How the Wealth Shortlist process is overseen

Our research is supported and monitored by independent oversight and governance processes.

Monitoring is there to identify risks and check that processes are followed.

The Wealth Shortlist exists to help investors build well-balanced and diversified portfolios. It’s designed for clients who are comfortable choosing their own funds in line with their objectives and attitude to risk. There are five main ways we monitor and review the Wealth Shortlist:

The Investment Analysts continually research their sectors. They’re responsible for monitoring and documenting:

• Why we have conviction in a fund
• Performance and portfolio data showing what’s driving returns
• How a fund is performing on both an absolute and relative basis
• Economic analysis
• Fund manager meetings, providing essential context to the data

The Senior Research team reviews the Shortlist funds against parameters designed to flag potential risks to clients.

The team meet every month to review the Wealth Shortlist against factors including:

• Assessment of funds’ performance
• What investors are buying and selling
• Liquidity of the Wealth Shortlist funds

If these identify any cause for concern, the analyst covering the fund must justify its continued inclusion on the Wealth Shortlist.

If the Senior Research team have continued concerns after the analyst’s justification, they have the option to propose removing the fund from the Wealth Shortlist.

The Research team also look at events or circumstances that might change their long-term conviction. These include:

• A fund manager leaving their firm
• A new fund manager joining the management team, or a new fund manager taking over management of the fund
• A fund increasing holdings in illiquid assets
• The asset management firm undergoing a merger or acquisition

When events like these take place we’ll update clients. Where applicable, the Research team will share their analysis on how the event affects their conviction in the fund.

The Distribution Investment Oversight Committee (DIOC) provides quarterly oversight and challenge of the Research team’s investment analysis process.

The DIOC’s members are independent from the Research team and include directors within the group with decades of experience and industry knowledge.

The Head of Investment Analysis reports to the DIOC on a quarterly basis. The DIOC will review and challenge:

• The Wealth Shortlist investment selection process
• How the investment selection process has been applied
• Whether the process is still delivering good outcomes for clients, and challenge whether it could be improved

If the DIOC has concerns about the Wealth Shortlist, or any of the funds, it can request further information from the Head of Investment Analysis. If it isn’t satisfied with the outcome of this review, it can escalate matters to the HL Asset Management Board for further discussion, review and challenge.

The Proposition team set the high-level investment criteria for what can be included on the Wealth Shortlist.

The starting point is clearly defining who the Wealth Shortlist is and isn’t for – the target market.

The Proposition team monitor how the Wealth Shortlist is promoted and used, and report to the Product Governance Committee.

There’s also an annual product governance review which is submitted to the Product Governance Committee. This review includes assessing the Wealth Shortlist against a number of criteria and taking action to address any areas of concern.