A £6.1m windfall for Hargreaves Lansdown head of research Mark Dampier weeks before retail investors became trapped in Woodford Equity Income, the fund he and his team have consistently championed to the platform’s clients, has sharpened the contrast between the fortunes of the investment industry and its clients during the episode.
Dampier, 62, the architect behind the Wealth 50 and its predecessors, sold £5.6m worth of shares in May as the FTSE 100 firm’s price neared its peak. On 16 May alone, he sold over 230,000 shares at £23.92 a share in a transaction that totalled £5m.
Hargreaves shares have since fallen 11% to £19.30 with its reputational hit via its links with Woodford taking a toll following the £3.7bn Equity Income fund’s suspension this month.
Hargreaves loses trust with customers
As performance and liquidity issues besieged Woodford, prompting a slew of intermediaries to pull money from the fund house, Dampier stood steadfastly behind the Wealth 50 constituent, predicting the beleaguered manager would shine again after Brexit had been resolved.
Portfolio Adviser tried to reach Dampier when the fund gated, but Hargreaves instead referred queries to head of investment analysis Emma Wall, who only recently joined the company.
Mike Barrett, consulting director at the Lang Cat, said the “unfortunate timing” of the sale would not do the Hargreaves brand any favours.
Barrett said: “Hargreaves customers trust them and have been very, very loyal to them for a number of years and that trust has taken a long time to build up. If anything is going to damage Hargreaves’ business in the long-term it won’t be short-term noise around a particular fund it will be if that that trust has been broken and I’m sure that’s what they’ll be focused on.”
Investment industry rakes in cash
The multi-million pound windfalls Dampier and Woodford have enjoyed over the last couple of years contrasts with the losses suffered by investors in Woodford Equity Income.
Woodford Equity Income has lost investors 20.2% over three years and 20.8% over the last year, according to Trustnet.
Woodford’s boutique investment business made £41.7m in profits in 2018, a year in which the Woodford Equity Income fund was down 13%, according to data from FE Analytics. Accounts for Woodford Investment Management (WIM) also revealed that a dividend of £36.5m to its parent company, Woodford Capital, 65% of which is owned by Woodford and 35% by WIM chief executive Craig Newman.
High Pay Centre director Luke Hildyard, director at the High Pay Centre, criticised the platforms and pension funds that funnelled ordinary savers’ money into an underperforming fund as Woodford and his business partners made “egregious sums of money for themselves”.
“It’s clearly not something that looks good,” Hildyard continued. “If you try to explain it to a layperson, somebody who’s not completely okay with the industry, that has a basic and functional moral compass, I think they’d find it pretty unseemly and correctly so.”
