Are HL Managed Funds Good?
Introduction
The claim regarding the quality of Hargreaves Lansdown (HL) managed funds has garnered attention, particularly in light of recent performance reports and changes within the fund structure. The inquiry centers on whether these funds provide good value for investors, especially considering their recent performance metrics and the management strategies employed.
What We Know
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Fund Structure and Changes: HL's managed funds, including the HL Cautious Managed Fund and HL Adventurous Managed Fund, underwent significant changes in March 2023, including a name change and a shift in investment objectives and policies 1. This indicates a strategic pivot that may affect their performance and investor perception.
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Performance Metrics: According to various sources, the HL Adventurous Managed Fund has shown strong returns over the past year, although it lacks long-term performance data due to its recent launch in February 2023 2. The HL Select Global Growth Fund reported a quarterly return of 9.05% for Q4 2023 3.
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Assets Under Management (AUM): As of the end of 2023, HL Funds reported an AUM of £8.7 billion, but revenues decreased by 10% compared to the previous year, attributed to a drop in average funds under management and the introduction of lower-cost funds 5.
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Value Assessment: A report by Hargreaves Lansdown indicated that despite some funds experiencing sustained underperformance, they still represented value for the end investor 6. This claim raises questions about the criteria used to define "value" in the context of fund performance.
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Investor Interest: HL's managed funds have been popular among investors, as indicated by their ranking among the most bought funds in 2023 8. However, popularity does not necessarily correlate with performance or value.
Analysis
The evidence surrounding HL managed funds presents a mixed picture. On one hand, the reported strong returns of newly launched funds could suggest effective management strategies. However, the lack of long-term performance data for these funds raises concerns about their sustainability and reliability.
The source of the performance data, Yodelar, provides an extensive analysis but may carry a bias due to its promotional nature, as it is focused on reviewing HL's offerings 2. Additionally, the HL Select Global Growth Fund's reported performance is derived from HL's own communications, which could be seen as self-serving 3.
Moreover, the claim that funds represent value despite underperformance could reflect a conflict of interest, as HL stands to benefit from maintaining investor confidence and participation in their funds 6. The methodology behind defining "value" in this context is not clearly articulated, which complicates the evaluation of this assertion.
Furthermore, while HL's AUM and revenue figures provide a snapshot of the fund's market position, they do not directly address the quality of investment returns or the satisfaction of investors. The decrease in revenue could indicate broader market challenges or investor dissatisfaction, which warrants further investigation.
Conclusion
Verdict: Partially True
The assessment of HL managed funds as "good" is partially substantiated by evidence of strong short-term performance and significant investor interest. However, the lack of long-term performance data for newer funds, potential biases in the sources of performance metrics, and ambiguous definitions of "value" complicate a definitive conclusion.
While some funds have shown promising returns, the sustainability of these results remains uncertain, particularly given the recent structural changes and the reported decrease in revenues. This suggests that while there may be merit to the claim, it is not universally applicable across all HL managed funds.
It is important to recognize the limitations of the available evidence, including potential conflicts of interest and the subjective nature of value assessments. Readers are encouraged to critically evaluate information regarding investment options and consider their individual financial circumstances before making decisions.
