Peter Hargreaves says fund manager appears not to have been truthful about performance
The billionaire founder of the UK’s largest retail investment platform has attacked the beleaguered fund manager Neil Woodford for appearing not to be “truthful” about the performance of his frozen investment fund.
Peter Hargreaves – who with Stephen Lansdown founded the Hargreaves Lansdown share-dealing service for private investors in 1981 – added that the firm’s clients had been “stuffed into this horrible Woodford fund”.
The FTSE 100 company has come under fire for using its Wealth 50 list of recommended funds to promote Woodford’s Equity Income fund, which blocked investors from withdrawing their cash in June after becoming overwhelmed by customer withdrawals following a series of bad market bets.
Hargreaves, 72, told the Sunday Times: “It’s annoyed the hell out of me that it would appear he [Woodford] has not been truthful with Hargreaves Lansdown. But it’s also annoyed me that they [Hargreaves Lansdown] let it go on so long.”
Hargreaves Lansdown has previously said it was aware of the fund’s underperformance but kept it on its recommended Wealth 50 list in the hope it would bounce back. Woodford became one of the UK’s most feted fund managers after his initially contrarian bets against technology and banking stocks paid off following the dotcom crash and the banking crisis.
He told the Sunday Times: “The clients have been stuffed in this horrible Woodford fund. I’ve drawn this big dividend. Nothing to do with me and I’ve been very successful. What do they want me to do? Give the dividend back to the unit holders?”
In a June letter addressed to Nicky Morgan, the then chair of parliament’s Treasury select committee, the Hargreaves Lansdown chief executive, Chris Hill, said the platform conducts “extremely rigorous” checks on funds before including them in its Wealth 50 list, including analysis of fund manager performance and “face to face meetings”.
However, the note to Morgan also stated that Woodford Investment Management had failed to follow through on a promise to inform Hargreaves Lansdown if more than 10% of the Equity Income fund was ever invested in unquoted companies.
Hill wrote: “We insisted that they abide by … guidelines not to breach the 10% level and to inform us immediately if they did, to which they also agreed. We have subsequently, on 18 June 2019 in FCA chair Andrew Bailey’s response to the Treasury select committee, found out that Woodford twice breached this limit in February and March 2018. They did not inform us of this on either occasion.”
Woodford has said that the agreement was to disclose “month-end breaches only”.