Hargreaves Lansdown to remove Lindsell Train from Wealth 50
Discussion
Anyone have an email from HL this morning?
I can understand the potential for conflict of interest given Lindsell Train own something like 15% of Hargreaves Lansdown shares but the timing seems like it may be more than a co-incidence.
Reaction to Woodford or something that would have happened anyway?
I can understand the potential for conflict of interest given Lindsell Train own something like 15% of Hargreaves Lansdown shares but the timing seems like it may be more than a co-incidence.
Reaction to Woodford or something that would have happened anyway?
Yes I got the email too. It seems odd to de -list Lindsell Train when they are doing so much better than their benchmarks and yet they hung on to Woodford when he was losing money year after year. It could be read that Hargreaves L have so little faith in their own shares that they don't want Lindsell T holding too many! Stables and bolting horses come to mind. I certainly not selling any. My faith in the Wealth 50 (46) has gone to zero,
I think the Times ran an article on the conflict about a month ago.
Is definitely due to the Woodford situation.
Probably a precursor to any potentially new FCA guidelines.
Will be interesting to see what becomes of the class D variant which is the HL exclusive giving a 0.14% saving on fees to HL customers.
Is definitely due to the Woodford situation.
Probably a precursor to any potentially new FCA guidelines.
Will be interesting to see what becomes of the class D variant which is the HL exclusive giving a 0.14% saving on fees to HL customers.
swatches said:
I think the Times ran an article on the conflict about a month ago.
Is definitely due to the Woodford situation.
Probably a precursor to any potentially new FCA guidelines.
Will be interesting to see what becomes of the class D variant which is the HL exclusive giving a 0.14% saving on fees to HL customers.
I think the crux will be whether people /regulators think /suppose/presume the wealth 50/150 list is some sort of recomendation/advice.Is definitely due to the Woodford situation.
Probably a precursor to any potentially new FCA guidelines.
Will be interesting to see what becomes of the class D variant which is the HL exclusive giving a 0.14% saving on fees to HL customers.
I'm with HL and I can't say that the wealth 150/50 didn't have some bearing on my investment decisions, I'm also a natural cynic though.
swatches said:
Derek Chevalier said:
That would suggest the benchmarks are incorrect
Which benchmark would you use?LT themselves use the following:
Lindsell Train UK Equity Fund
Benchmark: FTSE-All Share TR Index
Lindsell Train Global Equity
Benchmark: MSCI World Index (developed markets)
The mkt cap of the ftseall share is about 2.5 trillion. 2 trillion of which is the ftse100. And even within the FTSE 100 the bulk of the value lies in top quartile.
So we need to know what the fund is investing in and it’s weightings.
https://www.lindselltrain.com/~/media/Files/L/Lind...
At first glance and as someone who used to run the fund benchmarking dept of a large custodian, my conclusion is that the benchmark used in that pdf is wrong.
Not only foes the fund hold 10% in US equities which is not being represented in the benchmark but if you look at the sector weightings they are not inline with the FTSE weightings.
The next clue is the yield of the fund. That seems quite low in contrast to the FTSE. At first glance it seems to be running at about half as much. That gives a clue to the stock selection within the sectors and again suggests a lack of correlation with the chosen benchmark.
This is just a very rapid, 30 second glance but it’s given me the impression that Derek has made an appropriate suggestion.
What could we infer? Well it’s possible that the fund is more weighted towards less liquid mid caps in search of out performance but also that whole sectors appear to have been bypassed such as oil, mining, gas, exploration etc which is a key weighting and driver of the FTSE index.
Just reading the fund objective does explain that they seek to outperform the FTSE all share by investing in markets that aren’t in the FTSE all share.
. That smacks to me of a bit of a wheeze to get a lownperformaing benchmark onto the books. Edited by DonkeyApple on Friday 5th July 11:07
DonkeyApple said:
That smacks to me of a bit of a wheeze to get a low-performaing benchmark onto the books.
No one would be surprised by this, but neither you or Derek have named a more representative benchmark.Yes, we can delve into the fund and start making a pseudo benchmarks based on the holdings but if no one else is using it, by definition it is not a benchmark.
I'm no fan of "benchmarks" at all. I've always been suspicious their primary purpose is to give the fund something to congratulate itself about - so there's inevitably be a tendency to have higher risk in the fund than there is in its benchmark.
I prefer to focus on what a manager says he's trying to achieve and how he's planning to achieve it. And whether what he actually does matches what he said!
Neither am I a fan of "balanced" funds.
I prefer to focus on what a manager says he's trying to achieve and how he's planning to achieve it. And whether what he actually does matches what he said!
Neither am I a fan of "balanced" funds.
FredClogs said:
I think the crux will be whether people /regulators think /suppose/presume the wealth 50/150 list is some sort of recomendation/advice.
