Is it me or is Hargreaves Lansdown beginning to feel a bit like the US? Bear with me here – I’m not casting the eponymous bosses as Barack Obama or, heaven forfend, George ‘Dubya’, but the company does seem to be assuming the role of the investment world’s policeman.
Modern history, of course, has shown this to be a tricky proposition. Sometimes you choose to ride on your white charger to tackle – say, Standard Life about a Not Really Cash Fund – and sometimes your eye is caught by the goings-on at the now-defunct New Star Heart of Africa.
Now I’m going to leave it up to you to assign your own theatres of war to that pair (why should I do all the work?) – in fact, I’m going to switch analogies completely. If you were in a curry house, one of the funds in the preceding paragraph would be the omelette and chips – albeit with a handful of chillies added by mistake – while the other would be the full-on chicken phaal.
Seemed like the real thing, only to find – mucho mistrust, cash’s gone behind.
I do get the point of single-country funds and even single-continent funds that have, as I believe I may have observed here before, the market capitalisation of Basingstoke – they must be handy for multi-managers, discretionary portfolio overseers and other asset allocators. Yet I struggle to believe the number of retail punters who should have been anywhere near Heart of Africa comes to six, maybe seven, in total.
Just before the fund launched in October 2007, then manager Jamie Allsopp was quoted in these very pages saying: “Strong economic growth, high levels of foreign direct investment, increasing political stability and the resultant improvement in corporate governance have created a compelling investment backdrop and it is no surprise that some of the best-performing markets in the world are situated in sub-Saharan Africa.”
Well, OK, but I still think I’d prefer my exposure to all that joy to come through a global emerging markets manager, if that’s all right. Yes, I know Heart of Africa could go 100 per cent into cash but that’s not really the point. Again, give me a manager who, when they like Africa, buys Africa and, when Africa’s looking shaky, can head off to Brazil or China or a nice little Bhutani smaller company.
Once I had a fund and it was divine – soon found out I was losing more than my mind.
Mind you, apparently I’d be on my own to judge by the latest IMA sales figures. In April, sterling corporate bond was the most popular UK-domiciled net retail sector, with inflows of £684m, while the grouping with the biggest outflows was global emerging markets, which waved farewell to £243m. Perhaps it’s best not to dwell on the relative performance of the two sectors that month.
Of course, the extent to which emerging markets have risen in recent weeks is part of Hargreaves’s issue with the Heart of Africa wind-up saga. But is the extra pick-up on the 17.66p pay-out in the context of the 50p-a-unit at launch a battle really to be fighting?
If I put money into what at least started life as a pure cash fund, I’m mentally prepared to lose about half a percent of my investment – tops. But if I am a serious investor in Africa, regardless of all that potential, I’d better have come to terms with the possibility of ending up with a lot less than 33 per cent of my stake.
By extension, if I bite into my omelette and chips and swallow a mouthful of chillies, it’s great to have Hargreaves Lansdown by my side with a soothing glass of Lassi and to help take on the restaurant. But if I order my chicken phaal with open eyes and consequently (and ironically) can’t see for the rest of the evening, it’s my own fault and I should quickly chalk it up to experience. I’m happy to sing solo rather than, ahem, as a duet.
It seemed like the real thing but I was so blind – mucho mistrust, cash’s gone behind.
Julian Marr is editorial director of marketing-hub.co.uk