Majedie UK Equity, Threadneedle UK Equity Alpha Income and Axa WF Framlington UK were added to the portfolio.
Merian UK Dynamic Equity, a £533m fund managed by Luke Kerr, was also sold down in the HL MM Equity & Bond fund, in favour of JO Hambro UK Equity Income.
Fund switches after Lee Gardhouse hands over the reins
The funds had both been managed by Hargreaves Lansdown chief investment officer Lee Gardhouse, but in August he passed the reins to Richard Troue on the Equity & Bond fund and Roger Clark on the UK Growth fund.
Troue also took on the HL MM High Income fund, which has trimmed Artemis High Income and Global Equity Income to make way for the M&G Emerging Markets Bond fund, managed by Claudia Calich.
In the HL MM European fund, which Gardhouse handed to Ellen Powley in October, TM Sanditon European has been dropped after the boutique fund house shut down following prolonged poor performance.
Although Crux manager Richard Pease has been handed the fund the HL MM European fund already has exposure to him via Crux European Special Situations.
Wealth 50 rejects also get dumped from multi-manager range
Sanditon European was one of two former Wealth 50 constituents that got the boot from the multi-manager range, according to the update.
The HL Multi-Manager Balanced Managed Fund dumped M&G Recovery instead replacing Tom Dobell with Jupiter’s Whitmore, who will run a portion of the fund via a segregated mandate.
Dobell’s exit from the Wealth 50 in December was regarded as well overdue with the £2bn fund underperforming the wider UK stock market since early 2012.
Fundcalibre managing director Darius McDermott reckoned the recent scrutiny Hargreaves Lansdown has faced could partly explain the motivation for revamping the range. McDermott said he rates the Marlborough funds and Merian UK Dynamic fund highly.
Hargreaves’ use of segregated mandates would make it easier to replace managers in future, he added.
