Hargreaves Lansdown is set to place Schroders' North American fund on its sell list after the group radically overhauled its process and management for the third time in 18 months.
Schroders is handing management of the fund to Grant Cowley after its quantitative-based investment strategies unit failed to boost performance following its taking over of the portfolio in September 2002. Although HL is concerned about Cowley's inexperience – he has only a 15-month track record – it is particularly unhappy with Schroders' decision to change the fund's objective.
The fund will now aim to beat the S&P 500 by 2 per cent instead of the previous 1 per cent but the new objective will not include Schroders' 1.5 per cent annual management charge, giving a real outperformance target of 0.5 per cent.
Schroders says this is sufficient to attain a firstquartile ranking but HL argues that investors may as well hold a tracker, with so small a difference bet-ween their objectives.
HL is also concerned about the costs involved in Schroders slashing the number of stocks in the fund from 350 to 70-80, a consequence of the fund being brought back into more active management.
Schroders plans to mitigate the dealing expense by making the trades simultaneously but HL fears it could still have a negative effect on performance.
Senior analyst Meera Patel says: “This is the third change of manager since June 2001 and it is unsettling. The new management team is not proven and we feel other teams like Legg Mason can do a good job.”
Schroders head of UK retail Robin Stoakley says: “We accept the market will look at this and say 'show us the money'. We think we can do that in a year. We are offering investors a choice of styles.”