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No place for Nick Train or Terry Smith on Hargreaves’ revamped best-buy list

Britain’s largest fund shop has been forced to redesign the hugely influential best-buy list less than 18 months after its last shake up

Hargreaves Lansdown has revamped its fund recommendations list – but has controversially left out highly regarded managers Nick Train and Terry Smith.

Britain’s largest fund shop was forced to redesign the hugely influential best-buy list less than 18 months after its previous restructure大发体育网站 – when it renamed the Wealth 150 to the Wealth 50. This was due to complaints over the firm’s continued support for failed fund manager Neil Woodford and criticism the composition of list was not rigorous enough.

The firm has now changed the way it picks funds. Previously a fund was expected to offer a discount for inclusion on the Wealth list, but this obstacle has been removed.

It has also removed the managers of the Hargreaves Multi-Manager funds, such as the £2.6bn Income & Growth fund, from the process of designing the list. This previously created a conflict of interest大发体育网站 as the managers bought the funds also being tipped to Hargreaves users. 

However, the new list – simply called the “Wealth Shortlist” – has still not found space for two of Britain’s best performing and popular managers, Nick Train and Terry Smith.

大发体育网站Mr Smith, who has been outspoken about his omission in the past, has not been included, despite Hargreaves Lansdown customers owning more than 10pc of the £20bn Fundsmith Equity fund.

Nick Train was previously included in the Wealth 50 but was removed as his company, Lindsell Train, owned a 13pc stake in Hargreaves Lansdown. The fund shop said this created a potential conflict of interest in recommending his funds.

Mr Smith’s fund – Britain’s largest – was not included because Hargreaves has introduced new rules that require recommended funds to update the fund shop with a full breakdown of the portfolio every month. Mr Smith currently only provides this on a biannual basis. Emma Wall, of Hargreaves, said the Fundsmith Equity fund would be included if Mr Smith complied with the new regime.

The new requirement was brought in following the firm’s dogged backing for Mr Woodford’s defunct Equity Income fund

The fund suspended trading in June 2019 after the manager invested too much in difficult-to-sell and unlisted stocks. The fund was subsequently closed in October and investors are still waiting for their savings to be returned.

By demanding more regular updates from fund managers, Hargreaves will be able to spot issues and warn investors off funds earlier. The fund shop recommended the Woodford fund up until the day it trapped investors’ savings.

大发体育网站The new list will now consist of 68 funds, an addition of 17 portfolios (see table). It will also include more passive funds and ethical portfolios. 

大发体育网站Trojan Global Income, Baillie Gifford American and Liontrust UK Growth are among the 12 additions that have been included without offering a reduced charge to Hargreaves Lansdown customers.

大发体育网站The firm said it will also expand its research into investment trusts, something it has been reluctant to do in the past, including analyst notes and additional information. 

The firm does not include any on the Wealth list however. It has stated previously that it would not recommend investment trusts due to liquidity concerns, as the list is so widely followed it could move share prices significantly.

Charges are higher for funds than investment trusts. An investor with £250,000 invested in funds will pay Hargreaves £1,125 in charges. For investment trusts this is capped at £45.

Ms Wall added: “We have improved our transparency of research and process, the information, tools and support we provide clients, and the governance and risk controls of our processes and removed the fund price as a factor for fund selection.”

Terry Smith of Fundsmith said: “We note the reasons put forward for Hargreaves Lansdown’s continued failure to include Fundsmith in the “best buy” list. They cite our unwillingness to disclose our portfolio positions to them more frequently than we do to our other investors. 

大发体育网站“Leaving aside the issues this would raise with Treating Customers Fairly, we would note that Hargreaves Lansdown has a fund which competes with ours – the HL Select Global Growth Shares Fund – and a highly questionable track record in handling conflicts of interest. Moreover, given the poor track record of Hargreaves Lansdown’s best buy lists and the fate of some other funds they have recommended, we would worry if we were included.”

Nick Train and Hargreaves Lansdown大发体育网站 declined to comment.