HL removes Lindsell Train from Wealth 50

Herbalus

An email says this will happen at the end of the month. The reason is that LT holds HL shares and this is increasing, so the funds will be removed from the wealth 50 list to avoid conflicts of interest.

I know the wealth 50 lists are marketing tools, but I can’t help but wonder if this would have happened had Woodford not just happened.

I also wonder whether this will affect the popularity of LT funds given the amount that HL users have put with them in the past, based on the “recommendation” of being included in HL’s list.

bowlhead99

Herbalus wrote: »

I know the wealth 50 lists are marketing tools, but I can’t help but wonder if this would have happened had Woodford not just happened.

IMHO, no way it would have happened 'pre Woodford shuttering' as they have never appeared to be particularly bothered about the potential to create conflicts of interest before.

It has long been the case that driving large volumes of business to people who reward them with lower fees has the potential to create a conflict of interest or push their investors towards an investment that might not have been selected by an independent investment adviser on its merits. However, in the past it was just the cynics on forums like this who would mumble about them being marketing lists rather than impartial recommendation lists, and how you should take them with a pinch of salt because they are self-serving rather than as the best way to filter down the thousands of choices. Now that way of thinking has gone mainstream in the national press and brought scrutiny to a previously ignored issue.

For time-poor customers their marketing lists are certainly a quick way to slim down the choices and buying a fund at a discounted price makes the high HL platform fee feel more 'affordable'; even though they will not necessarily get those investors into the best investments for the investor. If there is scrutiny of this area, I can see why the management would not want one of the most promoted funds to be one that holds a lot of stock in HL itself: "buy this fund, every pound you invest helps to prop up our own share price!".

Perhaps it is a shame that it is removed, as the LT funds have been ones that would have deserved inclusion on their merits now they have a decent track record. However, they and Woodford unduly benefited from being on the lists before their funds established any track record, after setting up their own independent fund house and using the managers' individual reputation (i.e. those of Lindsell, Train and Woodford) together with fee discounts to get on the list - before their respective management company had actually proved itself.

Moe_The_Bartender

Are you forgetting that Train had a pretty good track record with Finsbury before setting up his OEICs? I think he had proved himself.

bowlhead99

Moe_The_Bartender wrote: »

Are you forgetting that Train had a pretty good track record with Finsbury before setting up his OEICs? I think he had proved himself.

No, which is why I mentioned that they were "using the managers' individual reputation (i.e. those of Lindsell, Train and Woodford)" and the fee discounts as a reason to promote the fund, because they liked the idea of the fund rather than because the product itself was proven. They were quite keen on Bolton's China fund at Fidelity too, before it tanked

Yes Lindsell and Train were both decent fund managers well before the LT branded UK and Global OEICs were launched, which is how they were able to set up shop together at the age of 40ish.

aroominyork

Yet HL insist Fundsmith has not proven itself through enough of a cycle and they do not take account of Terry Smith's previous record. When they reduced the Wealth 150 to 50 they said more clearly than before "no discount, no listing" and I think they'll be glad they came clean about that pre-Woodford since when the microscope is being turned on them.

talexuser

Moe_The_Bartender wrote: »

Are you forgetting that Train had a pretty good track record with Finsbury before setting up his OEICs? I think he had proved himself.

Exactly the same could be said about Woodford before it all blew up.

Johnnyboy11

I still can't believe Lindsell Train Global Equity performance, up a staggering 180% in five years, which is insane. Same for Fundsmith, up 180%.


Don't get me started on Woodford...

OneInTheHat

I've had it in my portfolio for years and love it (obviously). I wasn't planning on selling it but I must admit, it did make me go back and have a good look at it (and considering the return, I'd do well if I did take it out now).

The Woodford thing is a mare - I have/had a small amount in there. Am kicking myself as was very busy at the start of the year and meant to review it and unfortunately didn't get around to it before it got frozen. Tempted to just write it off in my head and ride the storm now (am a long term investor).

I suspect HL are being super careful given the wide press criticism re Woodford.

Wassa123

Johnnyboy11 wrote: »

I still can't believe Lindsell Train Global Equity performance, up a staggering 180% in five years, which is insane. Same for Fundsmith, up 180%.

They're definitely my favourite!

Baillie Gifford American is up 199% in 5 years, but they tend to be much more swingy!

Malthusian

Johnnyboy11 wrote: »

I still can't believe Lindsell Train Global Equity performance, up a staggering 180% in five years, which is insane. Same for Fundsmith, up 180%.

It's terrific performance, but when you have hundreds of fund managers in the country, if they're not all running closet trackers then a handful of them are going to manage 23% per year from a 100% equity portfolio in a bull market with a 25% fall in Sterling. Just as some of them are going to lose a boatload of money like Woodford.

SonOf

Baillie Gifford American is up 199% in 5 years, but they tend to be much more swingy!

Its one of the higher risk US equity funds. So, in growth periods you expect greater growth. And you expect it to be hit harder in loss periods.