The removal of the SVM UK Opportunities fund from the Hargreaves Lansdown Wealth 150 has provoked a strong defence by the asset manager.
The fund was removed from the Wealth 150 list after the Bristol-based firm claimed that it had “struggled to outperform in recent years”.
Meera Patel, senior analyst at Hargreaves Lansdown, says fund manager Neil Veitch’s stock selection was the “main reason for the underperformance”.
She says: “Notably in 2011 the fund’s stock selection in some commodity stocks proved costly for overall performance.
“In particular, there were a couple of stocks in the oil exploration and production sector which were poor despite the rising oil price and this had a negative impact on the fund’s returns.”
Patel says Veitch’s ability to take short positions could have helped to reduce volatility in 2011, but instead had been more volatile than peers in the past three years.
Mark Noble, head of retail sales and marketing at SVM Asset Management, says: “SVM UK Opportunities is the third top performing fund in the highly competitive IMA UK All Companies sector over three years and we are mystified and disappointed by Hargreaves Lansdown’s decision to remove it from the Wealth 150.
“The fund delivered significant outperformance in both 2009 and 2010 and has had a strong start to 2012, delivering 12.6% year to date compared to 7.1% for the FTSE All-Share [as at February 29].
“Over three years the fund has delivered 179.0% compared to an average of 74.8% for the IMA UK All Companies Sector and 75.0% for the FTSE All-Share.”
Noble adds: “We believe that following a year where markets were driven by fear, 2012 has seen a return to investment decisions based on fundamental value.
“Our fund is well positioned for this backdrop and we are confident for the year ahead.”
Patel says the move was a “simply a precaution while we monitor it for signs of consistent improvement”, adding that existing investors should continue to hold the fund if it meets their objectives.
She adds: “While we are disappointed by the fund’s recent performance, Neil Veitch has previously demonstrated the ability to deliver good long-term returns through positive stock selection.”