The wealth manager’s twice yearly ‘Spot the Dog’ list names OEICs and unit trusts that have underperformed for three consecutive years and by more than 10% over a three-year period. 

Some 49 funds were featured on the list this year, down from 53 last year, while total assets in dog funds fell from £22.3bn to £19.5bn.

Nimmo’s £1.2bn fund was one of only four smaller companies funds featured on the list, and Bestinvest said it had underperformed due to poor stock selection and sector rotation.

The three other smaller companies funds were the £144 JPM UK Smaller Companies, £69m Ignis Smaller Companies, and £3.7m SF Webb Capital Smaller Companies Growth funds.

Jason Hollands, managing director of Bestinvest, said: “Smaller companies can add a real kick to a portfolio, but it is an area where we feel small-sized funds have added flexibility in their ability to fish further down the company spectrum.

“Nimmo fans will be hoping for a recovery in form as investors become more discerning between quality and speculative companies than they have done in recent years.”

M&G remains the most-featured company on the list with three funds representing 55% of total assets on the list. This includes the £6.7bn Recovery fund, £3.1bn Global Basics, and £924m American funds. Other groups with funds featured on the list include Schroders, Neptune, F&C, and Standard Life Investments.

Hollands said Randeep Somel’s Global Basics fund had suffered from exposure to emerging markets and mining companies, while Tom Dobell’s Recovery fund had “seriously tested” investors’ patience.

“The run of underperformance is particularly disappointing given half the fund is invested in small and mid-cap stocks, parts of the market which have performed well in recent years,” he said of Dobell’s fund.

The IMA Global and North American sectors continued to hold the most dog funds, with 20 global funds – representing 16% of the sector – and eight North American funds making the list. 

Global funds on the list included the £76m JM Finn Global Opportunities, £3m Neptune Global Special Situations, and £171m River & Mercantile Global Opportunities funds, which were hurt by exposure to emerging markets.

North American portfolios included the £42m Allianz US Equity and the £117m L&G North American fund. However, Bestinvest noted the performance of the sector had improved in the last six months, with 13% of the sector labelled dog funds, down from 22% at the time of the last report. 

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Fund groups in the doghouse

 Source: Bestinvest