Peter Hargreaves has upped his family’s stake in the LF Blue Whale Growth fund, accounting for just under a quarter of the total assets of the £856m fund.
Hargreaves, who co-founded the Hargreaves Lansdown platform business and has been selling a stake worth about £500m in the business over past two years, set up and chairs Blue Whale Capital, the fund management business which runs the LF Blue Whale Growth fund.
The fund itself is managed by Stephen Yiu, a former employee at Hargreaves Lansdown and Artemis.
In an update to clients of the fund to mark the unit price doubling since launch, Hargreaves wrote: “My family are still adding to their holdings in Blue Whale.
"The potential is no less and because of the success achieved, the company has enhanced the fund management team – we have recruited new, diligent people with enquiring minds.
"We are hoping to reinforce the potential - we want to be the top fund over five years, six years and beyond."
He added: "There has been comment recently about fund managers investing in their own funds. Apparently in America this is divulged.
"I notice the proprietor of another of the UK’s successful funds voluntarily reveals he has £200m invested in his fund. The Hargreaves family has just over this amount invested in Blue Whale.
"You can rest assured Stephen Yiu and his team have the hunger to keep in the forefront of performance.”
The fund has returned 101 per cent since launch in September 2017, compared with 53 per cent for the average fund in the IA Global sector in the same time period.
Performance more recently has been less sure footed, with the fund in the bottom quartile over the past year mostly as a result of its growth style during a period when value was in favour.
Hargreaves wrote: “Two questions often asked of any investment is when to sell and should investors take profit.
"This doubling of Blue Whale’s price may prompt assessment. It is interesting to note how investors are often persuaded to take profits.
"Certainly, there is a case if the investment is in a very narrow sector or has taken a speculative stance. Investors in the UK are advised to take some profits to utilise their Capital Gains (CGT) allowance.
"What is invariably wrong in my mind is selling the winners to cover the CGT exemption. It flies in the face of the sage strategy of selling the losers and keeping the winners.
"It is not unusual for in-vogue sectors to get over-heated and there is nothing wrong in crystallising some of those profits. Blue Whale however is not a sector play.
"Whilst we have invested in stocks with a technology base, we also have positions in consumer goods and sustainable brands.
"We have also reduced the American exposure as we saw the threat of inflation. We also appraise carefully that our companies have future earnings to warrant the share price.
"Buy and hold is not a bad strategy but when a company becomes extremely overvalued there will be superior opportunities.”
FTAdviser understands Blue Whale is evaluating whether sufficient demand exists to launch a global equity investment trust, which would echo the strategy of the open-ended fund but also have exposure to some slightly smaller companies.
Blue Whale would only be keen to launch a trust if they can raise £200m at IPO.
Darius McDermott, managing director at Chelsea Financial Services, said: "Blue Whale is one we like, the manager has done very well. The extent to which a big investor owns a fund is one of the questions we always ask when we meet managers. But I think in this case, Peter is a seed investor and a long-term investor who is backing his judgement, so it is not a concern."
david.thorpe@ft.com
