Hargreaves Lansdown is to add to its multi-manager range of funds with the launch of a new income solution that targets a yield of 4.5 per cent.
The HL Multi-Manager High Income Fund, which is due to launch on 13 April, aims to deliver sustainable high income distributed monthly through investment in shares and corporate bonds.
At launch, the fund will have approximately 60 per cent invested in shares and 40 per cent in corporate bonds through underlying funds.
The fund will be managed by Lee Gardhouse and Ellen Powley, who also manage HL’s Multi-Manager Income & Growth Trust, which boasts growth of around 64.8 per cent over a five-year period according to FE Analytics data.
The fund will sit in the Investment Association Flexible Investment sector, and will have an ongoing charge of 1.34 per cent.
Its first income payment will be made into Vantage accounts on 1 July to investors who hold the fund prior to the valuation point taken on 1 June.
Provider view
Richard Troue, head of investment analysis at Hargreaves Lansdown, said: “This new fund aims to offer the best of both worlds in a single fund with an impressive expected yield of 4.5 per cent. It offers the benefits of income and capital growth from a selection of the best equity income funds available, plus the long-term income and lower volatility from a selection of our favourite bond fund managers.
“Furthermore, Lee Gardhouse, Ellen Powley and our experienced investment research team will continue to search the market for areas offering the best yield opportunities. By blending different types of funds, constantly reviewing the portfolio, and moving between different areas when more attractive opportunities emerge, we aim to deliver a high income that can grow over the long term.”
Adviser view
Dean Mullaly, managing director of London-based Mark Dean Wealth Management, said: “The price point does seem very high, but an investor might not appreciate this if they go online and enter their details and are presented with five funds priced between the 1.2 per cent and 1.4 per cent region.
“Good past performance is important, but it is not a guarantee of how the fund would perform in the future. When analysing performance, it is important to compare like-for-like. A fund that grows by 60 plus per cent may appear impressive, but who is to say that a similar fund has not grown by more than 100 per cent within the same time period?
“For people looking for a one-stop fund, multi-asset funds make sense.”
Charges
Ongoing charges figure of 1.34 per cent.
Verdict
The old adage: ‘two heads are better than one’ may be true in many facets in life. In investments, the brainpower of two seasoned fund managers in the active management of a single fund is likely to cost investors a pretty penny. Here, the OCF seems to reflect this sentiment. In addition, the fact the fund is due to invest across two asset classes is also a contributing factor behind the charge.
Although the fund may appear pricey, investors would be encouraged by the performance achieved by the fund managers in another fund. However, as the Mr Mullaly rightly pointed out, past performance is not a guide to future returns.