The report for the year to September 2023 revealed HL Multi-Manager Asia & Emerging Markets and HL Multi-Manager Strategic Bond scored ‘poor’ in their overall rating.
This was largely driven by poor performance for both funds, alongside costs standing above comparable market rates.
Additional focus was also required on the authorised fund manager costs for the Asia and EM fund.
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The HL Multi-Manager Asia & Emerging Markets fund will “undergo a complete assessment” over the next 12 months, which will include changes to the investment process and a reduction in fees.
Hargreaves said poor performance stemmed from “poor stock selection” from its Asian equity managers, who missed out on a “momentum-driven equity rally” in Taiwan and India.
HL wrote: “We currently believe this fund is not delivering value to investors through performance. The upgrades to the investment processes and the changes have been made to enhance future performance and we continue to review the fund proposition.”
The HL Multi-Manager Strategic Bond fund will also be subject to a complete assessment, but the company will not lower its fees and will conduct the review over a six-month period.
The platform explained: “We feel that the performance of the fund is not providing value. Close attention has, and will continue to be, placed on the managers in order that improvements are made to the benefit of fund investors.
“The upgrades to the investment processes are expected to enhance future performance in line with the action plan requirements.”
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Three other funds were scored as representing value but requiring continued focus: HL Multi-Manager High Income, HL Multi-Manager UK Growth and HL Multi-Manager European.
While the UK fund scored poorly on performance, with AFM costs and comparable market rates requiring greater focus, the European fund scored poorly on comparable market rates, with AFM costs and performance needing more focus.
The High Income strategy only required greater focus on performance, according to the firm.
HL Cautious Managed was exempted from value and performance reviews, due to significant changes being made in the first quarter of 2023.
The fund was renamed and had its investment policy, objective and comparator benchmark changed in March 2023, following an extraordinary general meeting with investors earlier in the month.
However, HL did note the fund could be providing better value on economies of scale.
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