Hargreaves Lansdown has removed BlackRock’s flagship £1.8bn UK absolute alpha fund from its Wealth 150 list of recommended funds, citing poor performance and stock selection.
It says fund manager Mark Lyttleton has lagged behind his peers due to his preference for bigger, defensive companies during a period when small and mid-cap companies have flourished.
HL has also removed Lyttleton’s £1.4bn UK dynamic fund from the Wealth 150.
A Hargreaves Lansdown spokesman says: “Our analysis has 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 both from 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.”
Hargreaves Lansdown says it would like to see a sustained improvement in stock selection before reconsidering the funds for selection.
Lyttleton’s UK absolute alpha fund is up by 4.3 per cent over the past three years, compared with an average increase in the IMA absolute return sector of 15.8 per cent. The UK dynamic fund is fourth quartile in the IMA UK all companies sector over three years, having fallen by 4.7 per cent compared with an average rise of 15.3 per cent.
BlackRock UK retail business head Tony Stenning says: “BlackRock’s UK dynamic and UK absolute alpha funds have delivered excellent returns for investors over the long term.”