Hargreaves Lansdown to Oeic £68m of unit trusts
Hargreaves Lansdown is to convert four of its five unit trusts into an Oeic with effect from 30 May....
Hargreaves Lansdown is to convert four of its five unit trusts into an Oeic with effect from 30 May.
The IFA firm, better known for its direct marketing operations than its fund management activities, is to convert the £10m HL Warrant Portfolio Fund, the £31m HL UK Performance Trust, the £20m HL Investment Trust Portfolio Trust, and the £7m HL Optimum Income and Growth Trust.
It is not Oeicing its externally run HL Utilities Fund for the time being, but investment manager Ben Yearsley said this was likely to follow. He said the funds will cease trading as unit trusts on 25 May, however, they will not trade as Oeics until 30 May due to the bank holiday.
The conversion will bring its range of Oeics to six with the HL Active Managed Fund, launched in January last year, and the HL Balanced Growth Fund, converted from an offshore unit trust.
Only A class shares will be issued on the funds as no B class investors hold assets in the funds, however the option is available for large scale or institutional investors.
There will be an initial charge of 3% on all four funds, which are available as Isas, and an annual management fee of 1% on class A shares in the HL Optimum Income and Growth Fund and 1.5% on the other three. All the transfer schemes are available for Peps, except the HL Warrant Portfolio Fund.
If issued, B shares will carry an initial charge of 2% and an annual management fee of 0.75%. IFA commission is 3% on the funds, which are distributed mainly by direct marketing. There will be no annual renewal. Unit holders have been contacted and no objections have been made.
Yearsley said the move was part of an industry wide shift away from unit trusts to Oeics to provide more transparent charging through single pricing, and the option of selling them into Europe, although he added Hargreaves Lansdown had no immediate intention to expand overseas.
He said: "Unit trusts are antiquated. They have been around for years and charging is not as transparent. I would not be surprised if only 5% of funds in 10 years time were unit trusts."
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