Hargreaves Lansdown has criticised Lindsell Train’s investment risk framework, saying the fund manager does not have the capability to provide strong oversight and challenge of its investment team.
In an update last week (May 18), Emma Wall, head of investment analysis and research at Hargreaves Lansdown, said ongoing analysis of the company had highlighted some concerns, which it had raised with Lindsell Train.
These included the capabilities and resources the business had in place to provide effective challenging to its investments teams, which Wall said was necessary to deliver effective oversight.
“At present, we don’t feel that the investment risk framework currently in place is sufficiently robust, nor that Lindsell Train have the correct capabilities, to provide strong independent oversight and challenge of the investment team.”
Wall said Hargreaves Lansdown will continue to monitor the situation and will let investors know if its views change.
She emphasised that the announcement was not a judgement on the investment capabilities of the fund managers at Lindsell Train, who Wall said are “patient, long-term investors” who have established a repeatable investment process.
“This is an approach which has served investors very well over the long term,” she said.
Annual performance growth
Apr 18 - Apr 19 | Apr 19 - Apr 20 | Apr 20 - Apr 21 | Apr 21 - Apr 22 | Apr 22 - Apr 23 | |
24.73% | -1.59% | 17.95% | -4.90% | 8.75% | |
IA Global | 8.87% | -0.89% | 33.57% | 0.51% | 0.56% |
Source: Hargreaves Lansdown
Wall added that this is not a recommendation for investors to make any changes to a portfolio.
The Lindsell Train Global Equity and Lindsell Train UK Equity funds are not on Hargreaves Lansdown’s wealth shortlist, as the Lindsell Train business owns a stake in Hargreaves Lansdown and the latter wants to avoid a conflict of interest.
A spokesperson for Lindsell Train said the company has a “clearly defined and disciplined” investment approach.
“When considering investment risk, our primary aim is to avoid losing permanent capital value for our investors and we believe that risk can best be mitigated by investing in high quality companies,” they said.
The spokesperson added that the company’s global, UK, Japanese and North American equity funds invest only in liquid companies, with no exposure to unlisted securities.
The independent oversight of risk is the responsibility of a risk and compliance committee, they said, chaired by an independent non-executive director with “considerable experience” in this area, they added.
sally.hickey@ft.com
