In a recent Money Marketing article, Hargreaves attacked structured providers for ignoring the importance of dividend yields in capital growth. He said the fixed term of structured products drains liquidity and removes choice for investors while the companies that structure the products are “another mouth to feed.”
Speaking at a Money Marketing round table on structured products, Blue Sky Asset Management chief executive Chris Taylor said Hargreaves was completely “out of kilter” on his understanding of structured investments.
Taylor agreed that mediocrity may exist in some parts of the sector but said Hargreaves was wrong to dismiss the whole industry.
Taylor said: “We agree that dividends are an important part of the total return but we potentially optimise the upside performance to an extent which more than compensates for dividends. Hargreaves Lansdown needs to understand structured products better.”
Taylor also argued that most providers now provide liquidity within their plans where the prevailing value can be accessed at any point.
Morgan Stanley vice-president of UK structured products Marc Chamberlain said: “We agree that dividends are a consideration but if you are happy with the pay-off and think you can potentially outperform the expected dividends, then there is a good proposition. Advisers just have to bear in mind that you have to give something up to get protection.”
Barclays Wealth director Colin Dickie told the round table: “They have tarred us with the same brush. Hargreaves Lansdown is dependent on fund revenues and if you look at some of the funds they currently market in the Wealth 150 Funds, I think you will find they are severely underperforming the potential of structured products.”