While the group's head of research (pictured) points to a number of promising funds, he says a manager needs a track record of "around seven years or so" before they should be considered for inclusion in a portfolio. As a result, this leaves only an elite group of tried-and-tested funds in attractive areas of the market.
Speaking about the Hargreaves Lansdown Wealth 150 list, Dampier said: "At the moment there’s only about 110, and I wouldn’t be that surprised if it dipped below 100 at this rate. We’ve been taking off a lot more funds than we’ve been adding."
Dampier points out that Hargreaves has become stricter in the criteria it uses for selecting funds, but says the lack of genuine talent in the industry is a concern. He identifies emerging markets as an area that is particularly under-represented in the Wealth 150 list.
"We’ve genuinely found it tough to find funds in certain areas," he said. "The only fund we’ve added recently that immediately springs to mind is the Newton Emerging Income fund, and even then we were split over whether we’d include it."
"The problem is that a lot of the really good funds out there, particularly in the emerging markets sector, are soft-closing, and don’t want any more money coming in. As a result, we’ve had to take them off the list."
He points to Aberdeen Emerging Markets and First State Global Emerging Markets Leaders as two examples.
"I find it pretty amazing that in spite of all the hype surrounding emerging markets, there’s not a lot to choose from. This is why we’ve had to look more into passives."
"We hold the JPM Emerging Markets Income fund, but that’s about it."
Dampier says he is unimpressed with the way a lot of managers have handled the volatility of the past five years or so, and is taking a closer look at new talent which he hopes can fill the void.
He commented: "You’ve got a few good young managers out there like Thomas Moore and Stephen Message, but they’ve only got three or four years of experience."
"They’ve produced some very good returns during a tough time, but I think you need a record of seven years or so to make a claim, or at least a market cycle. At the moment we’re just looking at them."
"When I say track record, I mean manager record – I don’t understand why anyone looks at fund track records, because if a manager leaves, they mean nothing."
Performance of manager vs peers since Dec 2004
Source: FE Analytics
The Newton Emerging Income fund was only launched at the back end of last year, but Jason Pidcock has been running portfolios at Newton since December 2004.
His management of Newton Asian Income, Oriental and the FSA offshore-recognised BNY Mellon Asian Equity portfolio has seen him deliver 185.21 per cent over eight years, compared with 157.97 per cent from his peer group composite.
Newton Emerging Income has a minimum investment of £500 and a total expense ratio (TER) of 2.03 per cent.
It is currently yielding 3.68 per cent and has returned 8.78 per cent since its launch in October 2012, marginally beating its IMA Global Emerging Markets sector.
Moore’s Standard Life UK Equity Income Unconstrained and Message Old Mutual Equity Income funds are both top-decile performers in their IMA UK Equity Income sector over three years, with returns of 37.35 and 35.84 per cent respectively.
Performance of funds vs sector over 3-yrs
Source: FE Analytics
Moore took over his fund in January 2009, while Message joined his in December 2009.
Both funds require a minimum investment of £1,000, although the Old Mutual fund is a little cheaper, with a total expense ratio (TER) of 1.72 per cent, compared with Standard Life’s 1.91 per cent.