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HL Multi-Manager Funds – an investments update

Emma Wall shares what’s affected the funds in recent months, as well as some of the latest investment changes.

Important notes

This article isn’t personal advice. If you’re not sure whether an investment is right for you please seek advice. If you choose to invest the value of your investment will rise and fall, so you could get back less than you put in.

What has happened in markets?

For investors in the UK, politics once again dominated the headlines in the three months to 31 January 2020. Boris Johnson's gamble to call a General Election paid off, paving the way for the UK to leave the European Union and reducing the chance of a no-deal Brexit.

Small and medium-sized UK companies, whose prospects tend to be more sensitive to the health of the UK economy, delivered strong performance as some of the Brexit uncertainty lifted.

Particularly in the days and weeks immediately after the Election, those sectors which had previously been under threat from Labour’s plans to re-nationalise – such as utilities stocks – saw an uplift in share prices. Larger companies also made money but didn’t do quite as well as their higher-risk smaller peers, because a stronger sterling reduced the value of the money they make overseas.

Bond markets were more mixed. UK government and corporate bonds were some of the best performers. Higher-risk parts of the market, including emerging market and high yield bonds, also did well. Global bonds lost money on the whole because of a stronger sterling.

Asian and emerging stock markets made money in the three months to 31 January 2020. Like most other global markets, Asian stocks were boosted by progress in US-China trade talks, as US President Donald Trump and Chinese President XI Jinping signed a 'phase one' trade deal in January. The US agreed to axe certain tariffs on Chinese goods and China agreed to step up purchases of US goods and introduce measures to protect US intellectual property.

In more recent weeks however, Asian stock markets have seen increased volatility as investors try to predict the impact of the coronavirus on companies and the broader economy.

Over in the US, President Trump faced impeachment proceedings after he allegedly asked his Ukrainian counterpart to investigate a political rival, over which he was later cleared.

This update is not personal advice. If you’re not sure, please seek advice. All investments 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.

Changes to HL Multi-Manager portfolios

HL Multi-Manager UK Growth Fund:

The fund managers recently sold investments in Merian UK Dynamic Equity and Marlborough Special Situations. Both funds have performed well over a long period of time, helped by their focus on smaller companies. But the managers now feel the funds, and smaller companies in general, have less potential for growth from current levels. They also reduced exposure to Marlborough UK Micro-Cap Growth and Marlborough Multi Cap Income.

The proceeds were added to a number of investments across the portfolio including LF Majedie UK Equity, Threadneedle UK Equity Alpha Income and AXA WF Framlington UK.

HL Multi-Manager Balanced Managed Fund:

The fund managers recently sold an investment in M&G Recovery after losing conviction in the manager's ability to outperform the broader UK stock market in the long run. The proceeds were used to appoint Ben Whitmore from Jupiter to manage a portion of the portfolio.

HL Multi-Manager European and HL Multi-Manager Special Situations funds:

An investment in TM Sanditon European was sold following news that Sanditon Asset Management was to close and manager Chris Rice would retire. The fund was transferred to Richard Pease at CRUX Asset Management, a manager the team hold in high regard but who they already invest with through his TM CRUX European Special Situations Fund.

HL Multi-Manager Equity & Bond Fund:

An investment in Merian UK Dynamic Equity was sold. It's performed well over a long period of time but the managers feel the fund has less potential for growth from current levels. A number of funds across the portfolio were added to including J O Hambro UK Equity Income.

HL Multi-Manager High Income Fund:

A new investment into the M&G Emerging Markets Bond Fund. It's managed by Claudia Calich, with the support of the well-resourced M&G fixed-interest team. Calich and her team have plenty of flexibility to invest wherever they see the best opportunities, and they've made good use of it in the past. To free up cash for the new purchase, investments in Artemis High Income and Artemis Global Equity Income were reduced.

LF Equity Income wind-up payment

Six of the 10 Multi-Manager portfolios have exposure to LF Equity Income, the former Woodford Equity Income fund. Following the initial wind-up payment on 30 January, the portfolio managers have reinvested this cash.

Following the payment the funds’ exposure to LF Equity Income are:

  • HL Multi-Manager Balanced Managed Trust – 0.93%
  • HL Multi-Manager Special Situations Trust – 1.02%
  • HL Multi-Manager Income & Growth Trust – 2.79%
  • HL Multi-Manager Equity & Bond Trust – 1.53%
  • HL Multi-Manager UK Growth Fund – 1.49%
  • HL Multi-Manager Strategic Assets Fund – 0.57%.

The following four portfolios have no investment in the LF Equity Income Fund: HL Multi-Manager European, HL Multi-Manager Asia & Emerging Markets, HL Multi-Manager Strategic Bond Trust and HL Multi-Manager High Income.

Proceeds have been reinvested with a number of funds, dependent on the Multi-Manager funds’ objectives:

HL Multi-Manager Equity & Bond Fund:

The cash is being reinvested into a new portfolio to be run by Troy’s Francis Brooke. This portfolio is one of the segregated mandates – portfolios run by fund managers especially for HL funds.

HL Multi-Manager Balanced Managed Trust:

In this fund the cash has been reinvested into the AXA WF Framlington UK Fund, and a segregated mandate run by Ben Whitmore.

HL Multi-Manager Special Situations Trust:

The cash has been reinvested into a segregated mandate run by Artemis’ Adrian Frost.

HL Multi-Manager Strategic Assets Fund:

The portfolio managers have topped up their existing investment in JO Hambro Equity Income.

HL Multi-Manager UK Growth Fund:

The cash was used to top up several existing positions including Threadneedle UK Equity Alpha Income, Lindsell Train UK Equity, Jupiter UK Special Situations and JO Hambro Equity Income.

HL Multi-Manager Income & Growth Trust:

The portfolio managers are investing in the new segregated mandate run by Troy’s Francis Brooke.

HL Multi-Manager funds are managed by our sister company, HL Fund Managers Ltd. The Lindsell Train UK Equity Fund holds shares in Hargreaves Lansdown plc.

Important notes

This article isn’t personal advice. If you’re not sure whether an investment is right for you please seek advice. If you choose to invest the value of your investment will rise and fall, so you could get back less than you put in.

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