View more on these topics

Hargreaves’ Wealth 150 picks fail to deliver across sectors

Sign-Signing-Letter-Contract-Business-700.jpg

Hargreaves Lansdown’s recommended funds list has delivered top picks in the UK Smaller Companies and China sectors new analysis shows.

But despite the Wealth 150 claiming a “strong track record of selecting the best funds in each sector” the list has failed to find funds that outperform in seven sectors, with the worst results in the Global Equity Income and Flexible Investment sectors.

Overall the average fund in the list, which includes products like Woodford Equity Income, EdenTree Higher Income and Lindsell Train UK Equity, has outperformed their sector 12 per cent since the Wealth 150 launched in 2003.

Funds recommended from the UK Smaller Companies sector have delivered 46.8 per cent more than their sector, while for the China sector this is 31.1 per cent.

Hargreaves Lansdown head of research Mark Dampier says he expected the number of funds on the list to increase over time, but it has instead shrunk, launching with 141 active funds, but now listing 77 active options and 13 trackers.

That’s because there’s only a limited pool of talented managers with proven track records out there, and we believe that managers who outperform are lucky until proven skilful,” Dampier says.

But there are seven sectors where the the Wealth 150 recommendations have underperformed.

Flexible Investment funds in the list have underperformed their sector 13.7 per cent, while Global Equity Income funds have underperformed 10.9 per cent.

“We haven’t got everything right,” says Dampier. “For instance we have found it difficult to find active managers investing in US large caps who have consistently added value, and this is one area where our fund selections haven’t lived up to our expectations.”

The recommended funds list hasn’t included a US active fund since the beginning of 2013 as a result. The average North American fund in the Wealth 150 has underperformed the sector by 4.5 per cent.

However, while there are 13 trackers on the list, Dampier notes that since the Wealth 150 launched the average FTSE All Share tracker is now 28 per cent behind the index as a result of the compound effect of charges.

“Fund management charges for some tracker funds have come down considerably of late, which should help to reduce this drag on performance, but it will still be present to some extent,” Dampier says.

Average outperformance or underperformance by sector in the Wealth 150

IA Sector

Average active W150 vs sector

Average active W150 vs index

Average active W150 vs average tracker fund

Absolute Return

-2.4%

-5.5%

 

Asia Pacific Ex Japan

11.6%

-2.3%

15.4%

China/ Greater China

31.1%

44.0%

 

Europe Excluding UK

17.6%

13.8%

25.6%

European Smaller Cos

3.6%

1.0%

 

Flexible Investment

-13.7%

-4.1%

 

GBP Corporate Bond

4.5%

1.0%

1.6%

GBP High Yield

2.2%

-5.8%

 

GBP Strategic Bond

13.5%

8.2%

 

Global

5.1%

-10.5%

-4.6%

Global Bonds

5.8%

11.0%

 

Global Emerging Mkts

14.2%

3.8%

 

Global Equity Income

-10.9%

-6.0%

 

Japan

11.8%

1.3%

13.5%

Mixed Investment 0-35% Shares

2.3%

0.8%

 

Mixed Investment 20-60% Shares

4.0%

-5.4%

 

Mixed Investment 40-85% Shares

13.1%

-3.9%

0.0%

North America

-4.5%

-8.6%

-7.1%

North America Smaller Companies

-2.2%

-4.3%

 

Specialist

-5.2%

2.2%

 

Technology & Telecoms

-6.3%

-6.5%

-26.7%

UK All Companies

23.5%

13.9%

26.8%

UK Equity Income

8.2%

3.3%

 

UK Smaller Companies

46.8%

55.3%

 

Overall Wealth 150

+12.0%

+6.5%

+13.5%

Recommended

Stock-Stockmarket-FTSE-Index-700x450.jpg

How are firms choosing their passive buy lists?

Major firms have shed light on how they pick passive funds in their buy lists as the industry fights over how many and which to hold. In a recent study, the FCA expressed concerns that providers’ lists of favourite funds did not include enough passives. Platforms and wealth managers such as Tilney Group and AJ Bell […]

Money-Cash-Coins-GBP-Pounds-UK-700x450.jpg
97

How much are advisers charging for pension transfers?

Defined benefit pension transfer charges are being put under the microscope again as the regulator turns over more potential conflicts of interest. With the British Steel Pension Scheme the latest to dominate headlines and the FCA ready to interrogate further as it extends its review to include all firms authorised to give pension transfer advice, […]

Benefits of using a probate bare trust

Have you ever wondered what happens to someone’s investment bond on their death if it is not written in trust? When someone dies it is essential to deal with their estate, which can be made up of their home, belongings, investment bonds and anything else they may have owned. But, it is not as simple […]

Newsletter

News and expert analysis straight to your inbox

Sign up

Comments

    Leave a comment