Latest Spot the Dog guide reveals 60 underachieving funds containing £23bn of investors’ assets24 January 2015
- Controversial report names and shames investment funds that have underperformed for three consecutive years on the trot and by more than 10% over three years
- Number of serial underperforming funds increases to 60, up from 49 funds six months ago
- The level of assets in the underperforming funds rises slightly to £23bn, from £19.6bn in our last report
- The Investment Association sector with the largest number of dog funds remains the Global sector, with 19 funds representing 15% of the universe
- M&G continues to dominate the dog-house by assets under management (£7.9 bn) due to the continued woes of its former flagship Global Basics and Recovery funds
- Fund giant Aberdeen now manages 9 ‘dog’ funds, some of which have entered its ‘rescue centre’ as a result of its acquisition of rival SWIP last year
- Readers offer: Spot the Dog can be downloaded for free at www.bestinvest.co.uk/dogs or by calling 020 7189 2400 to request a hard copy
Those who intend to invest using the increased £15,000 New ISA (‘NISA’) allowance or contribute to a Self-Invested Personal Pension before the end of the tax year should get hold of a free copy of the latest Spot the Dog report from Tilney Bestinvest before committing their hard-earned money. The twice-yearly landmark report, which is loathed by fund management companies, ‘names and shames’ the investment funds open to retail investors which are the leaders of the pack for consistent, derisory performance.
January 2015’s edition of Spot the Dog, published this week, has identified 60 ‘dog’ funds (unit trusts and OEICs) from a number of Investment Association equity sectors - up from 49 funds in the last edition. The level of assets in the funds identified has also risen from £19.6bn in July 2014 to £23bn in this latest report. Each of the funds in the report met the strict criteria applied by Tilney Bestinvest of being available to retail investors and having underperformed in each of the last three years and by 10% or more over the three years.
European dogs join Global and North American pups in the kennel
In the July 2014 edition of Spot the Dog, not a single Europe ex UK fund met our criteria but in this edition 4 howlers have been snared. However, the Investment Association sector with the largest number of dog funds remains the same as six months ago; the Global sector, with 19 funds representing 15% of the universe. The sector with the highest ratio of dogs as a proportion of the universe also continues to be the North American sector, where 12 dog funds in the kennel represent 20% of the sector universe.
The groups in the Dog House
When ranked by level of assets, the unwanted trophy of ‘Top Dog’ remains with M&G, the same as in July 2014’s report. This is due to the continued woes of its former flagship M&G Recovery (5bn) and M&G Global Basics (2.6bn) funds. Together these two funds account for 34% of all of the dog fund assets listed and their underperformance is due to both stock selection and sector allocation decisions. In the case of the Recovery fund, which Tilney Bestinvest also rates 1-star the firm believes its problems are exacerbated by fund size. In second place by level of assets is BNY Mellon subsidiary Newton whose two funds included represent 21% of total dog assets.
Groups with large fund ranges and sizeable assets under management are inherently more likely to feature in Spot the Dog since few companies are consistently good across the board. While most groups with funds in Spot the Dog have just one or two offenders, fund giant Aberdeen finds itself with 9 funds, up from just 1 in the previous issue, due in part to its acquisition of SWIP, whose funds previously featured prominently in Spot the Dog, last year. Only one other firm - Neptune – has multiple funds (5) in this edition.
On a positive note, not a single UK Equity Income has been awarded a dog fund label with even the average fund in the sector having outperformed the UK stock market in each of the last four twelve-month periods. While many groups will from time to time have a mutt in their fund range, notable absentees amongst larger groups include: Henderson, Invesco Perpetual, JO Hambro CM, JP Morgan, Legal & General IM, Liontrust, Royal London, Threadneedle and Standard Life Investments.
Jason Hollands, Managing Director at Tilney Bestinvest commented: “Many investors put up with weak fund performance by either not monitoring their investments regularly, receiving poor service from the adviser who originally recommended the investment or through simple inertia. The differences in performance between funds within the same sectors can vary enormously, so it is vital to be very selective when making your choices.
