Hargreaves Lansdown’s multi-manager range has recouped over £300m that had been trapped in the frozen Woodford Equity Income fund as it began winding down last month.
Woodford Equity Income investors received the first chunk of their investment back last week. The fund’s authorised corporate director Link is overseeing the process which is set to cost over £10m.
Details from Hargreaves annual report for the £8bn range show that the six multi-manager funds that hold Woodford Equity Income owned a total of 614.7 million shares at the end of September 2019. Hargreaves Multi-Manager Income & Growth accounted for two thirds of this with 11.1% of its total assets invested in the fund.
When Woodford Equity Income suspended last June, 291,520 Hargreaves customers who held the fund directly or indirectly were blocked from pulling out their money. At the time they accounted for £1.6bn of the £3.7bn fund.
Stake in Woodford Equity Income fund at 30 September 2019
| Fund | Number of shares | % of total net assets | Bid market valuation £’000 |
| HL Multi-Manager Balanced | 53.0 million | 3.7 | 44,138 |
| HL Multi-Manager Equity & Bond | 25.6 million | 6.2 | 17,942 |
| HL Multi-Manager Income & Growth | 428.8 million | 11.1 | 300,397 |
| HL Multi-Manager Special Situations | 87.1 million | 4.1 | 72,628 |
| HL Multi-Manager Strategic Assets | 6.3 million | 2.3 | 4,390 |
| HL Multi-Manager UK Growth | 13.9 million | 6.0 | 11,612 |
Source: Hargreaves Lansdown
Hargreaves’ latest multi-manager report doesn’t specify which share class customers in the affected multi-manager funds held but specifically mentions the Z income and accumulation share classes. Link had previously said investors in these share classes would receive 48.5p and 59.0p respectively in the first capital distribution.
That means Hargreaves multi-manager range would have received a cash injection of between £298.1m and £362.6m depending on how much was held via the income versus accumulation share classes.
Since the reporting period, the fund’s accumulation Z share class is down 4.7% with units now priced at 79.9p compared to 83.9p at the end of September. The deduction of dividends from the income share class, which have continued even while the fund is suspended, means the Z income share class has fallen 6.8% from 70.5p to 65.7p.
Hargreaves managers offload stakes in Woodford Equity Income
The annual report for the funds also revealed several fund managers sliced their stake in Woodford Equity Income during the period.
Lee Gardhouse and David Smith, who run the £294m Hargreaves Multi Manager Equity & Bond fund, sold £4.9m in the fund taking their 9.6% stake down to 6.2%.
Hargreaves Multi-Manager UK Growth and Multi-Manager Strategic Assets also shaved their stakes in Woodford Equity Income over the year to 30 September 2019 with the former offloading £2.5m worth of shares and the latter fund a smaller £147,000 stake.
Hargreaves’ reputation has taken a beating since the Woodford scandal erupted due to its constant promotion of Woodford Equity Income in its Wealth 50 list and multi-manager range despite having misgivings about the fund’s exposure to hard-to-trade start-ups and small caps. Hargreaves only dropped Woodford Equity Income from its Wealth 50 after the fund suspended.
In the period since, investors have pulled £633m from Hargreaves’ multi-manager range and analysts speculate the platform group may have difficulty attracting new clients into its fund products.
Its multi-manager funds have languished at the bottom of performance tables due to their investments in Woodford’s beleaguered fund, with Multi Manager Income & Growth suffering the biggest setback, returning 11.7% over three years versus the IA UK Equity Income sector average of 19.7%.
