March Sees Tax Windfall for Hargreaves Investors

NEWS YOU CAN USE: M&G to be split from Prudential, Hargreaves Lansdown investors in line for tax rebate

Emma Simon 3 April, 2018 | 7:28AM
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March brought good news for Hargreaves Lansdown investors, who are in line to receive a tax rebate after the discount broker challenged an HMRC ruling. This could potentially trigger tax rebates for customers of other discount brokers too.

As the end of the tax year approaches, March has seen a flurry of fund launches, fund mergers and fund closures. Given Trump’s tax giveaway it is perhaps not surprising that a number of these have focused on the US market, and the smaller companies sector in particular.

Tax Windfall for Hargreaves Lansdown Investors

Tax deadline approaches ISA season stock picking

Hargreaves Lansdown has won an appeal against HM Revenue & Customs, which should trigger a tax rebate worth £15 million to 150,000 of its customers.

Like most discount brokers, Hargreaves Lansdown refunds part of the fund management charges, and repays these to investors as a ‘loyalty bonus’. However, since 2013 HMRC has demanded that these payments are subject to income tax, and must be paid net of basic rate tax on funds held outside ISAs or SIPPs.

Hargreaves Lansdown has challenged this ruling and was successful in the first tier of this tax tribunal.  Refunds won’t be paid immediately, as the company is waiting to see if HMRC will appeal this decision.

If this decision is not overturned on appeal, then Hargreaves Lansdown says it will return £15 million to investors.

Hargreaves Lansdown’s chief executive Chris Hill says this ruling was “a victory for ordinary investors.”

He says these discounts helped reduce the cost of investing for many investors. If this tax tribunal ruling stands, this will also benefit the customers of other discount broking firms, he added.

M&G to Merge Global Funds

M&G are demerging from Prudential, as part of the global insurance giant’s restructuring. While it is de-merging at a corporate level, on a more local level, M&G Investments also announced plans to merge its Global Leaders fund into the larger Global Themes fund, which has £2.1 billion of assets under management.

This move – which has to be approved by shareholders – follows the news that the Global Leaders fund manager, Aled Smith, will step down from the role in April.

Last year, the Global Themes fund, run by Jamie Horvat, broadened its investment remit. M&G says the two vehicles now share a number of similar characteristics. M&G has written to shareholders and if passed the merger is will place on May 25.

JP Morgan to Merge US Funds

JP Morgan Asset Management is merging its £457 million US fund into the smaller JPM US Select fund, which it says has better prospects for growth.

The fund management groups says there are overlapping investment strategies between these funds so is seeking approval from shareholders for the merger. If this is given the two funds will merge at the end of April.

The £200 million US Select Fund is managed by Susan Bao, Scott Davis and David Small. Investors in the A-, B- or C-class shares of the US fund will also benefit from lower fund charges if the merger goes ahead.

Miton Launches US Smaller Companies Fund

There was further activity in the US equity space, with Miton launching a new US smaller companies fund, run by Nick Ford and Hugh Grieves.

Ford previously ran a US smaller companies fund when he was at Scottish Widows Investment Partnership.

Meanwhile the pair currently run Miton’s US Opportunities fund, which has comfortably outperformed its benchmark over the past three years. This fund has a four-star performance rating from Morningstar.

Launching the fund Grieves said that the tax reforms passed by the Trump administration at the end of 2017, should act as a stimulus for companies and boost confidence. He adds that small caps in particular could benefit from these changes, which included cuts to corporation tax.

The fund will invest in a portfolio of between 70 and 100 companies with a market cap between $100 million and $6 billion. Managing director of Chelsea Financial Services Darius McDermott says that both Ford and Grieves have good track records. He adds: “We like Miton’s multi-cap US fund, and think this one has the potential to do well too.”

Franklin Templeton Closes Korean Fund

The recent Winter Olympics may have thrown a global spotlight on South Korea but it hasn’t helped rekindle interest in Franklin Templeton’s Korean fund.

The investment house announced this month that it is closing this fund, which was previously run by Mark Mobius. The fund has just $32 million assets under management, which Franklin Templeton says means it is no longer viable as an investment option.

Emerging markets veteran Mobius retired from Franklin Templeton earlier this year, but has since announced that he is setting up a new investment company with a focus on environmental social and governance (ESG) issues. Mobius says this new venture aims to drive up these standards in emerging and frontier markets.

Pictet Launches Global Fixed Income Fund

Pictet Asset Management has launched a higher-risk global fixed income fund, in an attempt to tap into increased volatility in these markets.

This unconstrained fund will invest in both developed and emerging market debt as well as holding rates, spreads and foreign exchange in its portfolio.

Pictet said this Luxembourg-domiciled fund will be aimed at investors “who are willing to accept a higher level of risk in order to achieve higher returns”.

The fund will be managed by Sanchez Balcazar and will target a return of 6% to 8% more than cash a year. The fund has an ongoing charge of 0.81%.

The information contained within is for educational and informational purposes ONLY. It is not intended nor should it be considered an invitation or inducement to buy or sell a security or securities noted within nor should it be viewed as a communication intended to persuade or incite you to buy or sell security or securities noted within. Any commentary provided is the opinion of the author and should not be considered a personalised recommendation. The information contained within should not be a person's sole basis for making an investment decision. Please contact your financial professional before making an investment decision.

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Securities Mentioned in Article

Security NamePriceChange (%)Morningstar
JPM US Select C Net Acc10.23 GBP-1.33Rating
M&G Global Themes GBP I Acc2,828.96 GBP0.55Rating
Premier Miton US Smaller Companies B Acc164.67 GBP3.31Rating

About Author

Emma Simon

Emma Simon  is a financial journalist, specialising in investment and consumer issues, writing for

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