Hargreaves Lansdown - tomorrow's winners

koru

I imagine that a lot of readers of this forum receive the Investment Times magazine from Hargreaves Lansdown. I notice that the latest issue suggests that even though the stock markets have, overall, made no profit over the last 10 years, it would have been easy to get much better performance simply by choosing those relatively few funds which delivered much better performance. HL go on to list 15 funds which clearly, in retrospect, would have been good ones to have invested in 10 years ago.

I would love to know how many of these funds were actually being recommended by Hargreaves Lansdown 10 years ago. Does anyone have any records of the funds in their Wealth 150 from 10 years ago?

The 15 funds are:
Aberdeen Asia-Pacific
Aberdeen Emerging Markets
Artemis UK Special Situations
Blackrock Gold & General
Fidelity South East Asia
Invesco Perpetual High Income
Invesco Perpetual Income
JPM Natural Resources
Jupiter Financial Opportunities
Lazard Emerging Markets
M & G Global Basics
Marlborough Special Situations
Rensburg UK Mid-Cap Growth
SLI UK Are smaller Companies
SVM UK Opportunities

mike88

I'm always suspicious of dealer recommendations. Two years or so ago (maybe longer) just about every IFA was recommending Axa Framlington Monthly Income and Artemis European. Today, these two funds lie virtually at the bottom of the performance league tables so I wonder what attracted them to these funds in the first place.

In terms of HLs recommendations the two Invesco Perpetual Funds were bound to be on their list 10 years ago as were the Blackrock Gold and General then called Mercury Gold and General.

I have no knowledge of any of the others except for the Aberdeen Fund which I bought and sold many years ago at a huge loss.

sabretoothtigger

I didnt know they did it ten years ago. Ten years ago I think even my lg tracker had exit fees but I remember considering JP India and that did well. I decided against it because the fees were too high :doh:

The top ten performing funds last month were:

Fund Category Performance

Investec Global Gold Specialist +9.63%
Aberdeen Asian Smaller Companies IT plc Overseas Equities +5.86%
BlackRock Gold & General Specialist +5.55%
JPMorgan Indian IT plc Specialist +4.95%
JPMorgan Sterling Corporate Bond Bonds +4.47%
Allianz PIMCO Gilt Yield Bonds +4.44%
Standard Life UK Gilt Bonds +4.41%
Royal London Index Linked Trust Bonds +4.36%
Aberdeen New India IT Specialist +4.30%
Henderson All Stocks Credit Bonds +4.23%

dunstonh

Does anyone have any records of the funds in their Wealth 150 from 10 years ago?

No. However, comments from others I have spoken to suggest that they just recommend what is popular or selling the most or what they have been asked to promote.

Rollinghome

koru wrote: »

I would love to know how many of these funds were actually being recommended by Hargreaves Lansdown 10 years ago.

And equally interesting, how many of the recommendations from them have gone down the pan.

To be fair to them, it's a numbers game played by the whole industry. Most investment managers have zillions of different unit trusts/oeics all using slightly different approaches so when most of them do badly they can sing the praises of the few that do well and quietly disappear the worst.

In the FT book "Investing" it's compared to the old share tipsters scam. The tipsters contact 10,000 punters telling half that a particular share will rise and the other half that it will fall. Half of the punters are impressed. They then tell half of those 5000 that the price will rise and half the opposite. This is repeated until there's a group of people who have consistently been given the right forecast and who are very impressed. They then hit them for a large fee for their next 'infallible' tip. Lots of variations on a very old ploy including as used many moons ago by good old Horace Batchelor, inventor of the "Famous Infra-Draw Method".

mike88

I have always found the best way to track funds is to track the manager. They move around so tracking funds is inheently dangerous.

You can do this here:

http://citywire.co.uk/money/fund-and-fund-manager-performance/-/unit-trusts/global-emerging-markets/fund-manager-league-table.aspx?CitywireClassID=45&RankModelID=8&IsSectorDefaulted=True


On this page you can change the sectors to find the best managers. Its a good research tool but those who use it do so of course at their own risk.

