- 57.4% of the funds featured in Hargreaves Lansdown's 'Wealth 50' list underperformed compared to their peers and ranked among the worst performers in their sectors over the past 1, 3 & 5 years.
- The Jupiter India fund has consistently delivered impressive returns, outperforming its sector peers across multiple time periods.
- There are 68 funds in the Hargreaves Lansdown Wealth 50 list, 18 received a top-performing 4 or 5-star rating while 39 received a poor 1 or 2 star performance rating.
- This report highlights the best and worst performing funds from Hargreaves Lansdown's Wealth 50 list.
- The Artemis Global Income fund has been the top-performing fund in the IA Global Income Equity sector over the past year with returns of 29.84% ranking 1st out of 54 funds in the sector.
For several years, Hargreaves Lansdown, the UK's leading investment platform, has famously published a selection of their favourite funds known as the Wealth 50. This popular fund list is regarded as one of the most influential in the UK but it is no stranger to controversy, most notably when it continually featured the Woodford Equity Income fund, despite the fund continually underperforming. This fund (which at its peak was once the largest in the UK) was famously suspended in 2019 resulting in billions of lost savings for investors.
After the Woodford controversy, Hargreaves Lansdown subsequently carried out a review of their Wealth 50 list, reducing its size and increasing scrutiny on the funds it features.
The list now comprises of 68 funds that Hargreaves Lansdown identifies as potentially attractive options for investors. The selection criteria encompass various factors, including historical performance, management expertise and alignment with investor objectives.
In this report, we will analyse the performance, sector ranking and overall fund rating for all 68 funds within the Wealth 50 list and identify just how competitive each of the funds are.
Hargreaves Lansdown Wealth 50 Performance Summary
The Hargreaves Lansdown Wealth 50 includes a carefully selected list of 68 funds, spanning various investment sectors. Given the diverse nature of these funds, it is essential to evaluate each fund's performance against its sector peers to fully understand their effectiveness.
Our analysis of their funds' performance identified that 18 were awarded an impressive four or five-star rating, highlighting their strong performance. Additionally, 10 funds received a modest three-star rating, reflecting average performance.
However, a significant portion of the funds have underperformed, with 21 receiving a two-star rating and 18 receiving just one star. This means that 57.4% of the funds in the Wealth 50 list have struggled relative to their peers.
Best Performing Hargreaves Lansdown Wealth 50 Funds
While the Wealth 50 list features funds which Hargreaves Lansdown believe offer the greatest performance potential, our analysis identified that only 26.5% of the funds have consistently outperformed their sector peers.
The table above lists 5 funds along with their 1, 3 & 5 year performance, sector rankings, and overall performance rating.
Jupiter India
The Jupiter India Fund is a notable performer within the Hargreaves Lansdown Wealth 50 list. Its goal is to provide returns, after fees, that exceed those of the MSCI India Index over a long-term period of at least five years. Avinash Vazirani manages the fund, which primarily invests in a diverse range of Indian companies, with a focus on smaller and medium-sized businesses that typically carry higher risk than the broader Indian stock market.
The fund's recent performance has been strong. In the past year, it grew by 53.13%, placing it second out of 224 funds in the IA Indian sector and significantly outperforming the sector average of 30.56%. Over longer periods, the fund has also shown substantial growth, with returns of 92.31% over three years and 131.50% over five years.
The fund currently manages £1.5 billion of investor assets. Its performance can be attributed to the manager's in-depth knowledge of the Indian market and a strategy that aims to balance growth opportunities with risk management. The fund uses a "Growth at a Reasonable Price" (GARP) approach, which involves identifying undervalued companies with strong cash flows and solid financial standings. This strategy aims to capitalise on India's economic growth.
