HL MULTI-MANAGER FUNDS

UK Coming Back Stronger: An HL fund manager’s view

Susannah Streeter Senior Investment & Markets Analyst sits across from Lee Gardhouse, Chief Investment Officer in a brightly lit room with a coffee table.

Susannah looks to camera to introduce and ask her opening question:

"I’m Susannah Streeter and I’m here with Lee Gardhouse to talk about the HL Multi-Manager funds. So Lee, tell me first of all, what is a Multi-Manager fund."

Lee Gardhouse:

"OK, so it’s basically the best ideas or the best fund managers we can find from across the planet, and we pull them all together, invest into their funds, invest into their skills and that produces an overall portfolio that fits a particular client need. Whether that be mixed assets where you’ve got equities for your higher risk – higher return, or fixed interest to control the risk. Or in one specific area, so for instance, if you wanted to get exposure to Asian emerging markets, we would find all the best managers in that area and bring them together in that one fund."

Susannah Streeter:

"Is that because it’s called the ‘fund of funds’ in a way these Multi-Manager funds, because you’re bringing together lots of different fund manager expertise?"

Lee Gardhouse:

"Yeah, absolutely. So, our view is there is no one great fund management company out there. Some fund groups are extremely good in one area, for example they might be good stock pickers in Japan, but might be rubbish at picking fixed interest assets, for instance. Whereas another manager might be very good in the American markets. So, it’s that belief that there’s no one great fund management group that covers all the bases well, and therefore we get to pick the cream of the crop."

Susannah Streeter:

"Tell me how many funds there are and what kind of sectors, and what should you be looking for when you’re choosing one."

Lee Gardhouse:

"OK, so a bit like picking an individual fund, you’ve got to work out what you’re looking for in the first place. So, if for instance you’re looking for equity exposure, a lot of our funds are just pure equity. We’ve got a range of 10 ‘fund of funds’ in total, but we have funds covering the global sector, so that’s the entire international market, as well as specialist equity funds, such as in the UK equity income market, which provides you with long term capital growth potential but also an upfront income as well. On the other side, we’ve got lower risk funds which mix the assets of equity and fixed interest but have more in the lower risk area. And one fund that just invests in bonds, to give you that long-term income stream, but also that protection when equity markets seem to be more volatile."

Susannah Streeter:

"How do you keep a check on these funds to make sure they’re performing as well as they could do?"

Lee Gardhouse:

"We meet well over 100-200 fund managers a year, so we’re keeping close tabs on the managers we’ve got, but also we’re always on the look out for new investment talent we think we can invest with for the next decade or so that will hopefully give those good long-term returns. So, it’s a constant process of meeting, re-meeting, challenging, and then making decisions if we think it’s time for a change."

Susannah Streeter:

"That’s how you pick the fund managers for the Multi-Manager funds, but what about the kind of on-going relationship – how many people are involved at HL in that?"

Lee Gardhouse:

"We’ve got quite a substantial research team, that covers the fund research so that covers both the platform-side of the business, our Wealth Shortlist so clients can read our views on those funds, as well as the Multi-Manager team that specifically run these funds. So a substantial team which allows us to meet hundreds of fund managers a year and do the detailed research of understanding exactly how they’re investing, what returns they’ve achieved, whether those are acceptable, and then at times having to make the decision to make a change."

Susannah Streeter:

"Now these funds, they are a little bit more expensive than other funds on the platform, why is that?"

Lee Gardhouse:

" Firstly, we would say that we’re taking an active approach, so we’re generally investing with active fund managers here. We can use passive strategies if we think that’s the right place to be but generally, we’re looking for mangers who can beat their index over time. So that in itself is a more expensive way of investing than the passive approach. We are then providing an additional service above and beyond a client making their own investment decision or piking their own fund manager. So, we’re re-balancing the portfolio, we’re doing all the research to identify the next investment opportunity, we’re selling when it’s time to do that as well. So, we’re carrying out the work in-effect so the client doesn’t have to do that."

This video is not personal advice or a recommendation to invest. If you are unsure about the suitability of an investment for your circumstances, please seek advice. Investments can fall as well as rise in value so you could get back less than you invest. Past performance is not a guide to the future. The HL Multi-Manager funds are managed by our sister company Hargreaves Lansdown Fund Managers.

Correct as at May 2021