“However in recent years, rising stock markets which have been supercharged by massive central bank stimulus programmes have helped mask the poor relative results delivered by many fund managers whose portfolios have been lifted with the overall tides. For unsuspecting investors, rising six monthly valuation statements may have given the superficial impression of a job well done. But the reality is that the fund manager may have seriously lagged the overall movement in the market, detracting rather than adding value while earning lucrative fees. This is especially the case for funds invested in the US, where the S&P 500 Index has reached a record high but few managers have outperformed and a staggering 20% of funds in the sector have been identified as outright dogs.”
“In recent years, more and more people have chosen to become so-called ‘DIY investors’ and manage their own investments. While many enjoy taking control of their investments and closely monitor their progress, some may have found that their initial enthusiasm has waned or they simply haven’t had the time to devote to it. However, with the returns from ISAs and pensions potentially determining how secure an investor is in their retirement, it really is vital to keep a beady eye on performance and to make sure a portfolio stays in good shape. For some, it might therefore also be time to think about whether it is time to consider an advised or managed service.”
Readers offer: Members of the public can get a free copy of the latest edition of Spot the Dog either by downloading it from www.bestinvest.co.uk/dogs or by calling 020 7189 2400 to request a copy.
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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. If you are unsure about the suitability of any investment, you should seek professional advice. Past performance is not a guide to future performance. This press release does not constitute personal advice.
Different funds carry varying levels of risk depending on the geographical region and industry sector in which they invest. You should make yourself aware of these specific risks prior to investing.
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About Tilney Bestinvest
Tilney Bestinvest is a leading investment and financial planning firm that builds on a heritage of more than 150 years. We look after more than £9 billion of assets on our clients’ behalf and pride ourselves on offering the very highest levels of professional client service with transparent, competitive pricing across our entire range of solutions.
We offer a range of services for clients whether they would like to have their investments managed by us, require the support of a highly qualified adviser, prefer to make their own investment decisions or want to take more than one approach. We also have a nationwide team of expert financial planners to help clients with all aspects of financial planning, including retirement planning.
We have won numerous awards including UK Wealth Manager of the Year, Low-cost SIPP Provider of the Year and Self-select ISA Provider of the Year 2013, as voted by readers of the Financial Times and Investors Chronicle. We are pleased that our greatest source of new business is personal referrals from existing clients.
Headquartered in Mayfair, London, Tilney Bestinvest employs almost 400 staff across our network of offices, giving us full UK coverage, and we combine our award-winning research and expertise to provide a personalised service to clients whatever their investment needs.
The Tilney Bestinvest Group of Companies comprises the firms Bestinvest (Brokers) Ltd (Reg. No. 2830297), Tilney Investment Management (Reg. No. 02010520), Bestinvest (Consultants) Ltd (Reg. No. 1550116) and HW Financial Services Ltd (Reg. No. 02030706) all of which are authorised and regulated by the Financial Conduct Authority. Registered office: 6 Chesterfield Gardens, Mayfair, W1J 5BQ.
For further information, please visit: www.tilneybestinvest.co.uk
Tilney is a leading investment and financial planning group that builds on a heritage of more than 180 years. Our clients are private investors, charities and professional intermediaries who trust us with over £23 billion of their assets. We offer a range of services including financial planning, investment management and advice and, through our Bestinvest service, a leading online platform for those who prefer to manage their own investments.
We have won numerous awards. Tilney has been awarded Best Conventional Advisory Service at the 2018 City of London Wealth Management Awards, Best Advisory Service in the 2015 City of London Wealth Management Awards; Investment Award – Cautious category in the Private Asset Management Awards; and Stockbroker of the Year, Execution-only Stockbroker of the Year and Self-select ISA Provider of the Year 2015, as voted by readers of the Financial Times and Investors Chronicle. Bestinvest was voted Best SIPP Provider and Best Fund Platform at the 2017 City of London Wealth Management Awards, Best Direct SIPP Provider at the YourMoney.com Awards 2017, Best Stocks & Shares ISA Provider at the 2017 Shares Awards, as well as Best Self Select ISA Provider, Best Online/Execution-only Stockbroker and Best Investment Platform 2017 at the FT and Investors Chronicle Investment and Wealth Management Awards, as voted by readers of the FT and Investors Chronicle.
Headquartered in Mayfair, London, the Tilney Group employs over 1,000 staff across our network of 30 offices, enabling us to support clients with a local service throughout the UK.