Hargreaves Lansdown has not seen a drop off in new business coming to the platform in the months following the Woodford Equity Income suspension but has issued a warning for tougher times ahead.
The D2C giant took in £1.7bn of net new business in the three months to 30 September 2019, up 31% from the £1.3bn of client money it attracted the year before.
This pushed assets under administration from £99.3bn to £101.8bn.
Another 35,000 customers were added to the site in the quarter, the firm said.
Hargreaves chief executive Chris Hill (pictured) said positive flows were driven by organic growth, wealth consolidation onto the platform from existing clients, more money coming into its Active Savings cash management business and £900m worth of back book transfers from JP Morgan and Baillie Gifford.
Hill praised the results as a “solid start to our financial year” but cautioned that the business could be impacted by weaker macro sentiment.
“I’m pleased to report a solid start to our financial year for client, net new business and revenue growth,” he said. “We have, however, seen new business in the period being impacted by weak investor sentiment arising from continuing Brexit and political uncertainty in the UK and wider global macro issues such as trade tariffs.”
Hargreaves’ share price dipped 4% to £17.46 on Thursday morning but had risen back up to £18 a share around mid-day.
Hagreaves quiet on Woodford impact
There was no mention of the potential impact from the Woodford Equity Income suspension, despite some analysts predicting hard times ahead for the D2C platform giant.
Credit Suisse initiated an ‘underperform’ rating on the stock on the basis that the Woodford saga could knock customer confidence in Hargreaves’ Wealth 50 list and its own brand of funds which would have a “noticeable impact” on revenue yields over time.
This followed a similarly downbeat note from JP Morgan’s European equity research team which predicted Hargreaves’ Woodford cheerleading could result in a £7bn hit to the group’s inflows over the next three years.
JP Morgan maintained its underweight on Hargreaves but boosted its net flows for 2019, 2020 and 2021 to £7.3bn, £7bn and £8.1bn respectively from its previous estimates of £6bn, £5bn and £5.5bn.
It pointed out that excluding the back book transfers from Baillie Gifford and JP Morgan, Hargreaves’ net flows were only £800m, coming in lower than its own quarterly flow estimates of £1bn.
“Overall, AUA and net flows are broadly in line with our estimates and, given the high valuation with the shares trading on calendar year 2020 price to earnings of 30x, we remain cautious given the wider market uncertainty, which may hold back both net fund flows across the industry and earnings upgrades,” it said in the note.
