You are here: Home - Investing - Experienced Investor - News -

Is your money in an underperforming dog fund?

0
Written by: Paloma Kubiak
18/08/2018
The amount of cash in seriously underperforming funds has rocketed five-fold since the start of 2018. Is your money languishing in one or more of them?

The twice-yearly name and shame list reveals there are seven £1bn+ funds lagging, up from one in the previous period, and a total of 58 make the league – an increase of 123% since the previous edition.

But a starker figure reveals that the level of assets in underperforming funds has rocketed to £33.6bn, more than five times the £6.4bn reported just six months ago. According to Bestinvest, which compiles the ‘Spot the Dog’ report, this is the most amount of money in dog funds on record.

Is your money in a dog fund?

Dog funds are those which fail to beat their relevant benchmark over three consecutive 12-month periods and also by 5% or more over the full three-year period. It covers unit trusts and OEICs from a number of Investment Association equity sectors.

The largest number of dog funds remain in the Global sector, with 19 funds identified.

At the top of the shame list is Invesco Perpetual, which had no dogs in the previous edition, and this time, five make an appearance. These include the firm’s flagship Invesco Perpetual’s High Income and Income funds, respectively weighing in at £9.4bn and £4.5bn. In total, the five firms account for 45% of the total amount of assets in this edition.

Three of these funds are run by UK equity manager Mark Barnett, who inherited the firm’s flagship UK equity funds from star manager, Neil Woodford.

Recently merged Aberdeen Standard Investments also sees five funds make the list, though it draws attention away from Aberdeen’s previous record of 11 funds.

JP Morgan Asset Management secures its place due to a single but sizeable fund – the £3.47bn JPM US Equity Income fund. Bestinvest said this is likely due to its income seeking strategy being out of favour with market trends, such as FAANG stocks. But it added that in tougher market conditions, this fund is likely to prove more defensive than most US funds.

Fund giant Janus Henderson has worked its way up the rankings from 9th to 3rd place in this edition, with two completely new incumbents in the kennel. These are Janus Henderson European Selected Opportunities, and the much smaller Janus Henderson World Select fund.

Fidelity also makes the top five ranking, adding one more fund but over £800m of assets since the start of the year. Fidelity Japan is a repeat offender and the Fidelity American Special Situations fund and Fidelity MoneyBuilder Growth also make the list.

Time to switch?

Jason Hollands, managing director at Bestinvest, said: “There are numerous reasons why a fund might hit a period of relative underperformance and so it’s important to delve deeper before deciding to switch and move your cash elsewhere.

“In some cases, bad decision making is at fault, and the case to move on makes sense but in others a previously sound investment process or an agreed mandate may be out of favour with recent market trends, in which case some patience is required. For example, some of the global and US funds listed in this edition have income generation as part of their objectives and this has led them to be underweight the fashionable “growth” stocks that have performed particularly well in recent years but where dividends are low or non-existent.”

Related Posts

There are 0 Comment(s)

If you wish to comment without signing in, click your cursor in the top box and tick the 'Sign in as a guest' box at the bottom.

Are you a first-time buyer looking for a mortgage?

Look no further, get the help you need by searching for your perfect mortgage

Five ways to get on the property ladder without the Bank of Mum and Dad

A report suggests the Bank of Mum and Dad is running low on funds. Fortunately, there are other options for st...

The essential Your Money guide to the April 2018 tax changes

As we head into the 2018/19 tax year, a number of key changes take place to existing policies while some new i...

A guide to switching energy provider

All you need to know about switching from one energy supplier to another.

What will happen if rates change

How your finances will be impacted by a rise in interest rates.

Regular Savings Calculator

Small regular contributions can build up nicely over time.

Online Savings Calculator

Work out how your online savings can build over time.

Having a baby and your finances: seven top tips

We’re guessing the Duchess of Cambridge won’t be fretting about maternity pay or whether she’ll still be...

Protecting family wealth: 10 tips for cutting inheritance tax

Inheritance tax - sometimes known as 'death tax' - can cause even more heartache for bereaved families. But th...

Travel insurance: Five tips to ensure a successful claim

Ahead of your summer holiday, it’s important to make sure you have the right level of travel cover or you co...

YourMoney.com Awards 2018

Now in their 21st year, our awards recognise the companies offering the best products and services to consumers

Money Tips of the Week

Read previous post:
How to catch the Premier League football for free

The Premier League may have already kicked off, but if you fear missing out on more, there’s no need to...

Close