Please note I'm not recommending anything so this advice comes with all the caveats possible.

blinko

i dont get what the big deal about fund charges is, if the manager beats the index surely its worthpaying 1-2% more

sabretoothtigger

On average they dont usually beat the index by a large enough margin to justify the extra cost. 2% a year is 64% over 25 years

Kavor

mike88 wrote: »

I have always found the best way to track funds is to track the manager. They move around so tracking funds is inheently dangerous.

The most interesting thing about the 15 highlighted funds is that the majority have had the same manager for the last 10 years.

The OP stated that "I notice that the latest issue suggests that even though the stock markets have, overall, made no profit over the last 10 years, it would have been easy to get much better performance simply by choosing those relatively few funds which delivered much better performance.". All the article is doing is pointing out that the argument that investors haven't made any money in the last 10 years, fails to take into account dividends, whether reinvested or not, markets other than London, and the fact that some managers have managed to outperform the market over that period.

In terms of the funds that they've highlighted, all they've done is go through their current Wealth 150 funds, identify those which have been running for ten years or more and which have outperformed, then listed them.

koru

Kavor wrote: »

The most interesting thing about the 15 highlighted funds is that the majority have had the same manager for the last 10 years... All the article is doing is pointing out that the argument that investors haven't made any money in the last 10 years, fails to take into account dividends, whether reinvested or not, markets other than London, and the fact that some managers have managed to outperform the market over that period.

In terms of the funds that they've highlighted, all they've done is go through their current Wealth 150 funds, identify those which have been running for ten years or more and which have outperformed, then listed them.

Absolutely right. They are trying to give the message that investors should not be put off by the poor performance of most stock markets over the past 10 years, because you only have to choose the right managers and you can get much better performance. They are clearly setting out to give the impression that it is easy to spot these long-term outperformers. They even have the nerve to give their letter the title "an effortless way to invest".

Of course Hargreaves Lansdown frequently claim in the press that it is relatively easy to spot the managers who will outperform the market, because the underperformers are predominantly made up of funds run by banks and life assurers. I would love to know if there is any rigorous evidence (as opposed to selective anecdote) to support the contention that the specialist fund managers tend to be in the top two quartiles of performance.

I just thought this new list might be a good test of how easy it really is to spot the winners in advance, by seeing how many of them were being recommended by HL 10 years ago. (Of course, HL might have been clever enough to choose only the ones which they were actually recommending 10 years ago, although I would have thought that if the list was all companies that they recommended 10 years ago they would have said so.) I am a cynic, so I would expect that HL were recommending very few of these, but I would love to be proved wrong.

I agree with one of the replies already made, that it is also important to look at the other recommendations from 10 years ago, many of which will have performed abysmally. You would, however, have to take into account any switch recommendations made over the ten-year period.

I notice that HL's list does not include any European or American funds. In other words, to get to the marvellous performance which they are highlighting, not only would you have had to spot which managers would outperform, but you would also have to spot that emerging markets, Asia-Pacific and natural resources would be the big growth stories of the decade. It would have been a very brave and unusual investor who put most of their money into those sectors in 2000.

koru

blinko wrote: »

i dont get what the big deal about fund charges is, if the manager beats the index surely its worthpaying 1-2% more

By definition, the index represents average investment returns, so only managers who deliver above-average performance will beat the index. That's roughly half of investors in any given period. And most of the ones who do beat the index only do so by a very small amount. And most of the ones who beat the index by a sufficiently wide amount to compensate for their fees don't manage to do so consistently (so their outperformance can be put down to fluke). If you are sure that you can spot those very rare managers who have managed to outperform by a wide margin, consistently over a long period, and you are sure that they will continue to do so, then, sure, fund charges are not a big deal. That's why I am so interested in this new list from HL, because if there is a way to reliably spot funds like those on the HL list in advance, I would love to know about it.