Woodford backlash

■ Hargreaves tumbles 15pc ■ Firm could lose £2.7m fees ■ Insists its own funds are safe

FURIOUS traders have wiped £1.5bn off the value of Hargreaves Lansdown amid a backlash over its cosy relationship with Neil Woodford.

Shares in the online fund supermarket fell for the fifth day in a row on Monday, as Hargreaves was forced to deny that ripples from Woodford’s calamity will cause problems for its own in-house funds.

And analysts warned it could lose almost £3m in missing fees alone form the meltdown. The value of Hargreaves has fallen by 15pc or £1.5bn since Woodford was forced to stop withdrawals from his flagship Equity Income fund on Monday last week.

There are questions over whether the fallout will hit Hargreaves’ own-brand Multi-Manager funds, where in-house experts choose a range of fund managers to invest savers’ money in.

Around £ 620m has been invested in Woodford Equity Income through these funds.

In an effort to allay investors’ concerns yesterday, Hargreaves emphasised the total invested in Woodford Equity Income ‘is just 6.2pc of the total value of our Multi-Manager funds’.

In a blog post, Hargreaves’ chief investment officer Lee Gardhouse added that there was currently no risk their Multi-Manager funds would go the same way as Woodford Equity Income, and promised that investors would still be able to withdraw their money if desired.

He said: ‘We share the disappointment and frustration investors in Woodford Equity Income feel at this time and would like to apologise to all clients who have been impacted by the recent problems. And, once the dust settles, we will undertake a thorough review of what happened and see what lessons can be learned.’

Hargreaves told the Financial Times that it could now ditch Equity Income from its multimanager products entirely.

Experts have also predicted that Hargreaves could lose up to £2.7m in fees, after it agreed to stop charging clients who are directly invested in Woodford Equity Income.

James Hamilton, an analyst at stockbroker Numis, said Hargreaves stands to lose between £400,000 and £450,000 for every month that Woodford Equity Income remains suspended.

This could be as long as six months, according to Chelsea Financial Services’ managing director Darius McDermott, and is likely to be at least three months.

Hamilton said the sum would have a minimal impact on Hargreaves, which last year made a profit of £292.4m.

‘Hargreaves Lansdown has done the right thing in passing its fees while the Woodford fund remains closed, as well as asking Woodford to suspend its own fees on its clients’ behalf,’ he said.

Hargreaves has been criticised for plugging 59-year- old Woodford’s funds long after his poor performance became clear.

Woodford Equity Income was only dropped from Hargreaves’ Wealth 50 list of recommended funds after it suspended trading, despite the fund losing more than 17pc of investors’ money over the past three years.

Justin Modray, of Candid Financial Advice, said: ‘I think the many Hargreaves Lansdown customers invested in Woodford will be seriously questioning Hargreaves’ motives and judgement for continuing to back the fund.’

Shares in Hargreaves slipped 1.4pc, or 26.5p, to 1913p.

■ WOODFORD yesterday dumped stakes in publisher Time Out and bowling firm Ten Entertainment as part of a sale to release savers’ cash. He also blocked clients from seeing the complete list of companies he holds in his three main funds, the Patient Capital Trust, Equity Income fund and Income Focus fund.