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Hargreaves Lansdown unveils high income fund

Fund supermarket further expands its own investment range with new high income fund that will aim to yield 4.5% a year.

 
Hargreaves Lansdown unveils high income fund

Funds supermarket Hargreaves Lansdown is to launch an income fund that will aim to yield 4.5% a year through investments in other funds.

The HL Multi-Manager High Income fund is the fifth in the firm's fund of funds range and follows the launches of its UK Growth, European, Asia & Emerging Markets and Strategic Assets funds.

The new fund will be managed by chief investment officer Lee Gardhouse and Ellen Powley and will launch on 13 April.

The pair hope to generate the annual yield through a flexible 60%-40% mix of holdings in equity income funds and corporate bonds. It will levy an on-going charge of 1.33%.

With interest rates having been frozen at a record low of 0.5% for seven years, Hargreaves says the demand for investment income remains as strong as ever.

‘[The fund] offers the benefits of potential capital and income growth from a selection of the best equity income funds available plus seeking long-term income and lower volatility from a selection of our favourite bond fund managers,’ the company said.

‘By blending different types of funds, constantly reviewing the portfolio, and moving between different areas of the market when more attractive opportunities emerge, we aim to deliver an impressive high income, which has the potential to grow over the long-term. We believe this justifies the additional costs incurred by a multi-manager approach,’ it added. 

12 comments so far. Why not have your say?

Hampshire cynic.

Mar 18, 2016 at 10:29

I like Hargreaves Lansdown for their research and service levels. However, these 'fund of funds' mean pretty high charges which are effectively doubled up. I rate their skills and would be inclined ti simply mimic their allocation and selections, and then buy the individual funds through their platform.

This would not be as nimble as their own offering, and a time-lag when changes occur could cost, but hey ho investing is a gamble and it might even work in the investor's favour.

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Micawber

Mar 18, 2016 at 11:44

Clearly there's a growing market for novice investors with SIPPs, ISAs and soon Lifetime ISAs who are not equipped to handle their own investment decisions, or don't want to spend time doing that, and come to HL saying that they don't have or want to pay for IFAs, are cautious and don't want to lose money, and that they either need the income or have read that income reinvested produces a good compounded result. In return, charges for a multimanager fund will have an impact (but how will the charges be taken: from asset value or from revenue?)

This will be the kind of product for them, and I would expect it to be steady.

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dlp6666

Mar 18, 2016 at 15:20

Lee Gardhouse seems only recently to have been appointed as Hargreaves' CIO (http://citywire.co.uk/new-model-adviser/news/hargreaves-equities-head-exits/a882676).

I wonder how much his duties in this post will act as a distraction and impact his performance as a fund manager.

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sgjhaghsdg

Mar 18, 2016 at 18:09

Nice yield, perhaps too nice. The equity component won't contribute more than 4%, so the bond element will have to be quite high up the risk scale to make up the difference, and the multiples level of fees also need to come from somewhere.

Not one for widows and orphans.

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Big boy

Mar 18, 2016 at 19:42

We need confirmation if expenses/AMC come from capital or revenue a/c. If taken from Revenue the Investments need to yield about 6% assuming I have got my figures correct. What is the likely bid/offer spread? Good Multi-Managers should be able to add value providing they have liquidity within their portfolios.

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sgjhaghsdg

Mar 18, 2016 at 19:47

If multi-managers can add value, then maybe we need a fund if multi-manager funds, as they would surely beat everything else going. Of course, I wouldn't choose my own fund of fund of funds and would like a fund that could do this for me.

Of get rid of the layers of fees, get up close and personal (but still diversified withe the underlying investments, sit back and relax.

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Stanuk

Mar 19, 2016 at 09:28

@Hampshire cynic.

Absolutely agree with your comment about holding funds through HL. on the first £250,000 of UT's the charge is 0.45% annually. Cannot understand why as there is no charge for IT's

Their platform and service is top notch and the up front discount on funds also. I have never held funds with them myself so do not know if it would be possible but buying through them for the discount and then transferring out would make sense.

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Hampshire cynic.

Mar 19, 2016 at 09:51

Stanuk

To buy through HL and then transfer out would incur a charge so that idea will not work.

My point over the effective doubling up of fees where fund of funds are concerned is the main downside, and then there is the 'spread' as well. Why pay 1.3% plus, on a HL fund of funds offering when you could choose the individual funds at lowish fees eg Lindsell Train Global Inc at 0.70%? I know that this particular fund has more of a growth aspect than income, but the much lower management fee, with no spread, is attractive. They do have 'income' offerings where much lower management charges apply, some of these only being so discounted through HL.

By selecting and buying carefully the lower management charges go a long way to covering the HL platform charges which after all to mean superb research and service are available to all.

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sgjhaghsdg

Mar 19, 2016 at 09:54

I was about to move to large SIPP to HL when they unilaterally hiked their fees - my wife would have been paying 4x the fees she'd paid previously, so we moved everything (SIPPs, ISA, unwrapped) to BestInvest. BestInvest also changed their fees structure but they honoured their "custody fee" for existing customers so we hold mainly ETFs there. Our total fees (platform, fund, etc.) are sub 0.4%, which is hard to beat.

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timothyskinner

Mar 19, 2016 at 11:49

Buy City of London Investment Trust instead.

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Ladysaver

Mar 19, 2016 at 23:04

I agree with the comment that before charges, this fund might need to yield around 6% to give investors 4.5% after charges. And 6% in today's environment implies a pretty high level of risk. I'm generally wary of 'multi-manager' funds because of the layers of charges. It's also perfectly possible (albeit quite time-consuming) to research funds and ITs carefully to generate a decent income yourself, without relying on 'multi-manager' vehicles. And I agree that there are very good funds and ITs to pick from (also agree that City of London is one of them). While I like HL for customer service and a website that actually works, I don't like its charges, and dislike 'multi-manager' funds. I will decline this offer.

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Stanuk

Aug 13, 2016 at 09:09

"Buy City of London Investment Trust instead"

Good advice, in fact buy any IT before considering a UT. Easier to deal and HL's charges for holding UT's are frankly rip off....although in every other respect they are pretty good.

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