Hargreaves aims to shine in a sector dominated by Train and Smith

Platform giant adds global equity fund to £460m Select range

Hargreaves Lansdown has added a concentrated global equity fund to its £460m Select range, but it has been suggested the fund could struggle to stand out in a market full of funds already offering access to quality growth companies.

The HL Select Global Growth Shares fund, managed by the Select team led by Steve Clayton (pictured), will sit alongside the range’s UK Growth Shares fund and the UK Income Shares fund.

The fund will launch on 3 May at a £1 fixed launch price and sit in the IA Global sector. Investors can access it for £25 per month or £100 as lump sum at an ongoing charges figure of 0.6% plus HL’s Vantage platform fee of 0.45%.

Companies that ‘make a difference’

HL said it will hold 30-40 names, each deemed “capable of making a difference to the fund’s performance”, with a focus on quality. The benchmark is the FTSE All-World index.

The holdings will not be published until a week after the fund’s launch, but in a video on the HL website, Clayton said there will be a big exposure to North America, as well as exposure to Asia and Australasia, a selection of European businesses and some “top picks” from the UK Growth Shares fund.

Clayton said: “Investing globally opens up new opportunities to find truly exceptional companies from a much bigger pool of choice. We try to identify great businesses, wherever they are in the world, with strong balance sheets, and own them for the long term.

“We look for businesses that are in charge of their own destiny, which will grow through thick and thin, regardless of issues like Brexit.”

Funds already doing a similar thing

Shore Financial Planning director Ben Yearsley, said the fund’s “quality growth compounding story” is fine but questioned why an investor would opt for this fund over, say, Terry Smith or Nick Train, which are mainstays in many retail portfolios.

“Certainly you wouldn’t have all three, arguably you wouldn’t have two of them, you’d just have one of those kind of funds,” he said. “I have no problem with the approach or process but when you already have funds doing similar things, why would you?”

Chelsea Financial Services managing director Darius McDermott also said it is a crowded space and there are a number of proven global equity managers with very good longer term track records and similar fees.

He also noted performance for the other two funds in the range has been varied.

“While the Select UK Growth fund has done very well since launch – producing a first quartile return of  33.1% compared with 18.73% for the sector average – the Select UK Income Shares fund has not done so well; it is fourth quartile having returned 3.64% since launch compared with 6.34% for the sector average.”

He added: “Having said that, I’m sure Hargreaves clients will find it [the global fund] an attractive proposition.”

‘New level of communication’

But Hargreaves Lansdown believes its range stands out due to the level of transparency it offers investors.

The team has pledged to offer a “new level of fund manager communication” to DIY investors by publishing every shareholding, not just the top 10, offering explanations of why each share is held, and detailing the fund breakdown by sector and company size. It has also vowed to email blogs about each position when bought or sold to investors.

A Hargreaves Lansdown spokesperson said: “The main thing which differentiates our funds from peers is the level of information we provide to investors as a matter of course. We provide full portfolio details to clients, along with an explanation of why we’ve invested in each stock, and when we make changes we email them to let them know too. This is a greater level of transparency from HL Select funds than any other retail funds.”

Clayton added: “We want HL Select investors to really understand what is happening to their money, and why their fund manager bought and sold the stocks they did.”

McDermott said: “The transparency is very good and investors will be able to see exactly where the manager is putting their money. The cost of the fund is also encouraging.”

 

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4 thoughts on “Hargreaves aims to shine in a sector dominated by Train and Smith”

  • William Hawkins says:

    I wonder if this is economically rational for HL to do, as it is inviting copy-cat investing by those on platforms like AJ Bell and Interactive, and even the HL platform itself, to just copy the actions of the fund manager – and save on the fund charges at the same time?

  • Eleonora Vita says:

    William you miss the humour from Darius at Chelsea Financial services! In one breath he points out the Select UK Income Shares fund has “not done so well” with its “fourth quartile having returned 3.64% since launch compared with 6.34% for the sector average.” In his next breath he observes that “Hargreaves clients will find it [the global fund] an attractive proposition.” I not quiet certain from that comment what one is to think of Hargreaves clients? Personally, I think this whole transparency issue is a complete waste of time. Why pay 1.05%? Surely it is to get a return on your money? Will knowing what Mr Clayton does hour-in-hour-out help?Presumably some portion of the fee will also be spent providing this unnecessary level of transparency and not spent on managing the fund. I would rather my fund manager focussed 100% on the job in hand, not wasting their time telling me what they are up to.

    No doubt time will tell how this new fund does compared to Train and Smith. I expect Ben from Shore is right, why try and compete with those who already have the advantage of incumbency and the track record to boot? I can see no reason whatsoever.

    • No chance in competing with Train and Smith. But, Hargreaves customers have not always shown they are economically rational and along with accepting high fees are likely to stick with poorly performing funds. I might look for a bit more of a track record before putting my money with this manager. Under performing the sector average with one fund by nearly 50% does not inspire confidence.

      • Take, That was my point. How will any economically rational investor opt for Hargreaves’ new fund when they can go with Train or Smith who have already an exceptional track record.

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