Jupiter Asian Income
The Jupiter Asian Income Fund, managed by Jason Pidcock, was launched on 2 March 2016 and currently, it manages £1.6 billion of clients' money. This fund has consistently ranked among the top performers in its sector, earning a 5 star rating. Over the past year, the fund has returned growth of 18.76%, well above the sector average of 4.56%. Its 3-year performance of 45.56% has been exceptional, ranking 1st out of 107 funds in its sector and greatly surpassing the sector average of -4.24%. Over the past 5 years the fund has returned growth of 48.23%, which was more than three times the sector average of 15.77%.
These figures underscore the fund's ability to provide strong and sustainable returns, making it an attractive option for investors seeking a combination of income and capital appreciation within the Asia Pacific Ex-Japan region.
FSSA Greater China Growth
The FSSA Greater China Growth Fund, expertly managed by Martin Lau, is designed to achieve capital growth over the medium to long term, typically over a period of at least three years. The fund strategically invests at least 70% of its assets in equities and equity-related securities of companies based in, or with significant economic ties to, the People's Republic of China, Hong Kong, and Taiwan. By selecting companies listed on exchanges worldwide, the fund aims to capture the growth potential of the Greater China region.
Despite the challenging market conditions in China, the FSSA Greater China Growth Fund has demonstrated resilience, managing £417 million in client assets and outperforming many of its peers. Over the past year, the fund delivered a return of -7.47%. While this represents a negative return, it is important to note that it outperformed the sector average of -13.43%. Over three years, the fund returned -13.47%, again exceeding the sector average of -20.36%. Even over five years, where market conditions remained difficult, the fund achieved a growth of 2.09%, well above the sector average of -21.86%.
These results reflect the fund's strong performance relative to its peers, despite adverse market conditions, which justifies its 5-star rating. The negative returns are a direct consequence of broader market challenges, but the fund's ability to outperform the sector consistently underscores the effectiveness of its management strategy.
Artemis Global Income
Launched on 19 July 2010, the Artemis Global Income Fund aims to provide a healthy, steadily growing income alongside long-term capital growth (over 5 years) by investing in a diverse range of global companies.
The fund employs a value-focused investment strategy, often targeting companies that are out of favour but have potential for recovery and strong cash flows, which support dividend payments. This approach has led to the fund's distinct performance, setting it apart from many others in the Global Equity Income sector. It’s an excellent option for investors looking to add international exposure to UK-focused portfolios or to diversify their income investments.
The Artemis Global Income Fund, which manages £1.317 billion of investors' money, has been ranked among the best performing funds in Hargreaves Lansdown's Wealth 50 shortlist. Over the past year, the fund has returned a growth of 29.84%, ranking it 1st out of 54 funds in its sector, well above the sector average of 11.72%. It has achieved growth of 40.07% and 61.98% over the past 3 & 5 years, respectively, compared to the sector averages of 23.48% and 44.1%.
Fidelity Special Situations
The Fidelity Special Situations fund, classified within the IA UK All Companies sector, is one of the largest funds, managing approximately £2.96 billion of client assets. The Fund's investment objective is to achieve long-term capital growth by primarily investing in a portfolio of shares from UK companies. It employs a flexible investment approach, investing in a mix of large, medium, and smaller-sized companies across various sectors.
The fund manager focuses on identifying undervalued companies that have strong recovery potential, which the market has not yet recognised. The Fund may also invest in other securities, collective investment schemes, money market instruments, cash, and derivatives for efficient management and investment purposes.
Over the past 1, 3, and 5 years, the Fidelity Special Situations fund has returned growth of 19.77%, 29.30%, and 38.86% respectively, which was well above the sector averages of 12.25%, 11.16%, and 25.39%.
Worst Performing Hargreaves Lansdown Wealth 50 Funds
As identified in the performance summary table, some 57.4% of the funds featured in the Hargreaves Lansdown Wealth 50 list have consistently underperformed their sector peers over the periods analysed.
The below funds represent some 5 of the worst performing funds in the list with their recent 1, 3 & 5 year performance resulting in the funds consistently ranking in the bottom quartile of their sector.
