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Hargreaves demands managers' best price for new 30 fund core list

by Jun Merrett on Apr 25, 2013 at 13:53

Hargreaves demands managers' best price for new 30 fund core list

Hargreaves Lansdown is looking into creating a core list of 30 funds within its Wealth 150 made up of funds which offer the platform their best price.

The company has written to fund managers about being included on the list.

The Bristol-based discount broker’s Wealth 150 recommended fund list currently lists 105 funds as the numbers have decreased due to poor performance and soft-closures.

The company will select fund groups to go into the core list based on a combination of performance and price, including whether they offer a super clean share class to the platform.

Ian Gorham (pictured), chief executive of Hargreaves Lansdown, said he had written to fund groups asking them to give the company their best offers.

‘We are looking into having a core list within the Wealth 150 rather than deleting a lot of funds of it. The reason we have the 150 is we need to try and cover all the sectors that investors invest in.

‘I have written to everyone asking them to put their best foot forwards.

‘We would take into account the performance potential of the investment but also the charges. The lower the charges are the more of a heads start potentially people have got but performance is very important. Something that is high performing but expensive may still be OK and beat its rival that is less expensive.’

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6 comments so far. Why not have your say?

Scroogio

Apr 25, 2013 at 15:18

A list of 150 which becomes a list of 105 which then becomes a list of 30? It's starting to look like HL investors will be 'pushed' towards the handful of funds whose managers are happy to give into their demands.

If HL are so keen to use their size to give customers a good deal, why not focus their efforts on making their platform charges the most competitive in the market, instead of distorting the fund management industry demanding cheaper share classes?

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BGM

Apr 25, 2013 at 15:27

Because the latter has great advantages over the former in that it not only gives them a competitive edge on price but additionally it spikes the opposition too.

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Christopher Petrie

Apr 25, 2013 at 15:34

Can't see HL getting any different a deal than, say, Skandia, Standard Life, Cofunds, Funds Network or Transact. In the end, it's hard to see fund groups offering anybody anything else than "their best price" as it would cost them so much to offer smaller platforms less favourable terms, they might as well offer them all the same.

As Scroogio says, the platforms can then compete on their own charges and service, whilst the funds themselves will compete amongst themselves based on performance and their own own AMC's.

No loss of competitive forces - funds and platforms will all still continue to compete on price. It's just that the two elements won't be bundled together in the same way as currently (with fund/platform rebates).

In other words, if Artemis charge less than Invesco for instance for the same style UK Equity Income fund, I might choose Artemis. If Transact charge less than, say, Skandia, for the platform services then I might select Artemis on the Transact platform. No loss of competition there.

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Eugen

Apr 25, 2013 at 17:41

I wonder if the 30 funds list won't mean advice. As the FCA said the other day that their legal advice was: if the client belives he gets advice, than it is advice.

In conclusion execution only firms needs to make clear they take the right steps and let the clients choose themself the funds to invest in.

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Mr Jones via mobile

Apr 25, 2013 at 20:27

Agree with Eugen, having any sort of list amounts to advice in my book.

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Dathan Steele

Apr 26, 2013 at 07:01

@ Eugen. 'Advice' in this context means a personal recommendation by an Authorised Individual. As the arm of HL that offers their EO platform does not have permissions for advice, then it is tricky to see how the FCA could play 'pin the tail on the donkey' with them in this case.

@ Scroggio. Agreed. The idea that the 'Wealth 150' was anything other than a list of fund who would give HL 70-90 bps of the AMC of the funds concerned is laughable. So funny that I'm sure Peter and Stephen are laughing as they count their billions!

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