UK’s worst performing funds revealed
There are 149 funds in the latest Chelsea RedZone, the group’s list of the weakest funds. This is a similar number of funds to earlier in the year, but these funds now hold an extra £10 billion in assets.
Following its purchase of Scottish Widows, Aberdeen has the largest number of underperforming funds. By assets, however, BlackRock wins hands down, with £8.4 billion of assets in the RedZone.
Darius McDermott, managing director at the group, says: “The single worst-performing fund over the past three years is still the SF Webb Capital Smaller Companies Growth. £10,000 of your hard-earned cash, invested in this fund three years ago, would have shrunk to just £4,919.65 today. Putting the money in the average fund in the sector would have, in contrast, given you £16,035.48. If you had been fortunate enough to pick the best fund in the sector, R&M UK Equity Smaller Companies, you would be sitting on an investment worth £22,626.58. That’s quite a difference.”
“To be fair, the incumbent manager was on the receiving end of a hospital pass, in the form of a portfolio of stocks that were hard to sell, and performance has got progressively less bad over the past two years, but that will be of little comfort to anyone who invested, and lost, the majority of their money.”
McDermott says that Aberdeen’s purchase of Scottish Widows’ purchase is generating some improvement in the funds, but there is still room for progress: “Having completed its purchase of Scottish Widows Investment Management (SWIP) in April this year, Aberdeen has already rescued seven funds from the RedZone, with the migration of all SWIP-run active equity funds to the Aberdeen team. Four passive strategies remain, however, along with three of Aberdeen’s own funds, and Aberdeen tops the table in regards to the largest number of underperforming funds, so the turnaround job is far from over.”
BlackRock has the most assets in funds in the RedZone, at £8.4 billion, followed by M&G with £7 billion and Newton with £3.3 billion. The UK All Companies sector still attracts the most underperforming managers with 26 weak funds. Mixed Investments 40-85% shares is next with £5.05 billion and 14 funds, followed by Flexible Investments with £812 million spread across 12 funds.
McDermott concludes: “Perhaps unsurprisingly, given the company figures above, two UK equity funds account for two-thirds of the underperforming UK All Companies assets. BlackRock UK Equity Tracker at £8.26 billion and M&G Recovery at £6.35 billion. We were a supporter of M&G’s Tom Dobell for many years and it is sad to the fund languishing so badly.”
10 worst funds with percentage underperformance versus sector average:
SF Webb Capital Smaller Companies Growth -111.15%
CF Lacomp World – 38.19%
FP HEXAM Global Emerging Markets – 37.54%
Neptune Global Special Situations – 34.71%
FF&P Concentrated UK Equity – 34.61%
Elite Charteris Premium Income – 33.95%
F&C UK Alpha – 31.09%
M&G Recovery – 25.66%
Investec American – 25.28%
Neptune Global Equity – 24.57%