JPM Emerging Markets
The JPM Emerging Markets fund, classified within the IA Global Emerging Markets sector, has demonstrated poor performance in recent years. This fund has ranked as one of the worst-performing funds in its sector, based on its returns over various time periods.
Over the past year, the fund managed disappointing growth of 1.57%, significantly underperforming the sector average of 6.07%. The three-year performance paints an even bleaker picture, with the fund showing a substantial decline of -19.16%, in contrast to the sector's average loss of -5.19%. The five-year performance, while positive at 1.35%, still falls far short of the sector's average return of 11.53% over the same period.
These figures highlight a consistent pattern of underperformance relative to the fund's peers in the Global Emerging Markets sector. Such persistent underperformance raises questions about the fund's strategy, management, and ability to navigate the complex and often volatile emerging markets landscape.
Trojan Global Income
The Trojan Global Income Fund seeks to generate income and potential capital growth over a 3 to 5 year period. It primarily invests in global equities and related securities, with at least 80% of its assets allocated to these. The fund can also invest in government and corporate bonds, REITs, private equity, cash, and money-market instruments.
Launched in 2016, the fund has struggled to match its peers in the IA Global Equity Income sector. In the last 12 months, it returned 3.62%, ranking second to last among 54 funds in its category. Over 3 and 5 years, the fund grew by 10.32% and 23.77% respectively, falling short of sector averages of 23.48% and 44.1%.
The fund's performance has been impacted by its shift towards a growth-oriented approach, challenges in dividend growth recovery, and suboptimal stock selection. These factors have resulted in returns below expectations. Morningstar recently adjusted the fund's rating from "positive" to "neutral" due to concerns about recent investment decisions, position sizing, and overall strategy implementation.
Baillie Gifford Managed
The Baillie Gifford Managed Fund, one of the largest in the UK with £5.47 billion under management, has faced significant challenges in recent years, leading to underperformance within the IA Mixed Investment 40-85% Shares sector. Over the past three years, the fund has returned a loss of -16.46%, placing it last among 213 funds in its sector. Over a five-year period, the fund achieved growth of 21.38%, which fell short of the sector average of 24.37%.
The fund's difficulties were particularly pronounced in 2022, marking its worst performance year in over three decades. A key factor in this underperformance has been the fund's substantial exposure to growth stocks, which were adversely affected by rising interest rates and inflation. Its high equity weighting, especially in the technology and consumer discretionary sectors, has led to increased volatility and significant losses.
While the Baillie Gifford Managed Fund has historically been a significant player in the market, its recent struggles have highlighted the risks associated with its investment strategy, particularly in an environment of economic uncertainty. As a result, the fund's appeal has diminished for investors seeking more stable returns, reflected in its current 1-star rating.
Ninety One UK Sustainable Equity
The Ninety One UK Sustainable Equity Fund aims to provide capital growth and income over a minimum of five years by primarily investing in the shares of UK companies. These companies are selected based on their positive contributions to society and the environment, aligning with the fund's strong focus on sustainability.
This £114 million, Ninety One UK Sustainable Equity fund has managed to return only 6.89% growth over the past year and is ranked among the worst in the UK All Companies sector. Its performance over the past 3 & 5 years has been more disappointing, with growth returns of -5.95% and 21.91%, respectively, compared to the sector averages of 11.16% and 25.39%.
Despite its strong ESG principles, the fund has underperformed due to its strict investment criteria and sector concentration, leading to weaker returns compared to more diversified funds. This focus has made the fund more vulnerable to market fluctuations, particularly in challenging conditions, making it less appealing for investors seeking both financial growth and sustainability.
WS Amati UK Listed Smaller Companies
The WS Amati UK Listed Smaller Companies fund, classified within the IA UK Smaller Companies sector, has faced significant challenges in recent years. Its performance has consistently lagged behind sector averages, positioning it as one of the worst-performing funds in its category.
Over the past year, the fund managed to deliver a modest growth of 8.76%, falling short of the sector's average return of 16.01%. However, the longer-term picture is even more concerning. In the three-year period, the fund experienced a substantial decline of 26.38%, considerably underperforming the sector average loss of 13.60%. The five-year performance, while positive at 6.83%, still pales in comparison to the sector's robust 25.01% return.
