Short positions... the UK’s worst-performing funds

Savers have £45bn invested in funds that have failed consistently to beat their benchmarks, says The Daily Telegraph. The number of funds that have underperformed every year for the last three years – and by at least 5% in total – had risen from 77 in summer 2021 to 86 by the year’s end, according to the latest half-yearly Spot the Dog report from broker Bestinvest. St James’s Place, the UK’s largest wealth manager, and fund managers Abrdn and Jupiter each had six funds on the list. St James’s Place’s underperforming funds, which had £5.7bn in assets, ”accounted for six out of the top 10 most expensive poor performers”. Schroders had no laggards under its own name, but runs £8.6bn in seven funds marketed by Halifax and Scottish Widows, says the Financial Times. “The largest source of ‘dog’ funds were those… that tilt away from US tech stocks … Managers who focus on income, or who tried to balance exposure to the US with other regions, frequently fell behind.”

Only half of assets held by European sustainable funds are run in line with environmental, social and governance (ESG) standards reckons fund-research firm Morningstar, says Citywire. After new regulations last year obliged funds to provide more detailed documentation about their investments, Morningstar analysts concluded that some asset managers were marketing their products as ESG funds without changing underlying portfolios or investment strategy (known as greenwashing). There were 6,659 funds with £3.4trn in assets classified as sustainable at end 2021, accounting for 42% of total EU assets. But after culling 27% of funds from its own category, Morningstar now recognises just 4,461 funds with £1.7trn in assets as being compliant. More funds may be cut in the coming weeks.