Home Estate Planning Hargreaves Lansdown red alert: Two funds fail value assessment

Hargreaves Lansdown red alert: Two funds fail value assessment

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Two of Hargreaves Lansdown’s 13 funds have been found to not provide good value, the firm revealed in its assessment of value report.

The report, which is required by the Financial Conduct Authority to assess seven areas of each fund, uses a traffic light system for rating each area of a fund.

Just three of the firm’s funds received a green flag on performance, while only half gained a green for ‘comparable market rates’.

The HL Multi-Manager Asia & Emerging Markets fund and the HL Multi-Manager Strategic Bond fund both received a red in this year’s report, representing a poor overall rating.

“These two funds have experienced a prolonged period of investment underperformance,” said John Misselbrook, chair of Hargreaves Lansdown, in the report, adding that both will undergo a “complete assessment” over the next few months.

Between September 2022 and September 2023, the period which the report covers, the Asian fund lost 5.3 per cent of its value, compared to a global emerging markets sector average of a three per cent gain.

The firm has since brought the number of managers on the fund down from nine to eight, while reweighting the manager allocations within the fund.

Meanwhile, the strategic bond fund gained 4.5 per cent compared to a benchmark of five per cent over the year, but has continually underperformed the benchmark, having been below it consistently over the last three years. The firm said it had since executed “a near-total overhaul of our portfolio”.

Along with the Asia and strategic bond funds, the HL Multi-Manager European fund also received a red for performance, but due to strengths in other area, only received an orange overall. It grew 14.1 per cent last year, compared to a benchmark growth of 18.4 per cent.

“We will also be shortly reducing the asset management charge on three funds where we believe the fees are high relative to the complexity of the investment strategy and comparable market rates,” added Misselbrook.

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