I'm with HL and I can't say that the wealth 150/50 didn't have some bearing on my investment decisions, I'm also a natural cynic though.
I posted this on the IM thread a week or so ago and am pasting it here as it seems appropriate to your comment:I'm with HL and I can't say that the wealth 150/50 didn't have some bearing on my investment decisions, I'm also a natural cynic though.
JulianPH said:
I thought I would give an update regarding some interesting articles in the financial press this week:
Hargreaves Lansdown news
Citywire has reported that Hargreaves Lansdown has nearly 300,000 clients locked into the Woodford Equity Income fund. It is not known if this figure also includes those clients who have exposure to Woodford through HL's own multi-manager funds.
The article goes on to say how HL state that it's Wealth 50 list "isn't personal advice" it does claim "We’ve spent decades and thousands of hours crunching the numbers, and meeting fund managers, to uncover funds we believe have the most potential in each sector. To date, we’ve had an enviable track record."
To me that certainly sounds like an comment or value judgement as to the best funds to invest in. The FCA is very clear about comments and value judgements in this context:
Hargreaves Lansdown news
Citywire has reported that Hargreaves Lansdown has nearly 300,000 clients locked into the Woodford Equity Income fund. It is not known if this figure also includes those clients who have exposure to Woodford through HL's own multi-manager funds.
The article goes on to say how HL state that it's Wealth 50 list "isn't personal advice" it does claim "We’ve spent decades and thousands of hours crunching the numbers, and meeting fund managers, to uncover funds we believe have the most potential in each sector. To date, we’ve had an enviable track record."
To me that certainly sounds like an comment or value judgement as to the best funds to invest in. The FCA is very clear about comments and value judgements in this context:
The FCA said:
(1) In general terms, simply giving information without making any comment or value judgment on its relevance to decisions which an investor may make is not advice.
(2) The provision of purely factual information does not become regulated advice merely because it feeds into the customer’s own decision-making process and is taken into account by them.
(3) Regulated advice includes any communication with the customer which, in the particular context in which it is given, goes beyond the mere provision of information and is objectively likely to influence the customer’s decision whether or not to buy or sell.
(4) A key to the giving of advice is that the information:
(a) is either accompanied by comment or value judgment on the relevance of that information to the customer’s investment decision; or
(b) is itself the product of a process of selection involving a value judgment so that the information will tend to influence the decision.
One has to wonder whether the FCA (or the courts, if it is tested) would view the HL Wealth 50 list as being regulated advice. This would obviously have a huge impact on HL (and others doing the same).(2) The provision of purely factual information does not become regulated advice merely because it feeds into the customer’s own decision-making process and is taken into account by them.
(3) Regulated advice includes any communication with the customer which, in the particular context in which it is given, goes beyond the mere provision of information and is objectively likely to influence the customer’s decision whether or not to buy or sell.
(4) A key to the giving of advice is that the information:
(a) is either accompanied by comment or value judgment on the relevance of that information to the customer’s investment decision; or
(b) is itself the product of a process of selection involving a value judgment so that the information will tend to influence the decision.
Well it’s clearing the decks, conflicts of interest with interested party’s, perhaps we need to go back in time and send the HL of this world back into private ownership to ensure they are impartial.
Companies pushing sales with related or common ownership should be declared.
Anyway
Nice to see HL have updated there website to show this
But these are a little more known than the dross Woodford was pumping.
Anyway (disclaimer) I’ve got a bit with HL across SIPP, ISA, LISA, and JISA for the kids, and quite a bit with this LT. The vast majority in single shares but I’ve git a few trackers and funds to balance it out, like LT.
But there is a guy in here who is trying to do the right thing, I’m sure he owes me a few ‘virtual beers’ too he’s offering decent advise, and is clear and visible..
Companies pushing sales with related or common ownership should be declared.
Anyway
Nice to see HL have updated there website to show this
But these are a little more known than the dross Woodford was pumping.
Anyway (disclaimer) I’ve got a bit with HL across SIPP, ISA, LISA, and JISA for the kids, and quite a bit with this LT. The vast majority in single shares but I’ve git a few trackers and funds to balance it out, like LT.
But there is a guy in here who is trying to do the right thing, I’m sure he owes me a few ‘virtual beers’ too
he’s offering decent advise, and is clear and visible..swatches said:
Derek Chevalier said:
That would suggest the benchmarks are incorrect
Which benchmark would you use?LT themselves use the following:
Lindsell Train UK Equity Fund
Benchmark: FTSE-All Share TR Index
Lindsell Train Global Equity
Benchmark: MSCI World Index (developed markets)
Large cap growth (assuming that is what his investing style is) has had a terrific run over the last decade - it might not stay that way forever.
Testaburger said:
LTI plunged 22+ percent on Friday as a result.
