Harcus Parker (HP) has been investigating claims against fund managers and others for closet tracking: the practice of describing a fund as actively managed and charging for that service but in fact merely tracking an index or constraining performance.
HP are currently focussing investigations on two subsidiaries of Lloyds Banking Group, Scottish Widows and the Halifax. HP have now identified that the Halifax UK Growth Fund appears to be managed in exactly the same manner as the Scottish Widows UK Growth Fund, which was the subject of a previous blog. HP suspect that it, too, is closet tracking the FTSE All-Share Index.
The graphs below are illuminating and show that from August 2011, before the deduction of fees, the performance of the Halifax and Scottish Widows UK Growth Funds against the FTSE All-Share Index has been all-but indistinguishable. The graphs show that there appears to be prolonged periods of closet tracking punctuated by a very short, marginal shift in differential performance versus the index – sometimes over a period of a week but typically over a few months – as alternative constraints on fund deviation take effect. Re-indexing points can be mathematically deduced; the chosen date in early January 2017 used in the below chart coincides with the FCA’s investigation into closet trackers that was eventually published in March 2018. The link to that FCA report is here: https://www.fca.org.uk/firms/authorised-and-recognised-funds/closet-track
If you or anyone you know have invested in the Halifax UK Growth Fund via one of the many available share classes then ShareSoc and HP would really like to hear from you in order for HP to further its investigations.
Please contact ShareSoc by email at firstname.lastname@example.org if you or anyone you know are an investor in the Halifax UK Growth Fund and you or they would be interested in hearing more about how you can help.
Cliff Weight, Director, ShareSoc