Hargreaves ISA sales defy market

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Hargreaves Lansdown has defied stormy market conditions by increasing sales of individual savings accounts (ISAs) in the tax year just ended.

The investment manager yesterday announced annual ISA sales of £430m, up 2 per cent, as it updated investors on its third-quarter performance. Investments in self-invested personal pension schemes (SIPPs) jumped 53 per cent to £1.16bn.

Assets under management fell nearly 2 per cent to £10.7bn in the first three months of 2008 as new clients largely offset an 11 per cent drop in the FTSE All Share index in the same period.

Industry figures for ISA sales have not been released but the investment sector has been expecting a fall in demand as volatile share prices and fears about a sharp recession hit investor confidence.

Hargreaves Landsdown is known for its Vantage funds supermarket, where assets under management fell 2 per cent in the third quarter to £9.6bn. Vantage's customer numbers rose by 10,000 to 237,000 in the period.

The Vantage, advisory and discretionary businesses generated higher revenues in the third quarter compared with a year earlier due to higher average asset values in the period. The discretionary unit includes multi-manager funds while the advisory division advises clients on retirement planning, life insurance and other matters.

But the company's shares fell 4.3 per cent to 171.25p after Peter Hargreaves, the chief executive, said he expected market conditions to remain challenging. "[We] will continue to innovate and exploit any opportunities the market presents. As always, our asset values, revenues and profitability will be impacted by the performance of the market," he added.

Katrina Preston at Landsbanki said: "We remain very positive on the company's robust fundamentals. We do not expect to downgrade earnings materially following today's update."

Analysts expect profit for the full year, which ends on 30 June, to rise about 40 per cent to £57m. "I would be relaxed about the forecast if the [stock] market stays at this level," Mr Hargreaves told Reuters. He added that the company would have good inflows of business in the next month or two but that market turbulence would have a greater effect.

Hargreaves Lansdown listed on the stock exchange in May and its shares remain above the 160p offer price.