Terry Smith hits back at Hargreaves after failing to make top funds list

Fundsmith boss and star manager Terry Smith has hit back at Hargreaves Lansdown after he failed to make the platform’s new slimmed-down list of top managers.

Hargreaves Lansdown has dropped its  Wealth 150 list – a list of what it believes to be the best available funds – in favour of a new Wealth 50, standing by the likes of Neil Woodford despite recent controversy.

The platform started out publishing a list by choosing its top funds in each major sector, arriving at 150.

However, through “refining the selection process” and “becoming more picky”, it has decided to shrink it in size to 50.

Hargreaves says it has used the distilling to re-negotiate with the fund managers who made the list, and now as a result offers the featured funds at an annual discount to its customers.

This move has reportedly sparked critcism from Smith, whose flagship Fundsmith Equity fund has returned 270 per cent over the last nine years, who claims that he has been unfairly exlucded because he will not offer a fee discount for Hargreaves clients.

Smith tells the Times: “Hargreaves Lansdown’s recommended funds continue to be chosen mainly for fund managers’ willingness to comply with a charging structure which enables Hargreaves Lansdown to maximise its own profitability, and not because they perform well for investors.”

Hargreaves responded to the Times by saying that recomendations were not made on an improper basis, nut on investment performance and fees.

The Wealth 50 list does include the “unloved” Woodford Equity Income fund, run by Neil Woodford, which returned -8.2 per cent over three years and -14.3 over the last year to its investors.

Hargreaves stood behind the former star fund manager, saying it is a long-term supporter of Woodford and that its analysis isn’t based solely on number-crunching. 

Hargreaves says: “Woodford often invests against the herd. His funds can look very different from the wider stock market and the funds of his peers.”

The platform added that Woodford’s future fund performance is also linked to how the Brexit will play out. It says: “There are no guarantees but we think a soft Brexit or no Brexit at all will see his funds perform well.”

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Comments

There are 2 comments at the moment, we would love to hear your opinion too.

  1. Smith tells the Times: “Hargreaves Lansdown’s recommended funds continue to be chosen mainly for fund managers’ willingness to comply with a charging structure which enables Hargreaves Lansdown to maximise its own profitability, and not because they perform well for investors.”

    True, but a bit rich coming from a fund house that has not reduced fund charge’s with scale (a charging structure which allows you to maximise your own profitability without any recognition to your loyal investors)? It seems to me that you are more similar to Hargreaves than you care to admit.

  2. “nut on investment performance and fees”?

    That aside, why should Mr Smith care about being excluded from HL’s Fave 50 list? His fund has money pouring into it by the boatload from many other sources.

    If HL consider Neil Woodford’s UK only proposition to be a better bet than Terry Smith’s global one, that’s their choice. Can’t see it myself but hey, ho, everyone’s entitled to their opinion.

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