Small is beautiful for Hargreaves

Lee Gardhouse, head of fund of funds at Hargreaves Lansdown, says that smaller teams can be more efficient than larger ones, and it taking steps to ensure consistent branding across the range.

Lee Gardhouse, head of funds at Hargreaves Lansdown, says that smaller teams can be more efficient than larger ones, and it taking steps to ensure consistent branding across the range.

The Hargreaves Lansdown Ultimate Managed fund, launched in 2001, was the first multi-manager fund offered by the group. Two weeks ago it relaunched as the HL Multi Manager Balanced Managed fund. Lee Gardhouse, head of the fund of funds team, says he has made no radical changes to the portfolio, despite the name change.

“We have moved the weightings around but the fund is the same. The only change is that I sold the Fidelity MoneyBuilder Income fund and bought Royal London,” he says.

Gardhouse says Hargreaves wanted to get the fund in line with the rest of the suite. “We wanted all of them to have ‘multi-manager’ in the title and be more clearly labelled as ‘cautious’, ‘balanced’ and ‘special situations’. It makes the whole product range a bit more obvious,” he says.

The Multi Manager Cautious Managed fund is the new addition to the range and will launch on June 5, 2006. “There will be a lot more fixed interest in the new fund but it will not be super low risk,” Gardhouse says.

The Multi Manager Balanced Managed fund is the core fund of the range and is positioned between the Cautious Managed and Special Situations portfolios. It is predominantly equity based and has about 20% in fixed interest.

The important thing for Gardhouse is to isolate the performance of good fund managers by looking for funds that perform well. “Whether bonds or equities or UK or overseas, we are looking for stockpicking ability,” he explains. “We want managers who pick the best bonds and the best companies. They have to prove they can add value and have the ability to get it right on a medium-term basis.”

Gardhouse maintains that good stockpicking ability is the key to performing well. “Everyone has a macro view in the back of their minds but we don’t feel that’s the right way to manage money,” he says.

With regard to a cap bias, Gardhouse leans more towards funds that invest in small-to-mid-cap-sized companies. “The best stockpickers tend to be invested away from the largest companies in the mid and small-cap area” he says.

As well as preferring small-cap investors, Gardhouse prefers small investment teams. “In bigger teams there is potential for inaction or confusion,” he says. “Smaller teams can make quicker decisions and there is usually one person pulling the trigger on stocks, rather than lots of junior staff.”

He adds: “We like managers who have long records, who have made mistakes already, but for other people, not for us.”