Hargreaves Lansdown - tomorrow's winners

ColinJS

All this guff about 'best buy lists' etc gets up my nose. Yes there are skilled fund managers who beat indices/benchmarks/sector averages, but there are also an awful lot who don't.

Anyway, asset allocation generally drives performance, so perhaps they should focus on that rather than a backwards looking best buy list.

koru

Interestingly, HL has now inadvertently given a partial answer to my original question. The most recent issue of Investment Times reveals that their Wealth 150 has given a cumulative return of 80% since it was launched in November 2003. This reflects the average return on all the funds in the Wealth 150, limited to the periods when the fund was included on the list. If I understand correctly, they are effectively saying that if you taken a lump of money and split it equally between all the funds on the list and then sold any fund when it was taken off the list and bought any fund when it was added to the list, you would by now have made an 80% return.

That's a lot less than the performance of the 15 funds that they were highlighting last September. Which seems to confirm that they were using hindsight to choose the funds that have turned out to perform very well, whilst other funds that they were recommending have done less well. Of course, the article from last September was looking over a ten-year period, rather than seven years, so the 80% return does not include the dot-com crash period.

Nevertheless, the Wealth 150 does seem to have performed quite well in comparison with the benchmark suggested by HL, which is the average return of the Balanced Managed Sector. Is that a reasonable point of comparison? I rather suspect that most Balanced Managed funds are a lot less risky than the Wealth 150, so they are not comparing like with like. Riskier funds will outperform in the good times but will underperform in the bad times.

dunstonh

Nevertheless, the Wealth 150 does seem to have performed quite well in comparison with the benchmark suggested by HL, which is the average return of the Balanced Managed Sector. Is that a reasonable point of comparison? I rather suspect that most Balanced Managed funds are a lot less risky than the Wealth 150, so they are not comparing like with like. Riskier funds will outperform in the good times but will underperform in the bad times.

They have taken a list of 150 funds which have more higher risk funds than lower risk ones and have assumed an equal weighting into each (which no balance portfolio would have). Any comparison then to a benchmark is dodgy at best as there is unlikely to be any benchmark that can come close to meeting the asset mix of the 150 funds combined and evenly weighted.

Nanpy

I'm probably wrong but I think if you had opened a FTSE tracker back in 2003 you'd have seen a roughly 80% increase. But 2003 was the bottom of a big dip at the time.

I'm not sure what your point is. In general, according to the Motley Fool guide to investing, trackers out-perform managed funds. But that includes a lot of BAD managed funds like banks own funds.

You can pick up a cheap sector tracker with TER under 1 per cent for most sectors and you'll roughly follow the market. Had you done that with a FTSE tracker in 2003 you'd be sitting 80% up. If you'd done it with Blackrock Gold you'd be about 800% up. Pays your money and takes your choice.

koru

Nanpy wrote: »

I'm not sure what your point is.

The original article by HL was basically saying that investors should not be put off by the fact that the UK stock market was back to where it was 10 years ago, because it would have been easy (“effortless") to select funds such as the 15 that they listed which have performed far better than this. My point is that it is easy to pick these star funds in retrospect, but far from “effortless" to pick them in advance (without picking many other funds which do not provide such stellar performance). The new information about the overall performance of Wealth 150 funds seems to confirm this.

I was not particularly suggesting that trackers are better; merely that people should not be taken in by HL's misleading suggestions.

StevieJ

To be fair their main message seems to be that you should not be put off investing just because the main index has not shown a profit over the past 10 years, a message that rhymes with many of the posts by Dunstonh over the years.

atypical

dunstonh wrote: »

They have taken a list of 150 funds which have more higher risk funds than lower risk ones and have assumed an equal weighting into each (which no balance portfolio would have). Any comparison then to a benchmark is dodgy at best as there is unlikely to be any benchmark that can come close to meeting the asset mix of the 150 funds combined and evenly weighted.

They say they picked the IMA Balanced Managed sector as it has approximately the same asset mix as the Wealth 150 with 80% equities and 20% bonds. Like you say, finding any comparable benchmark is difficult. Is there a more appropriate one?

What would be a more effective way than using even weighting? Any other method would no doubt be more complicated and would still be open to criticism.

At least they have offered some performance figures. Though it would be better if they were regularly given on their website rather than when they think it's beneficial to do so. Or perhaps it's the case that they shouldn't give performance figures at all because it's too difficult and they risk being misleading.

le_loup

Be careful, the current 150 list is not the list that existed in 2003! They remove poorly performing funds, obviously. Had they done their figures on the 150 as it was then, I wonder what the out turn would be?

purch

Shouldn't this thread be entitled

Hargreaves Lansdown - Yesterdays winners :eek:

Rollinghome

Probably best not to look too hard at how they got their numbers. The point to remember is that it's a very good idea to give them your money, apparently.