Passives enter Hargreaves Lansdown ‘best buy’ list for first time

Britain’s largest fund platform, Hargreaves Lansdown, has added 13 index-tracker funds to its Wealth 150 list for the first time since its launch in 2003. Wealth 150 lists the funds rated as ‘best buys’ by the firm, which is one of the UK’s largest independent financial advisers. The 13 funds also appear in a more select list, the Wealth 150 Plus, which includes 54 funds in total. A spokesperson for Hargreaves Lansdown said clients have nearly doubled their passive exposure since 2011, when 6% of clients used index funds compared to 11% today. The firm attributes this to a combination of falling fees, the popularity of passives in company "auto-enrolment" pension schemes, and scepticism over the performance of active managers. In July this year, Legal & General Investment Management said passive index returns beat active fund returns 87% of the time, and active funds underperformed their benchmarks by 2.6%, on average, annually over the past 15 years. Mark Dampier, head of research at Hargreaves Lansdown, said index trackers have become an important part of an investor’s toolkit and the firm expected a continued polarisation of the UK funds market, with capital flowing into high quality active funds at one end of the spectrum, and low cost passives at the other. “The middle ground, inhabited by closet trackers, will become increasingly squeezed out of the picture, as investors continue to vote with their feet, and seek out real value in both active and passive funds,” he said. Regulatory change under the Retail Distribution Review (RDR) in the UK since 2013 was widely expected to increase the availability of passive funds from advisers. The RDR ended commissions paid by funds to advisers – a practice that was seen to bias advisers in favour of selecting more expensive active funds due to higher commissions. ©2016 funds europe

Executive Interviews

EXECUTIVE INTERVIEW: This is the year

Feb 16, 2017

Mark Weeks, head of ETF Securities, reflects on Brexit’s trampling of the FTSE and tells Nick Fitzpatrick he hopes to see stock and bond inflows top commodities for the first time this year.

EXECUTIVE INTERVIEW: A natural interest in the topic

Feb 16, 2017

Since 2016, Guillermo Ortiz has been a chairman of Latin America’s BTG Pactual. The former central banker of Mexico talks to Nick Fitzpatrick.

Roundtables

SEC LENDING ROUNDTABLE: Both a borrower and a lender be

Jan 11, 2017

Industry heavyweights, including agent lenders, discuss issues affecting the securities lending sector such as regulation and the types of collateral being used.

EMERGING MARKETS ROUNDTABLE: The re-emergence

Jan 03, 2017

2016 was the year emerging markets returned to the spotlight, as they regained ground since the 2012 sell-off. Funds Europe asked our panel if this appetite will persist in 2017.