Woodford Concerns

[Deleted User]

Therefore they cannot be a driver of profits.

Unless the underlying holding belongs to a firm transferring the investment between two funds.

coyrls

ZingPowZing, you appear to be making the following accusations:

Firstly that Hargreaves Lansdown’s management of their multi manager funds involves moving portions of their holdings in the underlying funds between different multi manager funds in the name of risk management. You have no evidence that such movements take place.

Secondly that when such movements take place, Hargreaves Lansdown fraudulently claim to have incurred transaction costs through buying and selling units in funds, when in fact no such transactions have taken place because the units have simply been moved between different multi manager funds. The purpose of fraudulently claiming such charges is to increase Hargreaves Lansdown’s profits. You have no evidence of Hargreaves Lansdown making claims for transaction costs where in fact no transaction has taken place.

Thirdly that all the above has somehow been facilitated by Hargreaves Lansdown’s relationship with Neil Woodford because their multi-manager funds hold funds that were managed by Neil Woodford. You have not explained why any relationship with a fund manager of a fund held by the multi manager fund would be required for what you accuse Hargreaves Lansdown of doing.

[FONT=&quot]I have one observation and that is that you should be very careful about throwing around accusations of fraud for which you have no evidence.[/FONT]

bowlhead99

ZingPowZing wrote: »

If I have been told the above twenty times, then for the 21st time I'll repeat that Hargreaves Lansdown DO charge transaction costs on their funds. To quote them:
"Transaction costs include the explicit costs the manager incurs whilst dealing on behalf of the fund (broker commission, taxes and custodial charges) as well a measure of the fund's trading performance when buying and selling underlying investments."

That doesn't say that HL 'charge' transaction costs on their funds, at all. It says that the funds incur costs, including commission from brokers, stamp duties etc. In other words, costs paid to third party service providers or government levies etc.

If a HL-managed fund such as HL MM Income & Growth unit trust were to, for some reason, arrange for its holding of interests in WEIF to be re-registered in the name of HL MM Equity & Bond unit trust in exchange for some cash from that Equity & Bond fund that acquired the holding, there is no stockbroker brokering a deal because nothing is happening on a market. And there is no stamp duty because a transaction in an OEIC is not subject to it (and that wouldn't go to HL anyway).

coyrls

bowlhead99 wrote: »

That doesn't say that HL 'charge' transaction costs on their funds, at all. It says that the funds incur costs, including commission from brokers, stamp duties etc. In other words, costs paid to third party service providers or government levies etc.

I think he is saying that HL funds (i.e. their multi-manager / fund of funds) are claiming costs that they don't incur.

bowlhead99

coyrls wrote: »

I think he is saying that HL funds (i.e. their multi-manager / fund of funds) are claiming costs that they don't incur.

I think he's saying that HL who arrange stockbroking services and fund intermediary/platform distribution services must also be supplying those services to their own MM funds (some of which hold only other funds and cash, and others of which hold other funds, cash, and direct equity or bonds).

And therefore if they are providing some sort of intermediary service to those MM funds (eg trustee, broker, custodian, depositary etc), they will make money off the activity levels in the MM funds, such as when one HL MM fund sells a Woodford fund to another HL MM fund.

The points being missed include that their typical fee structure would result in no broking fee when an open ended fund is reregistered (as there's no broking of a deal on the public market, because Woodford OEICs aren't able to be publicly traded on an exchange) and other ongoing services would be NAV based rather than transaction based (trustee, depositary, custody) and are in fact carried out by other parties anyway (e.g. Trustee, depositary and registration carried out by Northern Trust).

The fact that they don't earn fees for those services is separate from the fact that they haven't been churning a WEIF holding across their MM funds anyway, as you can see from activity levels reported in the annual / semiannual reports of those funds...

AnotherJoe

ZingPowZing wrote: »

If I have been told the above twenty times, then for the 21st time I'll repeat that Hargreaves Lansdown DO charge transaction costs on their funds. To quote them:
"Transaction costs include the explicit costs the manager incurs whilst dealing on behalf of the fund (broker commission, taxes and custodial charges) as well a measure of the fund's trading performance when buying and selling underlying investments."
To be fair, the charges projected are too low to be a big driver of profits for Hargreaves Lansdown; and some contributors say the practice of shuffling one holding between funds would be unlikely or forbidden.
But I do think it is naive to imagine that HL's business model is reliant solely on the fees they charge their clients; anymore than Aapl rely solely on the sale of iphones to generate profit.
The Woodford fiasco illustrates how the interests of Hargreaves Lansdown intertwine with various favoured funds. I don't know in how many funds Woodford is buried beneath a list of "top ten holdings" but, since a quarter of Hargreaves Lansdown customers are affected, if you are one, it may be prudent to check.
"Buyer beware" sure, yet, that Woodford's funds continue to leach fees while their investors watch, only seems like insult on top of misfortune.

The context you have quite clearly used "transaction charges" in relates to the client buying and selling of funds, because you accused HL of encouraging customers to change funds in order that transaction fees can be charged.
Do you acknowledge that HL do not charge for the buying or selling of funds ?

danm

arnoldy wrote: »

There is a nasty smell in the room over the Hargreaves Landsdown Corporate morals and behaviours that NO AMMOUNT of window opening or HL PR air freshener will clear.


It's the relentless plugging of Woodford on their discredited lists whilst simultaneously selling down Woodford in their own MM funds that makes you want to heave.

nothing inherently wrong with this assuming they have the appropriate chinese walls and controls in place.


if your statement said "plugging of Woodford on their discredited lists whilst simultaneously BUYING Woodford" other things equal you should have the same alarm bells that they are pumping the fund for their own gain


your post infers they did not have internal controls around this but has this been proven? (i have not been following this that closely tbh)

[Deleted User]

AnotherJoe wrote: »

The context you have quite clearly used "transaction charges" in relates to the client buying and selling of funds, because you accused HL of encouraging customers to change funds in order that transaction fees can be charged.

No. See #1505

Do you acknowledge that HL do not charge for the buying or selling of funds ?

Gladly.

[Deleted User]

coyrls wrote: »

ZingPowZing, you appear to be making the following accusations:

Firstly that Hargreaves Lansdown’s management of their multi manager funds involves moving portions of their holdings in the underlying funds between different multi manager funds in the name of risk management. You have no evidence that such movements take place.

I wondered whether such movements are explicitly prohibited in regulation because, if they're not, then a firm could encourage the practice, as a legitimate way of maximising profit. And, of course, if a brokerage fee applies in those circumstances, it would not be "fraud" but "adding value" by keeping the brokerage in-house. If I had a responsibility to shareholders and the practice is allowed, it would be under consideration. Sue me!

But, of course, I'm happy to learn that the practice is forbidden or rather, not happening, as bowlhead appears to be claiming.

To be fair to Hargreaves Lansdown, these possible conflicts (or confluence) of interests are not confined to them but across the whole financial services industry. For example, another 3/4 million are invested in True Potential.

talexuser

Slater & Gordon is "looking into" the merits of a class action against Hargreaves Lansdown for the 291,000 investors who went through HL with their Wealth List.