A new fund manager backed by Hargreaves Lansdown co-founder Peter Hargreaves is set to launch in a matter of weeks and is preparing to challenge established players on both price and style.
In an exclusive interview with Money Marketing, the man behind the UK’s largest broker reveals why has put his weight – and money – behind upstart Blue Whale Capital, and has given hints at the fund’s remit and how it will react to the challenging times head for investors in light of Brexit.
Blue Whale Capital was registered by former Artemis UK equities fund manager and Hargreaves Lansdown analyst Stephen Yiu in October last year.
The asset manager will be operating from Bath. The FCA register lists Hargreaves as a partner at the new firm.
Hargreaves says: “I wanted a home for some of the Hargreaves family money and I wanted a very good fund manager to look after it.
“I though Stephen Yiu would be that person and when we talked about it we decided we would probably make it home to the general public as well. A lot of people will be encouraged that they will invest alongside me.”
Hargreaves says his contribution to the fund will be “a substantial sum”. It is understood Hargreaves put an initial investment into the fund of around £25m.
Hargreaves maintains that the Blue Whale Capital offering will be “competitively priced”.
Hargreaves says: “I am very happy with the way the various investments will be chosen [in the new fund] which has a specific style picking a particular type of company. The geographical spread is more appropriate now that we are going to be no longer part of the EU.
“I feel that UK investors should be thinking on slightly different investment lines that they did before and this fund I believe will address that need.”
Total Brexit is best. Let’s not fool ourselves we won’t get deal until we’re gone. EU especially Germany will come crawling for our trade.
— Peter Hargreaves (@PkhPeter) May 2, 2017
Hargreaves says Blue Whale won’t get “sidetracked” with jobs other than running money, something he believes is a feature of larger fund management firms.
Yiu will be running the fund alongside two analysts.
Hargreaves says: “The main advantages of Blue Whale is that is has a very dedicated team. This will be the only thing they do, they won’t be doing anything else.
“Once a group gets large they spend half their time in meetings instead of running the money. They have daily investment meetings for no apparent reason and they get sidetracked with the marketing and all the rest of it.”
Hargreaves says the idea of the firm wasn’t the “spur of the moment” but has been in the pipeline for over ten years.
He says: “It is difficult to launch nowadays. There are probably hundreds of good fund mangers out there that would love to launch their own business but it is just too daunting.
“Most of the choices you have are very large funds…When I came into the business 40 years ago, the biggest fund of all was only £110m in size and that was the largest investment fund around at that time.
“Now, you can’t find many funds that have got less than a billion in them. When a fund gets to £10bn in size it’s very difficult to reflect the market, you might as well buy a tracker.”
The future of Hargreaves Lansdown
With Vanguard stepping into the direct to consumer space, Hargreaves says Hargreaves Lansdown is likely to remain primarily as a brokerage firm, rather than an asset manager, though it may branch out into other areas.
He says: “Hargreaves Lansdown’s main business is its platform. They are a platform for people to hold their investments. Their fund management side, whilst important, is quite small in comparison to their platform. But any company the size of Hargreaves Lansdown is going to diversify.”
As of 30 June, Hargreaves, who has stepped down the board of Hargreaves Lansdown in 2015, still holds a 32 per cent stake in the firm, compared to 15 per cent for co-founder Stephen Lansdown.
Peter Hargreaves: The key moments
1981 Peter Hargreaves and Stephen Lansdown found the eponymous financial-services firm Hargreaves Lansdown
2015 Hargreaves steps down from the board of the online stockbroker
2016 Hargreaves campaigns strongly for Brexit reportedly giving over $3.7m (£2.9m)
2016 Hargreaves signs letter to 15 million householders urging them to vote to leave the European Union before the June referendum
2017 Hargreaves is made a “designated member” at Blue Whale Capital LLP