Hargreaves Lansdown has removed three First State funds from its Wealth 150 list of favourite funds.
Meera Patel, senior analyst at Hargreaves Lansdown, says the funds have seen strong inflows during the past couple of years, thanks to the management team’s “excellent long-term track record”.
She says: “First State now believes these funds are at an optimum size and if they grew significantly bigger, future performance could potentially be compromised.
“We view this as a positive move for existing investors in these funds. Smaller funds will generally be more nimble, allowing the managers to react quickly to market developments and take advantage of opportunities when they arise.”
Patel adds: “It also allows these funds to continue investing in smaller companies, which have the potential for superior growth although they are higher risk.
“If these funds continue to see large inflows of capital, it could make them more difficult to manage.”
The analyst says investors do not need to take any action if the funds continue to meet their objectives and can continue regular monthly investing through its Vantage platform.
She says: “The long-term performance of First State’s Asia and emerging markets team has been strong, and we believe the restriction of inflows into these funds should help the managers outperform in future.”
The First State Asia Pacific Leaders and First State Global Emerging Market Leaders funds remain on the Wealth 150, as do the First State Global Listed Infrastructure and First State Global Resources funds.
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