Hargreaves Lansdown has removed a second UK smaller companies fund from its Wealth 150 fund buy-list in a review of the sector.

The Invesco Perpetual UK Smaller Companies Equity fund has been dropped from the Wealth 150, after its conviction in the fund 'diminished'.

Meera Patel, senior analyst at Hargreaves Lansdown, said while current fund manager Richard Smith's track record had 'generally been good' its conviction had waned.

She said, 'Performance over the last year has been below the sector average and our analysis suggests stock picking within the fund has not been up to previous high standards.

'Exposure to the support services sector has been one of the main reasons behind recent poor returns.'

She added, 'Two problematic stocks have been Connaught, which has now gone into administration, and Mouchel, the consulting and business services group, which has seen its share price fall over concerns it will be hampered by UK local authority spending cuts.'

Patel said it remained to be seen how Jonathan Brown, appointed co-manager earlier this year, would fare in the new role.

She said, 'Given the recent appointment of Jonathan Brown as co-manager we would like to see an improvement in stock picking and performance, and would stress we do not believe existing investors should sell the fund if it still meets their objectives.'

The news comes as the Standard Life Investments UK Smaller Companies fund was dropped from the Wealth 150 after it closed to new investors.

To receive more relevant articles like this one, why not sign up to our weekly newsletters, click here