Worth a punt? I thought so but it appears to still trade at a huge premium to NAV. Perhaps this is the beginning of a ‘rebalancing the premium’ event.
Are you sure? On the HL site the UK fund is down a percent or so but the Global one doesn't show a drop.Worth a punt? I thought so but it appears to still trade at a huge premium to NAV. Perhaps this is the beginning of a ‘rebalancing the premium’ event.
Mr Pointy said:
Are you sure? On the HL site the UK fund is down a percent or so but the Global one doesn't show a drop.
LTI is the Lindsell Train Investment Trust.http://tools.morningstar.co.uk/uk/cefreport/defaul...
It's dropped as it has around 50% in the Lindsell Train business.
swatches said:
DonkeyApple said:
That smacks to me of a bit of a wheeze to get a low-performaing benchmark onto the books.
No one would be surprised by this, but neither you or Derek have named a more representative benchmark.Yes, we can delve into the fund and start making a pseudo benchmarks based on the holdings but if no one else is using it, by definition it is not a benchmark.
This benchmark hasn’t been chosen because of its correlation or appropriateness to work as an actual mechanism to benchmark the manager’s performance but rather to work as part of the overall marketing strategy to investors.
The problem with doing this is that as an extreme example, I could state that my objectives were to outperform the FTSE 100 and so set the FTSE 100 as my measure and then invest it all in AIM shells.
It’s the correlation that looks iffy to me. The FTSE is 40% oil & gas, resources and banking. But this fund appears to have no exposure to the the three defining sectors of the FTSE index and a single. That’s a huge investment call but it puts it completely at odds with using the FTSE as a benchmark.
I imagine that for the average self executing investor this isn’t an issue. They will work all this out in seconds during their basic research and their decision whether to invest or not will not be based at all on the fund having a historic performance number that is a larger number than that of an index published next to it. They will have made their investment based on looking at what the holdings are, looking at the sector weightings and forming the view that over the next chosen investment period that a fund that is ex of the 40% of the defining sector weightings of the FTSE is what they want in their portfolio.
But I think with all of these things that there is a risk that publishing an index for the purposes of marketing alongside a fund could overly influence some investors decisions? A little bit like the responsibility HL has with their 50 funds. The savvy would use that list as a convenient tool to bring some funds to their attention for further investigation but I’m sure there are others who simply shop by numbers and pick the ones that look like they have performed the strongest but without per se knowing why?
Maybe it’s a simple as publishing the correlation between the actual fund and the high profil index being used by the marketing team to promote it?
DonkeyApple said:
swatches said:
DonkeyApple said:
That smacks to me of a bit of a wheeze to get a low-performaing benchmark onto the books.
No one would be surprised by this, but neither you or Derek have named a more representative benchmark.Yes, we can delve into the fund and start making a pseudo benchmarks based on the holdings but if no one else is using it, by definition it is not a benchmark.
This benchmark hasn’t been chosen because of its correlation or appropriateness to work as an actual mechanism to benchmark the manager’s performance but rather to work as part of the overall marketing strategy to investors.
The problem with doing this is that as an extreme example, I could state that my objectives were to outperform the FTSE 100 and so set the FTSE 100 as my measure and then invest it all in AIM shells.
It’s the correlation that looks iffy to me. The FTSE is 40% oil & gas, resources and banking. But this fund appears to have no exposure to the the three defining sectors of the FTSE index and a single. That’s a huge investment call but it puts it completely at odds with using the FTSE as a benchmark.
I imagine that for the average self executing investor this isn’t an issue. They will work all this out in seconds during their basic research and their decision whether to invest or not will not be based at all on the fund having a historic performance number that is a larger number than that of an index published next to it. They will have made their investment based on looking at what the holdings are, looking at the sector weightings and forming the view that over the next chosen investment period that a fund that is ex of the 40% of the defining sector weightings of the FTSE is what they want in their portfolio.
But I think with all of these things that there is a risk that publishing an index for the purposes of marketing alongside a fund could overly influence some investors decisions? A little bit like the responsibility HL has with their 50 funds. The savvy would use that list as a convenient tool to bring some funds to their attention for further investigation but I’m sure there are others who simply shop by numbers and pick the ones that look like they have performed the strongest but without per se knowing why?
Maybe it’s a simple as publishing the correlation between the actual fund and the high profil index being used by the marketing team to promote it?
https://www.thetimes.co.uk/article/this-savings-cr...
Out of all the fund managers out there, why are only Smith and Train mentioned?
(Also not sure why he thinks they are value investors
)Look at how the press were fawning over Woodford a few years back
https://icradio.co.uk/whats-happened-neil-woodford...
As Martin points out, the BBC were "mildly upbeat" back in 2015
"Neil Woodford: The man who can't stop making money"
https://www.bbc.co.uk/news/business-33113081
Gassing Station | Finance | Top of Page | What's New | My Stuff