These figures highlight a persistent underperformance issue for the WS Amati UK Listed Smaller Companies fund. Investors and analysts may question the fund's strategy, stock selection process, and ability to navigate market conditions effectively.
Summary
The Hargreaves Lansdown Wealth 50 list is marketed as a carefully curated selection of top funds, but questions need to be asked about the quality of some of the funds it promotes.
Relying heavily on such a list can be a risky move for investors, potentially leading them to select funds that are misaligned with their investment objectives. The Wealth 50 list is not a definitive endorsement but rather a subjective opinion, and it falls short of providing the comprehensive information necessary to make truly informed investment decisions. With thousands of funds available in the UK, reducing choices to a narrow list is more likely to mislead than to guide.
Investors face a stark choice: opt for funds that have consistently delivered strong performance or settle for underperformers within their sector. While the mantra "past performance is not an indicator of future success" is often repeated, we believe that past performance is a crucial metric. It reveals fund manager expertise and their ability to outperform peers. In the investment world, just as in any other industry, past performance matters.
Understanding Fund Performance
We define a top performing fund as one that consistently performs better than 75% of same sector funds (i.e. top 25%), yet the reality is that many portfolios on the market include funds that perform significantly below this percentage, with funds often ranking in the bottom 25%.
With more than 100 different fund management brands in the UK offering access to thousands of funds it can be a challenging task to find the best options. To add further complexity, new funds enter the marketplace each month adding to the thousands of funds that are already available.
Consistency is an important indicator of quality and success, and it is integral to our portfolio management philosophy. We believe consistency displayed by investment funds that maintain a high sector ranking over continuous periods reflects efficiency and expertise from the fund manager through their ability to deliver competitive returns for their clients over both the short and long term.
In the short-term with changing political and economic markets it is unrealistic for even the best fund managers to continuously maintain a level of performance from their funds that exceeds that of the majority of their peers. But analysing performance over a 1, 3 & 5 year period will take into account differing investment cycles and will help to identify the funds and fund managers that specialise and excel in a particular market.
The funds that consistently rank highly in their sectors can reflect a level of expertise from the manager within that investment sector. Whereas, the fund managers whose funds continually rank lowly within their sector have demonstrated a lack of quality and an inability to deliver competitive returns for investors.
Evaluate Your Fund Performance
Evaluating fund performance is a crucial metric for investors and reputable advisory firms. Understanding how your funds are performing will help to identify if you are entrusting your money to fund managers who are delivering competitive returns. While past performance does not guarantee future results, research shows that fund managers who have consistently outperformed their peers across various time horizons are more likely to do so going forward than those with a history of underperformance.
There are 3 key benefits of understanding fund performance
Past Performance
Past performance is not an indicator of future returns, but when asked, investors would prefer to invest with fund managers that consistently perform, over varying time frames, in the top 25% of performers in their sectors versus fund managers that perform in the worst 25% of performers.
Comparative Performance
Each fund’s performance can be compared alongside all other competing funds that are classified within the same sectors. How each fund compares over the medium to long term can identify the quality of the fund and the competence of the fund manager.
Fund manager accountability
Past performance exposes the effectiveness of funds and their fund managers. The funds that consistently rank highly in their sectors can reflect a level of expertise from the manager within that investment sector. Whereas, the fund managers whose funds continually rank low within their sector demonstrate a lack of quality and an inability to deliver competitive returns for investors.
Optimise Your Investments With Yodelar
Investing, like many aspects of life, isn't always straightforward and for some it can be more uncomfortable and stressful than others. As an investor, you will always be exposed to factors that can cause values to rise and fall. Investing can result in emotional decision making, but the investors who reach their objectives efficiently are typically those who have a disciplined and pragmatic approach to investing, and follow a structured, long term strategy. When this is followed better outcomes can be achieved.
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