Hargreaves Lansdown unveiled its new Wealth Shortlist this week, replacing the short-lived Wealth 50 which it launched back in January 2019. Since then it has faced much criticism, especially during the well-publicised Woodford issues.

The nuts and bolts

With the new list going live on Tuesday, we took a look under the bonnet:

  • The new list comprises 68 funds of which all 51 funds from the Wealth 50 remain.
  • Investment options have widened – there are more passive and ESG options.
  • The median OCF is still 0.58% – the lowest of any direct platform select list.

Let’s talk about discounts

HL has made much fanfare about discounts on select list funds in recent years. Not so much this time around because discounts are now completely detached from selection.

38 out of the 68 funds offer a discount through a rebate which Hargreaves Lansdown brands as their ‘loyalty bonus’. Cheaper share classes are also offered on most of the funds. Discounts range as high as 0.55% with a mean of 0.22%.

So what’s new?

A great deal of the marketing focus is on the methodology and governance. This is a general trend we have seen across all platform select lists since last summer.

We know that select lists are incredibly useful to many self-directed investors and play a large role in the shape of fund flows onto direct platforms. It’s a winning formula that the vast majority of Hargreaves Lansdown’s competitors have copied.

That’s why it was reluctant to change too much in the face of real difficulties that surfaced last year and perceived conflicts that have existed for a while around discounts and the use of select list funds in multi-manager solutions.

The re-launch is a typically sure-footed reaction by Hargreaves Lansdown that attempts to address criticisms without moving dramatically away from that winning formula. There is more transparency and more oversight – including some external perspective from non-execs.

The market leader has done just enough to assuage its critics but its history as a facilitator – a discount broker – are long gone and its brand health will now be tied to its success as a wealth manager and selector of investments.

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