JEFF PRESTRIDGE: Hargreaves is at it again with ‘Son of Woodford’ as it sends out positive note about Invesco funds
You can’t teach an old dog new tricks, so the saying goes. So it will come as no surprise to many readers to learn that Hargreaves Lansdown is up to its same old tricks again – and promoting investment funds that other experts currently will not touch with asbestos gloves.
Despite facing the possibility of legal action (and regulatory reprimand) over its relentless promotion of failed investment fund Woodford Equity Income – right up to the day the fund was suspended in June – it has now decided to send out a positive note about Invesco Income and Invesco High Income.
This follows a meeting with Mark Barnett, the somewhat beleaguered manager of the two funds – and commonly known as ‘Son of Woodford’ for being Neil Woodford’s protege when the latter was delivering for Invesco the stellar performance he failed to achieve at Woodford Investment Management.
‘Son of Woodford’: Mark Barnett, the manager of Invesco Income and Invesco High Income
Although the note makes it clear the two funds are currently not included in its premier list of top investment funds – the Wealth 50 – you don’t need to be an investment Einstein to realise Hargreaves Lansdown is positive about the outlook for them.
‘Mark Barnett’s an experienced income investor,’ it says (can’t argue with that).
‘He thinks the outlook for the UK economy is better than many believe and that companies earning most of their money in the UK have been overlooked by other investors.’ (Fair point).
‘He’s therefore focused the funds towards these companies. But many of them remain severely out of favour. If sentiment changes, performance could improve, although there are no guarantees.’ (Absolutely).
It then goes on to say: ‘The funds aren’t currently on the Wealth 50 as the list is focused on other excellent income funds.’ The key words here are ‘other’ and ‘excellent’ – Hargreaves is saying/implying that Invesco Income and Invesco High Income are excellent funds.
What the note – written on November 18 – singularly fails to mention is that earlier in the same month, fund ratings agency Morningstar had downgraded the two funds. This was a result of concerns over the funds’ continued exposure to smaller and illiquid companies (echoes of Woodford Equity Income) and ‘stock selection issues’ (code for poor investment choices).
There is also not one word about the apology Barnett made in the wake of Morningstar’s decision to downgrade – when he acknowledged some stock failures ‘had caused concern’.
Hargreaves Lansdown insisted that it did not say the Invesco funds were excellent
On Friday, Hargreaves Lansdown refused to confirm how many clients had received its update note on Invesco, stating it was ‘client sensitive information’ (what baloney). It also insisted that it did not say the Invesco funds were excellent – just that Barnett was experienced (I’ll leave you to be the judge on that).
But that’s not how the kind reader who forwarded me a copy of the note sees things. He asks: ‘Is this yet another glaring example of Hargreaves Lansdown misleading a lot of investors – just three weeks after Morningstar had downgraded Invesco High Income and Income?’ (Again, I’ll leave you to ponder that).
He concludes: ‘I am astonished Hargreaves Lansdown is making this kind of recommendation in a mail-drop to their clients, especially after the Woodford fiasco.’ I couldn’t agree more. But as I said at the beginning, you can’t teach an old dog new tricks.
By this time next week, we will know whether the country’s future is either in safe political hands or those belonging to a dogmatic Marxist.
If Marxist Corbyn wins – sadly, we can’t rule this nightmare out – expect a sharp stock market meltdown and a plunging pound. Take a deep breath and then start ensuring as much of your long-term finances as possible are protected from tax. Think pensions, think Individual Savings Accounts (Labour abhors wealth).
If Boris triumphs, expect the reverse – a joyous stock market and a revitalised pound (already strengthened as a result of expectation of a Boris win).
Indeed, Barnett’s downgraded funds may even enjoy the revival Hargreaves Lansdown talks about in its note.
Who will win the election battle for the future of our finances?
One of the biggest election issues is the battle over the economy and our personal finances – and there’s a sizeable difference between Labour’s tax and spending plans for Britain and those of the Tories.
So what do all the election promises and plans mean for you?
On this podcast we dig into the Labour, Conservative and Liberal Democrat manifestos to find out.