Interactive Investor

Woodford gets the boot from Hargreaves Lansdown Wealth 50

4th June 2019 10:57

Tom Bailey from interactive investor

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The online broker has long been a backer of the Woodford’s Equity Income fund, first placing it on the platform’s Wealth 150 list at launch in June 2014.

The flagship Woodford Equity Income fund has been dropped by online broker Hargreaves Lansdown’s Wealth 50, following its suspension from trading.

Unable to keep pace with investor redemptions, the fund has suspended trading for at least 28 days. Woodford Asset Management say this was necessary to protect investors and allow manager Neil Woodford time to sell some of the fund’s illiquid holdings.

This has prompted Hargreaves to drop the fund from its Wealth 50 list. Emma Wall, head of investment analysis at Hargreaves Lansdown, comments: “Because the fund has been suspended we’ve removed it from our Wealth 50 list of favourite funds.” Woodford Income Focus Fund has also been removed from the list.

Despite the suspension, Hargreaves Lansdown has not completely soured on the star fund manager. Wall notes: “We are advocates of long-term investing and think Woodford’s multi-decade track record remains compelling – but we don’t underestimate the disappointment investors must feel with Woodford’s recent performance.”

The online broker has long been a backer of the Woodford’s Equity Income fund, first placing it on the platform’s Wealth 150 list at launch in June 2014. The fund also survived Hargreaves Lansdown’s decision to trim its recommended list to 50 funds In January.

This sparked controversy, with fund manager Terry Smith (whose fund was not included in the Wealth 50) accusing Hargreaves of selecting funds based on the willingness of managers to give Hargreaves exclusive fee discounts. Hargreaves denied this, saying that recommendations were not made on an improper basis.

FundExpert’s head of research Sam Lees, however, says that Hargreaves Lansdown shoulders some “blame”. He says: “They over-promoted the fund and kept recommending it when there was no objectively good reason to do so.  Now the reason it is removed from their Wealth 50 is because ‘the fund can’t be traded’ - is that it?

This article was originally published in our sister magazine Money Observer, which ceased publication in August 2020.

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