Hargreaves Lansdown has defended itself against criticism of the Wealth 50 with funds from Schroders and Jupiter singled out for poor performance since the buy list was revamped a year ago.
The Sunday Times said 33 of the Wealth 50 constituents had underperformed their sector average since 9 January 2019, when the Wealth 150 was made over into the Wealth 50 with significantly fewer funds. The remaining 28 funds outperformed their sector.
Hargreaves has pointed out the list of underperformers includes 10 passive funds, which by their nature underperform the index once fees are taken into account.
Danny Cox at Hargreaves Lansdown told the newspaper: “Investing is for the long term and a year is far too short a time to draw meaningful conclusions. Over this very short period, more Wealth 50 funds have outperformed than underperformed. And the analysis does not take into account that HL clients benefit from an average 30% discount on the fund charges, which further improves returns.”
Schroders and Jupiter singled out for poor performance
Of the funds analysed, seven have been dropped by the D2C platform’s buy list.
But the newspaper singled out poor one-year performance from the Jupiter India fund and Income trust relative to their sectors, as well as the Schroder Small Cap Discovery.
The Sunday Times pointed out £1,000 in Jupiter India would be £177 worse off than the sector average after one year, although it sits in the Investment Association Specialist sector. For Jupiter Income, the value fund managed by Ben Whitmore (pictured), this would be £69 and for Schroder Small Cap Discovery, managed by Matthew Dobbs, it would be £65.
Woodford Equity Income, which was dumped by Hargreaves after the fund suspended in June 2019, was the worst performing fund from the 60 that were unveiled last January. A £1,000 investment in the fund at the time the Wealth 50 was unveiled would have lost investors £248. That is £421 less than the sector average over the same period.
The Sunday Times also highlighted relative outperformance by funds that did not feature on the Wealth 50.
The Liontrust Special Situations fund was dumped from the buy list when it became the Wealth 50 would have turned £1,000 into £1,186 over a year, while Fundsmith Equity, which has never featured on the buy list, would have seen that same investment grow to £1,221. Neither fund house offers Hargreaves Lansdown a discounted fee.
Hargreaves head of research Mark Dampier has previously referred to criticism of the Fundsmith Equity omission as “bullshit”.
Funds dumped from the Wealth 50
M&G Recovery is the most recent fund dropped from the Wealth 50 with Hargreaves Lansdown stating it had started to doubt Tom Dobell’s ability to outperform.
In October, the Sanditon European Fund was given the boot as the boutique announced it was winding down and handing the fund to Richard Pease and James Milne of Crux, who already feature on the Wealth 50.
A month after the Woodford Equity Income suspension, Hargreaves Lansdown dropped Lindsell Train’s UK Equity and Global Equity funds from the Wealth 50 because of Nick Train’s considerable stake in Hargreaves.
It also dropped the Schroders Tokyo fund after Andrew Rose’s exit, announced in February.
