You are here: Home - Uncategorized -

Underperforming ‘dog’ funds named and shamed

0
Written by: John Fitzsimons
22/02/2021
Almost £50bn of investors’ money is being held in underperforming dog funds, a new report has revealed.

The latest Spot the Dog report from BestInvest flagged up the 199 investment funds which have consistently underperformed and hold £49.6bn of investor cash between them.

Dog funds are defined as those which have delivered a worse return than the market it invests in for three 12-month periods on the trot. It has to have underperformed by at last 5% over that entire period too, to highlight those that are consistently missing the mark by a noticeable degree.

According to BestInvest there has been a 33% jump in the number of dog funds over the last 12 months, with some sectors worse affected than others. There are a whopping 38 dog funds for example in the global equities sector, representing more than one in five (22%) of funds within this sector. North America is also an area with a high number of dog funds, with 21 different funds meeting the dog criteria.

By contrast, not a single fund that invests in smaller companies were classified as dogs.

BestInvest breaks down the dog funds by size too. A third are classed as chihuahuas, as they are less than £100m in size, but 15 funds are classed as great Danes as they each boast more than £1bn of assets. Many of these are widely held by private investors and managed by big names like Invesco, Schroders and Hargreaves Lansdown.

Is your money in a dog fund?

Let’s take a look at the biggest underperformers according to the report:

  Fund Size (£ billions)  Sector 3-year return on £100 3-year under performance
1 M&G North American Value Fund £0.17 North America £107 -42%
2 GAM North American Growth Fund £0.08 North America £108 -40%
3 Legg Mason IF ClearBridge Glbl Eq Inc Fd £0.02 Global Equity Income £95 -39%
4 Fidelity American Special Situations Fd £0.49 North America £110 -38%
5 Ninety One Global Special Sits Fund £0.24 Global £94 -38%
6 Schroder Global Equity Income Fund £0.23 Global Equity Income £98 -36%
7 TB Saracen Global Income & Growth Fund £0.09 Global Equity Income £98 -35%
8 LF ASI Income Focus Fund £0.18 UK Equity Income £59 -35%
9 NFU Mutual Global Growth Fund £0.03 Global £99 -35%
10 UBS Global Enhanced Equity Income Fund £0.04 Global Equity Income £97 -35%

 

As you can see, the worst dogs miss the mark by a massive 42%. So even though your money may grow in value over the three years, the actual return is pretty poor compared to what you could have got by choosing a rival fund which focuses in the same area.

In terms of individual fund houses, Invesco is once again the worst dog, with a massive 11 dog funds in the list, worth £9.2bn. On the plus side this is an improvement on the 13 that made the list six months ago, and with the firm undergoing a shake-up under a new CEO better times may be around the corner.

Meanwhile Jupiter has leapt up the rankings from ninth last time out to second this time, with eight dog funds, in part due to having bought Merian Global Investors in July 2020.

The dog fund report follows a separate report last week which identified the most consistent investment fund businesses, with Baillie Gifford taking top spot.

Should I sell a dog fund?

As Jason Hollands, managing director at BestInvest, points out, if your savings are tied up in a dog fund then you really owe it yourself to have a closer look and consider moving elsewhere. After all, the differences between the best and worst performing funds are significant.

However, that doesn’t necessarily mean selling up.

He continued: “Of course, the past is not the future and there can be times when it might be worth hanging on. For example, if a new manager with a better track record has recently put in charge, or because you believe an approach that has been out of favour is about to make a come-back. However, if you really cannot find a convincing reason to stay-put in an investment also-ran then moving elsewhere could give your ISA or pension a new lease of life.”

It’s also worth noting that spotting that your money is in a dog fund isn’t always straightforward, given that funds can deliver a positive return but still massively underperform against their rivals.

Hollands added: “If the value of your investments has gone up over the years, it is easy to assume that the fund manager has done an OK job. In reality, their decisions may not be adding any value whatsoever, though you’ll be paying them fees nevertheless.”

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.

The savings accounts paying the most interest

If one of your jobs this month is to get your finances in order, moving your savings to a higher paying deal i...

Everything you need to know about being furloughed

Few people had heard of ‘furlough’ before March 2020, but the coronavirus pandemic thrust the idea of bein...

Coronavirus and your finances: what help can you get in the second lockdown?

News and updates on everything to do with coronavirus and your personal finances.

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...

Money Tips of the Week

  • RT @Defaqto: There are significant differences between precisely what Covid-19 cover different travel insurance policies offer, our latest…
  • RT @YourMoneyUK: New infrastructure bank based in Leeds #Budget2021
  • RT @YourMoneyUK: Corporation tax for companies with profits under £50,000 will remain at 19%, meaning only 10% of companies will pay the hi…

Privacy Preference Center

Necessary

Advertising

Analytics

Other

Read previous post:
Aldi named ‘UK’s top supermarket’

Aldi has been named the UK’s favourite in-store supermarket in Which?’s annual satisfaction survey.

Close