Hargreaves Lansdown has taken the Skandia UK Strategic Best Ideas fund from its Wealth 150 list of favourite funds.
The £46.9m fund, which is helmed by Lee Freeman-Shor, has been removed from the broker’s Wealth 150 ranking on concerns that the portfolio’s underlying managers may not devote enough time to its running.
However, the criticism has been refuted by the asset management house, which asserts the managers’ commitment to the fund and highlights its performance.
Hargreaves Lansdown senior analyst Meera Patel says: “Our concern is that there are currently six underlying managers in the fund and the proportion of assets allocated to each is insignificant in comparison to the other funds they manage.
“We do not feel the existing managers are sufficiently incentivised to dedicate a large proportion of their time to this fund.”
Patel adds that performance has been “a little lacklustre” over recent years, although she concedes that returns have been “reasonably strong” since launch in September 2007.
The Skandia UK Strategic Best Ideas fund has returned 10.42 per cent since launch to May 31, compared with the 0.98 per cent average loss in the IMA UK all companies sector.
However, relative performance is more muted over three years, with returns of 26.14 per cent against the peer group’s 35.93 per cent.
“We are concerned it could deteriorate further as there is a risk the managers spend less time on the fund,” Patel says. “Despite Skandia’s attempts to grow the fund’s assets, the difficult market backdrop has made this a challenge.”
Skandia says: “We are naturally disappointed by Hargreaves Lansdown’s decision on UK Strategic Best Ideas but we are pleased to see that it is recommending one of our other funds, the Old Mutual UK Dynamic Equity fund, as an alternative for its customers.
“Whist we respect its decision, we believe the underlying managers within UK Strategic Best Ideas remain fully committed to their mandates which is evidenced by the fact that the fund has delivered top quartile performance to our customers over the past year.”