Hargreaves Lansdown*, the UK's largest investment platform, has added a range of ready-made multi-index portfolios to its list of products, designed to offer a cheaper alternative to its actively managed funds. In this article, we explain what multi-index funds are, how they compare to other types of funds as well as how much they cost. We also review Hargreaves Lansdown's multi-index portfolios and compare them to other types of index funds from the likes of Interactive Investor, Nutmeg, Moneyfarm, Vanguard and Wealthify.
What are multi-index funds?
Index funds are designed to track the movements of various stocks, bonds and investment markets around the world. They are a popular form of passive investing, an investment strategy that aims to match the performance of whatever index it is tracking, as opposed to an active investment strategy, which aims to beat the relevant benchmark. We explain active and passive investing in more detail in our article 'Fund types explained'.
Multi-index funds invest in more than one index fund or ETF to create a diversified asset mix based on the chosen risk level. Hargreaves Lansdown has created a total of four multi-index funds, with the underlying index funds and ETFs provided exclusively by asset management firm BlackRock. The four HL Multi-index funds range from 'Cautious' to 'Adventurous', designed to provide a cheaper alternative to Hargreaves Lansdown's actively managed investment options.
How do the Hargreaves Lansdown ready-made multi-index funds work?
Investors can choose from four ready-made investment options offering four levels of risk. These are as follows:
- HL Multi-Index Cautious - Lowest risk level - Typically invests in 30% shares and 70% bonds
- HL Multi-Index Balanced - Second lowest risk level - Typically invests in 60% shares and 40% bonds
- HL Multi-Index Moderately Adventurous - Second highest risk level - Typically invests in 80% shares and 20% bonds
- HL Multi-Index Adventurous - Highest risk level - Typically invests in 100% shares and 0% bonds
The four multi-index funds* are managed by Hargreaves Lansdown's in-house fund managers and it is their job to ensure the portfolio/funds contains the right mix of index funds and ETFs (from Blackrock) for the chosen risk level. While the multi-index funds aim to provide a fully diversified mix of investments based on the investor's chosen risk level, investors have the freedom to choose additional investments to sit alongside it. This element of flexibility may appeal to investors who wish to dip their toe into non-passive investments from time to time and make some of their own investment decisions.
Hargreaves Lansdown ready-made managed portfolios vs multi-index portfolios
The introduction of the four multi-index portfolios means that Hargreaves Lansdown now offers two 'ready-made' portfolio options. Hargreaves Lansdown already offered four actively managed ready-made portfolios, however, as the portfolios include a mix of actively managed funds as well as passive investments, the ongoing fees are much higher and range between 0.85% and 0.91% per year. The ready-made multi-index portfolios provide a cheaper way for investors to access a diversified mix of investments. We include both of the ready-made portfolio options in our cost comparison table below.
How much does it cost to invest in Hargreaves Landsown's multi-index funds?
The fees for the multi-index funds are straightforward. There is a fund management charge of 0.30% plus investors will pay their standard Hargreaves Lansdown account fee, which can be up to 0.45% depending on the amount they invest and the type of product they wish to invest in. For a more in-depth look at Hargreaves Lansdown's fees, check out our independent Hargreaves Lansdown review.
Hargreaves Lansdown multi-index fund fees
Below, we have provided a simplified breakdown of the fees you will pay depending on the product you choose.
| Product | Account fee | Management fee | Total fee % |
| Stocks and Shares ISA | Up to 0.45% | 0.30% | Up to 0.75% |
| Self Invested Personal Pension (SIPP) | Up to 0.45% | 0.30% | Up to 0.75% |
| Fund and Share Account | Up to 0.45% | 0.30% | Up to 0.75% |
| Lifetime ISA | Up to 0.25% | 0.30% | Up to 0.55% |
| Junior ISA | No charge | 0.30% | 0.30% |
What is the minimum investment?
Investors can start with a lump sum of £100 or just £25 per month if they commit to a regular investment.
How do Hargreaves Lansdown's multi-index portfolios compare?
We have compared the cost of the Hargreaves Lansdown multi-index balanced portfolio with a number of alternative options. We have included a comparison of both passive and actively managed portfolios from Nutmeg, Moneyfarm, Wealthify, Vanguard and Interactive Investor. If you want to read more about the alternative options available, click on the links in the table.
| Provider | Product Type | Investment Type | Account Fee | Management fees | Total annual fee based on £20,000 investment |
| Hargreaves Lansdown* | Ready-made Multi-Index Balanced portfolio | Passive | 0.45% | 0.30% | £150 |
| Hargreaves Lansdown | Ready-made Managed Balanced portfolio | Active | 0.45% | 0.85% | £260 |
| Nutmeg | Fixed Allocation - Risk level 3 out of 5 | Passive | 0.45% | 0.23% | £136 |
| Nutmeg | Actively Managed - Risk level 5 out of 10 | Active | 0.75% | 0.23% | £196 |
| Moneyfarm | Fixed Allocation - Risk level 4 out of 7 | Passive | 0.45% | 0.17% | £124 |
| Moneyfarm | Actively Managed - Risk level 4 out of 7 | Active | 0.65% | 0.30% | £190 |
| Wealthify | Actively Managed - Confident portfolio | Active | 0.60% | 0.16% | £152 |
| Interactive Investor | Actively Managed - Balanced portfolio | Active | £4.99 per month | 0.19% | £152 |
| Vanguard | Ready-made Managed ISA Risk level 3 out of 5 | Passive | 0.15% | 0.45% | £120 |
Summary
The launch of its multi-index funds* means Hargreaves Lansdown customers can finally access a range of low-cost, ready-made diversified funds, rivalling the likes of those offered by the likes of Nutmeg, Moneyfarm, Vanguard and Wealthify. Alongside its more expensive actively managed ready-made portfolios, the multi-index portfolios provide investors with a simple 'off the shelf' solution that is competitively priced. It means that Hargreaves Lansdown may now be a viable and cheap investment option, particularly for beginner investors and those who haven't the time or inclination to pick their own funds. This is especially true for those who wish to invest in a Lifetime ISA or Junior ISA thanks to the fee reductions that apply. Perhaps the biggest disappointment, however, is the current lack of choice, with only four funds on offer. Those looking for more investment choice may want to consider Moneyfarm, which offers seven portfolios of varying risk levels or Nutmeg which offers ten.
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