The best buy list of HSBC UK has raised eyebrows for predominantly featuring the firm’s own multi-asset funds and having multiple products in the same risk category.
The firm’s funds shortlist is aimed at “novice self-directed investors” and spotlights 20 multi-asset funds out of the 279 available via HSBC’s Global Investment Centre.
HSBC UK head of wealth management James Hewitson said the group was responding to “a clear demand from investors for simple and informative journeys allowing them to open accounts and invest quickly and efficiently”, especially the 46% of investors who are going it alone without the help of a financial adviser.
“For those that don’t want to spend hours researching the market, we’ve done the work for them,” Hewitson said.
“Whether you’re investing for income or for growth, our funds shortlist provides another route to investing in approved HSBC and non-HSBC funds and portfolios.”
Total charges on the 20 funds range from 0.42% for the HSBC Global Strategy Cautious Portfolio to 1.55% for the Invesco Perpetual Managed Growth fund, the most expensive vehicle on the list.
HSBC funds dominate list
CWC Research managing director Clive Waller was sceptical that most of the recommended picks were HSBC’s own fund of funds.
Fourteen of the short-listed funds are HSBC’s own strategies, save for one each from Schroders, Fidelity and Invesco, as well as a trio of funds from Threadneedle.
“I would love to have been a fly on the wall when the researchers were briefed,” Waller said.
‘Pointless’ to offer 20 funds
GBI2 managing director Graham Bentley thinks that having several funds from the same risk category is likely to confound the end-investor.
There are four balanced funds on HSBC’s best buy list.
HSBC World Selection is a fund of HSBC funds, while the Global Strategy is a fund of HSBC index funds mixed with some iShares funds, and the Sustainable Multi-Asset funds are a mixture of sustainable funds from HSBC’s UK and Luxembourg ranges.
Meanwhile, the Schroder Manager Balanced fund is also a fettered fund of fund, as are the Invesco, Threadneedle and Fidelity products on the list.
“How would your average punter differentiate between four balanced funds?” Bentley asks. “What depths of research would a direct investor have to go through to tell whether they wanted to be Global Strategy, World Selection, or whatever?”
Bentley added that it seemed “pointless” to be offering 20 funds given the degree of overlap.
“It’s almost like saying, well, we don’t want to make the list look too small, so it looks as if you’re constrained. So, if we put 20 funds on here, it makes it look like you’ve got choice.”
Single-asset offering
A spokesperson for HSBC defended the firm’s “good track record of delivering appropriate and well-priced multi-asset solutions”.
“Whilst we recognise that an advised offering is different to a non-advised offering, these multi-asset funds are considered appropriate for direct-to-consumer for the same reasons that they are appropriate for our advised customers; they remove the need for clients to select multiple single-asset solutions in order to build a portfolio, and instead offer a ‘ready-made’ diversified solution,” they said.
HSBC will consider introducing a single-asset offering at some point in the future, to extend the list of third-party offerings, and allow customers to build their own portfolios, the spokesperson added.
HSBC Fund Shortlist with total charges
| HSBC Global Strategy Adventurous Portfolio | 0.46% |
| HSBC Global Strategy Balanced Portfolio | 0.46% |
| HSBC Global Strategy Cautious Portfolio | 0.42% |
| HSBC Global Strategy Conservative Portfolio | 0.44% |
| HSBC Global Strategy Dynamic Portfolio | 0.44% |
| Fidelity Multi Asset Income | 1.19% |
| HSBC Global Sustainable Multi Asset Balanced Portfolio | 1.27% |
| HSBC Global Sustainable Multi Asset Conservative Portfolio | 1.07% |
| HSBC World Selection Adventurous Portfolio | 1.22% |
| HSBC World Selection Balanced Portfolio | 1.00% |
| HSBC World Selection Cautious Portfolio | 1.23% |
| HSBC World Selection Conservative Portfolio | 1.30% |
| HSBC World Selection Dividend Distribution Portfolio | 1.35% |
| HSBC World Selection Dynamic Portfolio | 1.17% |
| HSBC World Selection Interest Inc Portfolio | 1.28% |
| Invesco Perpetual Managed Growth | 1.55% |
| Schroder Managed Balanced | 0.97% |
| Threadneedle Managed Bond Focused | 1.04% |
| Threadneedle Managed Bond | 1.13% |
| Threadneedle Managed Equity & Bond | 1.23% |
Source: HSBC UK
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