Dog funds: what the experts think
● Multiplying mutts Beware the dog, said Imogen Tew on FTAdviser. Markets might have been flying of late, but that hasn’t stopped the number of underperforming funds rising by more than 50% in the past six months, according to Bestinvest’s latest “Spot the Dog” survey. The report, which “names and shames” the worst-performing equity funds over three years, identified 91 funds meeting “the dog criteria” – up from 59 last summer. The level of UK assets held in dog funds has also jumped alarmingly – from £32.6bn to £44bn since the last report.
● Worst in show For the fourth time in a row, Invesco has topped the list of fund groups in the doghouse – leading the pack, by a long way. The fund house managed to chalk up 11 “dog funds” holding £13.1bn of assets, making up more than a third of the total £44bn. The second and third worst culprits were JPMorgan’s JPM US Equity Income fund (£3.8bn of assets) and Link, which manages the £3bn Equity Income Fund formerly run by disgraced star fund manager Neil Woodford. There were also multiple entries from fund houses Schroders, Jupiter and M&G. Invesco’s excuse for its poor performance was that the funds on the doglist had “a disciplined valuation driven philosophy”, which had been out of favour of late. Two of its giant failing income funds used to be run by Woodford. It seems as though “the curse of Neil Woodford” continues to blight some of the country’s largest funds, said Mark Atherton in The Times. Funds bearing “his fingerprints” were among those delivering the worst value.
● Finding another pet Should you ditch your dogs? Not necessarily, said Jonathan Jones in The Daily Telegraph – though, as the report advises, “unless there are good reasons to believe performance will turn around”, it may make sense to switch. “Time will tell whether the so-called Boris Bounce helps these funds turn a corner,” said the report’s author, Jason Hollands. In the meantime, fund managers continue to rook customers over fees: British savers invested in the 91 dogs are paying an estimated £410m a year for the privilege. Unsurprisingly, fund experts are full of ideas for replacements, said Mark Atherton. So do your research. But before “taking the plunge and moving your money, be clear that you could be locking in some hefty losses”.