Hargreaves Lansdown has ditched its influential “Wealth 150” list of recommended funds, replacing it with a slimmed-down list of 60 funds.
This new list – known as the “Wealth 50” – will comprise of 50 active and 10 passive funds.
These funds cover a range of equity, fixed income and mixed asset sectors, including emerging markets, strategic bond, high income, ethical and total return sectors.
This more focused list has already courted controversy, by failing to include star fund manager Terry Smith, and his Fundsmith global equity fund – which has been one of the top performing funds in recent years.
In contrast Hargreaves Lansdown has stuck with veteran fund manager Neil Woodford, whose Woodford Equity Income fund has underperformed.
Hargreaves Lansdown says this list is based on both quantitative and qualitative analysis. This includes taking into account fees charged to investors.
HL’s chief executive Chris Hill says: “We’ve also taken the opportunity to use the combined buying power of our clients to negotiate lower fund charges on their behalf.”
As a result he says customers get on average 30 per cent saving on Wealth 50 fund charges.
Hill says the cheapest active fund on the list charges annual fees of just 0.22 per cent, while the lower cost passive fund charges annual fees of 0.04 per cent.
He points out that since the Wealth 150 list was launched, the average active fund in the list has returned 5.8 per cent more than its benchmark index and 11.8 per cent more than its sector.
Hargreaves Lansdown says that the Fundsmith fund has not been excluded because the manager would not offer a reduced fee. It says similar funds on the list – such as the Lindsell Train Global Equity fund – follow a similar remit but for a lower cost.
HL is one of biggest retail investment platforms in the UK. It has than 1.1m customers, who have invested £92bn through its platform. However HL’s fee of 0.45 per cent is higher than many comparable platforms.
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