Hugh Hendry, chief investment officer of Eclectica Asset Management, has slammed the recent decision by Hargreaves Lansdown to remove the £109m Eclectica Agriculture fund from its Wealth 150.
Hendry insists that the Eclectica Asset group’s performance has been strong.
He says: “I find it hard to accept criticism for an agriculture fund because it does not invest in food retailers like Sainsbury’s and Tesco. If you look at our performance recently it has actually been strong. We have seen strong success on the back of BHP Billiton’s battle to take over Potash.”
Earlier this month, Hargreaves Lansdown removed the fund, which is managed by George Lee, saying it has struggled as it does not focus on the upstream end of the agriculture market. (article continues below)
Eclectica agriculture is up by 22.25% in the past 12 months to October 14, according to Lipper. It has risen by 1.66% in the past three years. Meera Patel, senior analyst at Hargreaves Lansdown, says that although the fund has improved its performance in the past couple of months, its make-up means it will be volatile.
She says: “We are only putting the fund from a buy to a hold and people should understand the volatility behind it. I do not see a problem with not going into food retailers like Tesco and Sainsbury’s; the problem is they have this massive conviction on the input end of the agriculture sector, and subsequently commodity prices, and with that investors will have to understand and ride the volatility.
“It’s not a fund for an 80-year-old pensioner. We just feel it has been more volatile than normal and would like to see the last six to eight weeks of performance continue. Our average client is nearing retirement and needs to understand their investment.”