In a statement responding to Hargreaves Lansdown’s concerns, Lindsell Train said: “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.
"In addition, we monitor and control other aspects of risk, including portfolio concentration and liquidity. We should add that our Global, UK, Japanese and North American Equity Funds invest only in listed companies, there is no exposure to unlisted securities.
"The independent oversight of risk is already the responsibility of a risk and compliance committee, chaired by an independent non-executive director with considerable experience in this area. We have also recently hired an executive focused on the monitoring of risk. We will continue to commit resources to this important part of our business.”
This has obvious echoes of the concerns many in the industry had around the risk levels in the Woodford funds prior to that firm’s implosion.
Hargreaves Lansdown’s corporate reputation took a considerable hit when the equity income fund collapsed, as the company had recommended the product right up until its closure, including trumpeting the fact that Woodford provided Hargreaves clients with a discounted share class.
But there are differences: Woodford Investment Management was 65 per cent owned by Neil Woodford, and although he highlighted the fact that he was not the chief executive of the firm, he was the only investor at the company with any sort of profile among advisers.
And when Woodford did speak of the wider investment team, he spoke positively of how they came from unconventional backgrounds, with one being an ex-policeman.
However, many clients have expressed the view that such individuals, however talented, were essentially relying on Woodford for their professional careers, and their backgrounds may have hindered them getting jobs at rival firms.
Train, on the other hand, has equal ownership of Lindsell Train, with his business partner Mike Lindsell, a veteran and long-established fund manager, and Train owns less than 40 per cent of the business.
As for access to clients, the Lindsell Train funds were also available at a discount on Hargreaves Lansdown’s platform for many years.
Representatives of the platform have previously stated that being on the firm’s buy list, which typically coincides with a discount, can add more than £100mn to the inflows of a fund within the first year or two.
Clients of the platform may then ponder whether they were encouraged into the fund, as they were with Woodford, although they will be thankful that Lindsell Train funds invest in large, liquid companies.
