Hargreaves’ £298m fund launch highlights its marketing advantage

Retail investors flock to fund in sector dominated by Smith and Train

HL

Hargreaves Lansdown (HL) has raised a cool £298m in retail money for its Select Global Growth Shares fund, which launched on Friday, despite the fact it sits in the crowded Investment Association Global sector and does not have a track record.

It is the most raised for any of the managed funds offered by the D2C platform, topping the £251m raised for the HL Select UK Income Shares fund and the £168m raised for the HL Select UK Growth Shares fund.

A HL spokesperson confirmed that the amount raised was all by retail investors.

Hargreaves highlights D2C advantage

The move raises challenges for asset management firms, according to Nextwealth founder Heather Hopkins. “Asset managers struggle to communicate directly with investors who hold their funds. On direct to consumer platforms, they often need to pay for messages to be sent to investors.

“Hargreaves is able to communicate directly with customers – giving it a huge advantage.”

Hopkins continued: “Hargreaves Lansdown’s new fund range along with the growing use of segregated mandates in retail relegates active asset managers to the role of component provider and further concentrates buying power with a shrinking number of influencers. This will have huge implications for active asset managers in particular.”

Crowded global sector

This fund is the third to be added to the range and will sit in the IA Global Sector. It will have an ongoing charges figure of 0.6% with an investment service fee of up to 0.45%.

HL said it is cheaper than 88% of the sector and cheaper than 86% of all active equity funds. At launch, the industry questioned whether the fund could compete in a sector dominated by star fund managers such as Nick Train and Terry Smith.

Hargreaves Lansdown have proven themselves to be effective marketers time and again and this is no exception, says Hopkins. “We’ve seen a trend in the US toward low cost active – I have long expected this trend to emerge in the UK and HL seem to be leading the charge.”

Transparency on fund holdings

In a press release revealing the total amount raised at launch, HL Select fund manager Steve Clayton (pictured) said: “We launched the HL Select fund range back in 2016 because we saw a demand for funds that offered much more communication to their investors about how their money’s being invested.

“The success of the HL Select Global Growth Shares fund shows that appetite remains undiminished. We’ve built a great investment team to support the HL Select Global Growth Shares fund and we’re delighted with this hugely positive response from clients.”

HL will be revealing the final portfolio later this month. Hargreaves has said it aims to set itself apart from its rivals through the level of transparency offered on the fund.

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One thought on “Hargreaves’ £298m fund launch highlights its marketing advantage”

  • William Hawkins says:

    Should we be worried that this disintermediation of the wider asset manager world, whilst good for HL that controls distribution, is something that ultimately will be bad for the individual investor if it causes a contraction in AMs as they cannot achieve scale and in the medium term will be unable to survive. Perhaps HL will need to introduce some form of commitment to its customers that it will not promote its own funds above those from third party providers, and that it wont exclude third party providers from its platform just because they will not agree to the fee discount/reimbursement which it is understood that HL demands? Unlikely it would do so I would think, but there could be a wider pubic policy issue here it Hargreaves promotes it own funds in front of others on its platform?

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