£6.4bn of savings is sitting in ‘dog’ funds

MORE than £6.4bn of savers’ cash is languishing in poorly performing funds despite stock markets reaching record highs.

A bombshell report yesterday revealed that investors are paying £65m a year in fees to fund managers who consistently fail to beat the stock market.

These so-called dog funds – described in the report as the ‘worst of the worst’ – have underperformed the index they aim to beat by 5pc or more over the past three years.

Last night experts urged savers to review their investments to make sure their money is not resting in a poor fund.

Aberdeen Standard Investments topped the list of shame with four underperforming funds, according to fund supermarket Bestinvest which carried out the research.

These are Aberdeen UK Equity Income, Aberdeen UK Equity, Aberdeen European Smaller Companies and Aberdeen Asia Pacific, which hold a combined £1.8bn. Two years ago, 11 of its funds were on the list.

A spokesman for Aberdeen said: ‘It’s encouraging that the number of our funds in the doghouse continues to fall and that only four out of our combined 150-plus UK mutual funds are on the list.’

Fidelity was next worst, with £955m in Fidelity American and Fidelity Japan.

A Fidelity spokesman said: ‘We take extended periods of underperformance very seriously, and constantly monitor and review our fund range to make sure it meets the needs of our investor base. We have already taken steps to address this issue.’