Hargreaves Lansdown has removed BlackRock’s flagship £1.8bn UK absolute alpha fund from its Wealth 150 of recommended fund, citing poor performance and stock selection.
The firm says that fund manager Mark Lyttleton has lagged behind his peers due to his preference for larger, defensive companies during a period when small and mid-cap companies have flourished.
The firm has also removed Lyttleton’s £1.4bn UK dynamic fund from its wealth 150.
HL says: “Our analysis has also identified that Mark Lyttleton’s stock selection, previously a positive contributor to performance, has deteriorated.
“Good stock selection is particularly vital in absolute return funds where the manager takes positions to benefit from both companies he thinks will rise in value, and companies he thinks will fall in value. As such they are entirely reliant on the manager’s skill in making the correct decisions.”
HL says it would like to see a sustained improvement in stock selection before reconsidering the fund for selection.
Lyttleton’s fund is up 4.3 per cent over the past three years, compared to an average increase in the IMA absolute return sector over 15.8 per cent.