Online investing service puts under-performing funds in the doghouse

Poorly performing equity funds have been named and shamed in the latest Spot the Dog list from Bestinvest.

The online investing service has put 86 such funds in its doghouse.

While the number of funds in the pound is only nine higher than the previous count last August, the total value of assets held in these “dogs” has surged by 54% to £45.4 billion.

Based on their current size and ongoing charges, the latest dog list would generate annual fees of £463 million in a flat market.

Bestinvest takes a twice yearly look at the performance of open-ended funds – unit trusts or open-ended investment companies – available to retail investors in the UK.

To make the Spot the Dog list, a fund must have failed to beat its market benchmark in each of three consecutive years, highlighting consistent under-performance.

It must also have under-performed its market by more than 5% over the entire three-year period under review.

Bestinvest – part of financial services group Tilney Smith & Williamson – said its latest list of shame was a reminder that, with less than two months to go before the end of the tax year, investors can shine a “bright and sometimes cruel light” on portfolios.

It added: “This is not to say that savers need necessarily to switch out of a dog fund, they might well have good reasons to forgive a fund’s recent travails and to believe things will rapidly improve.

“But owning a dog fund is certainly a reason to reconsider whether to hang on or move elsewhere.”

Some of the worstperforming “dogs” on the list are small funds with few retail investors, but those causing the biggest damage to portfolios are popular mega funds.

Many of Bestinvest’s 12 “lumbering canines” managing more than £1bn in assets are in the global and global equity income sectors.

JP Morgan’s US Equity Income fund – home to £3.92bn of investors’ money – under-performed its North America index by 32%.

The biggest Global Equity Income dog is Bnymellon Global Income Fund at £3.47bn, which lagged its benchmark by 26%.

St James’s Place, abrdn and Jupiter are wellrepresented on the list, with six funds each. Jupiter’s six total £988.6m in assets, abrdn’s comprise £1.84bn and St James’s Place a hefty £5.74bn.

The biggest UK dogfunds are Halifax UK Growth (£3.79bn) and Invesco UK Equity High Income (£3.08bn), which under-performed their benchmarks by 10% and 29% respectively.

Schroders has five funds on the list under its own name, housing £1.02bn in assets. However, it also manages a number of funds for HBOS and Scottish Widows, which add another £8.6bn to its “paw print”.

Bestinvest managing director Jason Hollands said: “Unsurprisingly, Spot doesn’t win any popularity awards with fund managers, particularly those with the funds in the list who will soon be howling out their excuses.

“But it has helped shine a spotlight on the problem of consistently disappointing returns delivered by many investment funds.”

Mr Hollands added: “£45.4bn is a lot of savings that could be working harder for investors rather than rewarding fund companies with juicy fees.”

EQUITY: Poorly performing funds have been named and shamed in the latest Spot the Dog list.