Lindsell Train defends approach to risk management after Hargreaves criticism
Lindsell Train defends risk management approach after Hargreaves Lansdown says its managers aren’t challenged enough
- Hargreaves Lansdown has focused on Lindsell Train’s risk strategy
- Lindsell Train has defended its “disciplined” investment approach
Lindsell Train has defended its approach to risk management after Hargreaves Lansdown criticized the company’s level of oversight.
In a message to investors last week, the investment platform said its ongoing analysis had revealed some concerns it had raised with Lindsell Train.
A Lindsell Train spokesperson told This Is Money that the company had a “clearly defined and disciplined investment approach…[ing] in what we believe to be high-value companies’.
Hargreaves Lansdown has focused on Lindsell Train’s approach to risk management in a note to investors
One of these companies is Hargreaves Lansdown itself. Lindsell Train is the investment platform’s second-largest shareholder, with a stake of approximately 12 percent.
The main concerns were that Lindsell Train, which was founded and continues to be led by Michael Lindsell and Nick Train, does not have an adequate risk management framework in place and that managers are not challenged enough.
Emma Wall, head of investment analysis and research at Hargreaves Lansdown, said: ‘After a period of involvement with the Lindsell Train team, we feel that the pace of progress is not satisfactory.
“At this point, we don’t feel the current investment risk framework is robust enough, nor that Lindsell Train has the right capabilities to provide strong independent oversight and challenge the investment team.”
The investment platform emphasized that its analysis “was not a judgment on the investment capabilities of the fund managers… [who] are patient, long-term investors and have established a repeatable investment process in the funds they manage, chasing high-quality companies.”
Wall acknowledged that the approach of Train, Lindsell and portfolio manager James Bullock “has served investors very well over the long term.”
The Lindsell Train Global Equity fund has far outperformed the IA Global sector over the past five years. Between April 2022 and April 2023, the fund grew by 8.75 percent, while the IA Global sector lagged behind by 0.56 percent.
Similarly, the Lindsell Train UK Equity fund reported a return of 9.71%, beating both the FTSE All Share, which returned 6.04%, and the IA UK All Companies with 1.62%.
Lindsell Train’s spokesperson said the company’s “primary goal is to prevent investors from losing permanent capital value” and that this is best mitigated by investing in high-quality companies.
The company noted that its global, UK, Japanese and North American equity funds only invest in publicly traded companies and have no exposure to unlisted securities.