Amount of investors’ cash in seriously underperforming ‘dog’ funds see five-fold increase to £33.6 bn since start of year

20 August 2018

Bestinvest names and shames 58 laggard investment funds, including seven £1 billion+ big beasts

  • Latest edition of Bestinvest’s controversial Spot the Dog report names and shames investment funds that have underperformed for three consecutive years on the trot and by more than 5% over three years
  • 58 investment funds identified, an increase of 123% since the previous edition and a level not seen since 2015
  • The level of assets in the underperforming funds rockets to £33.6bn, over five times the £6.4 bn of assets in Dog funds six months ago and the most amount of money in dog funds on record
  • Fund giant Invesco Perpetual leaps straight into the Top Dog spot with the highest number of assets (£15.1bn) and largest number of funds in the list as its flagship UK equity funds end up in the kennel
  • The area with the largest number of dog funds remains Global with 19 funds, but UK and European dog funds rise sharply
  • Global Emerging Market Dog funds seem to have become extinct with no dog funds to be found
  • Readers offer: Spot the Dog can be downloaded for free at or by calling 020 7189 2400 to request a hard copy

Bestinvest, the consumer champion and execution only online investment platform, has published the latest instalment of its controversial twice-yearly Spot the Dog report, which for over two decades has “named and shamed” consistently poor performing investment funds. Investors might be wise to get hold of a copy to check whether their returns are being chewed up by these mutts.

The latest edition of Spot the Dog, which uses data up until 30 June 2018, has identified 58 ‘dog’ funds (unit trusts and OEICs) from a number of Investment Association equity sectors. Each of the funds in the report has met the criteria applied by Bestinvest of being available to retail investors and failing to beat their relevant benchmark over three consecutive 12-month periods and also by 5% or more over the full three year period. These tough filters ensure the report collars the very “worst of the worst” funds that have underperformed consistently in recent years.

Who’re the Great Danes of the industry?
The ‘Top Dog’ in this edition is respected investment group Invesco Perpetual. Having had no dogs in the previous edition, the Henley-on-Thames based fund house has gone straight to the head of the pack with five funds in our hall of shame. These include the firm’s flagship Invesco Perpetual’s High Income and Income funds, respectively weighing in at £9.4 billion and £4.5 billion. The size of the Invesco Perpetual funds are of such scale that together they account for 45% of the total amount of assets in this edition. Three of these funds are run by UK equity manager Mark Barnett, who inherited the firm’s flagship UK equity funds when high profile manager Neil Woodford left to establish his own firm in 2014. Both Barnett and Woodford, who have broadly similar approaches, have had a torrid time over the last couple of years.

The prominence of Invesco Perpetual in this edition shifts the spotlight away from Aberdeen Standard Investments, the business created by the merger of Aberdeen Asset Management and Standard Life in 2017. Aberdeen had been prominent in Spot the Dog in recent years, at one time having 11 funds included, so its retreat from the top slot will be relatively welcome news. Nevertheless, the number of Aberdeen Standard funds featured at 5 is the same as last time, despite all but one fund being different from those in the last edition. Frustratingly the level of assets has actually gone up and on top of these own-brand funds, Aberdeen Standard has also been the underlying manager of two other funds in Spot the Dog, including the St James’s Place Ethical fund from which its management contract has just been terminated.

In total seven funds which are each over £1 billion in size appear in this edition, a major increase in the number of big beasts since the last edition where only one was identified. However, the majority of funds are small in size with the median dog fund having just £137 million in assets.

The Pit Bulls in the Pound: Global funds

With 19 funds the Global equities sector remains the area with the largest number of dog funds. Almost half of these have income generation as part of their objectives and that may help explain their relatively poor performance, as the greatest returns in recent years from global equity markets have come from ‘growth’ stocks in areas like technology and new media, where dividends are not a notable feature.

Close behind this time are UK Equity funds from across the IA UK All Companies and IA UK Equity Income sectors, with the number of dog funds surging from 2 to 18 since the start of the year. Most of these new entrants have income generation as part of their briefs. The surge in UK dog funds does seem to reflect a more challenging environment for equity income managers who have typically been underweight basic materials and energy companies. These have bounced back as commodity and oil prices have recovered. However many income managers have been under-exposed to them as their ability to sustain and grow dividends has been uncertain. Europe is another area where the failure rate has risen dramatically, with 10 funds compared to just 2 in our previous edition.

Not all Bad News…

Dog funds remain a rare breed in certain sectors. Not a single Global Emerging Markets fund made it into this edition, so this sector could one day become an extinct breed. There is also only one UK Smaller Companies fund in the dog house with only two in the previous edition - maybe one day this sector too could go the way of the Dodo.

US dogs used to make up much of the pack - a couple of years ago as many as one in five US funds appeared in the list. Such was the failure rate of active US fund managers, many investors now opt for passive index tracker funds as the default option for investing in the US markets. However active US managers appeared to be doing a much better job lately and have come to heel with only four funds included in this edition.  

Jason Hollands, Managing Director at Bestinvest commented:

“In the previous edition of Spot the Dog we questioned whether ‘dog’ funds were under the threat of extinction as the number of funds in the kennel had dropped to 26 amounting to £6.4 billion of assets, the lowest level we could recall. We welcomed this turn and hoped this would prove a sustainable trend rather than a mere blip but six months on it appears that the Lassies of the investment world have come home...

“In reality there are numerous reasons why a fund might hit a period of relative underperformance and so it is important to delve deeper before deciding to switch and move your cash elsewhere. In some cases, bad decision making is at fault, and the case to move on makes sense but in others a previously sound investment process or an agreed mandate may be out of favour with recent market trends, in which case some patience is required. For example,  some of the global and US funds listed in this edition have income generation as part of their objectives and this has led them to be underweight the fashionable “growth” stocks that have performed particularly well in recent years but where dividends are low or non-existent.”

Readers offer: Members of the public can get a free copy of Spot the Dog by downloading it from or calling 020 7189 9999.  

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Important information:

Please note that Spot the dog is intended purely as a representation of statistical data.

The value of investments, and any income derived from them, can go down as well as up and you may get back less than you originally invested. Prevailing tax rates and relief are dependent on your individual circumstances and are subject to change. This press release does not constitute personal advice. If you are unsure about the suitability of any investment, you should seek professional advice. Past performance is not a guide to future performance.

Different funds carry varying levels of risk depending on the geographical region and industry sector(s) in which they invest. You should make yourself aware of these specific risks prior to investing.

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