Hargreaves Lansdown Group  

Hargreaves removes Lindsell Train from buy list

Hargreaves removes Lindsell Train from buy list

Hargreaves Lansdown is to remove the Lindsell Train UK Equity and the Lindsell Train Global Equity funds from its Wealth 50 list at the end of the month, citing potential conflicts of interest.

A note from the platform this morning (July 5) stated it continued to have high conviction in the managers of the funds, namely James Bullock, Nick Train (pictured) and Michael Lindsell, but that their holding of the Hargreaves Lansdown stock had ticked up to levels that were unacceptable to its internal governance. 

It stated: "We have policies and procedures to help us manage the Wealth 50 list of favourite funds.

"As part of this, we keep under review the proportion of Hargreaves Lansdown plc shares owned by a fund, or multiple funds controlled by a single manager, on the Wealth 50." 

The note explained this was to "protect the interests of our clients and shareholders, the independence of our investment process, and the service we provide to our clients".

The Lindsell Train UK Equity fund returned 17.4 per cent in the year to date (July 5) compared with its sector (IA UK All Companies), which returned 0.77 per cent.

The Global Equity fund returned 22.9 per cent in the period while its sector (IA Global) returned 8.5 per cent. 

According to the latest fact sheet available on the company website, the Lindsell Train UK Equity Fund held 8.6 per cent of its portfolio in Hargreaves Lansdown stock in May, making the company its fifth largest position.

In January, its 7.4 per cent holding made it the seventh largest stock in the fund. 

The platform is not one the largest holdings in the Global Equity fund however.

Sam Slator, head of communications at FundCalibre, said it looked like after having identified a conflict of interest Hargreaves Lansdown was acting accordingly. 

Ms Slator said: "It is helpful for clients to know that this large investment in Hargreaves Lansdown exists and they can make their own minds up about whether they invest in the funds or not."

For Holly Mackay chief executive of Boring Money, the process of scrutinising the holdings in funds on best buy lists was something many platforms should be doing.  

She said: "It is reassuring that it is happening as the governance of best buy lists needs improving. If you looked at the Wealth 50, taking governance into account, you would question the holding and the close relationship between the manager and platform."

However, Ms Mackay said it was clear that Hargreaves Lansdown had no control over Nick Train’s stocks.

"He is not going to risk his performance or reputation by sucking up to a distributor," said Ms Mackay. "He doesn’t need to. His performance has been exemplary."

Hargreaves Lansdown has been criticised by some over its oversight and distribution of the Woodford Equity Income Fund, which was suspended over liquidity concerns in June.

The platform only stopped promoting the fund after its suspension but has defended its approach.