Hargreaves Lansdown is scrapping its Wealth 50 after just 16 months in favour of a fund list picked and overseen by an independent panel.
The platform provider is also mulling a revamp of its fund research notes in order to be more transparent and reduce the large stakes it holds in some funds through its multi-manager range, according to the Sunday Times. It is also understood to be making changes to the fee discounts it offers on some funds.
Independent committee will oversee investment decisions
The Wealth Shortlist, as it will be known, will be overseen by an independent panel separate from Hargreaves Lansdown’s existing product governance committee, including two new independent directors to oversee governance and investment decisions.
It had been due to launch about now, but has been delayed by Covid-19.
Wealth 50 has come under controversy
The Wealth 50 has come under controversy in the past year for its championing of the now defunct Woodford Equity Income fund, formerly managed by Neil Woodford (pictured), on its Wealth 50 list and in its multi-manager range, despite having misgivings about the fund’s exposure to hard-to-trade illiquid holdings.
Hargreaves only dropped Woodford Equity Income from its Wealth 50 after the fund was frozen last June. At the time of suspension, 133,769 Hargreaves customers, who held the fund directly or via the multi-manager range, were blocked from pulling out their money. At the time they accounted for £1.6bn of the £3.7bn fund.
Hargreaves has also been criticised for the fee discounts it offers certain funds on the list which critics claim has seen it favour certain funds over others.
Notably, when the firm slimmed down its Wealth 150 to the Wealth 50, it refused to hold Fundsmith Equity, stating the fund’s OCF was too expensive and that it preferred Lindsell Train Global Equity as a global equity product, as well as a preference for managers who have managed money through a downturn.
This was despite Lindsell Train Global Equity being among four of the 14 funds younger than Fundsmith Equity in the Wealth 150 that sit in the IA Global sector.
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In February, the Financial Conduct Authority fired a warning shot at platforms over managing conflicts of interest in their best buy lists after singling out fund discounts in a Dear CEO letter.
Hargreaves Lansdown has also courted controversy for excluding investment trusts from the Wealth 50 over liquidity issues.
Hargreaves Lansdown declined to comment.
