Spot the Dog guide reveals assets held in abysmal performers rises 68% to £22.32 billion – in just six months25 January 2014
- 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 underachieving individual funds drops from 59 to 53 since last edition, six months ago...
- ...But, assets under management identified rocket as three-giant M&G funds enter the hall of shame, representing 53% of all overall ‘dog’ fund assets
- IMA North America sector holds the highest percentage of dogs (22%) confirming its reputation as “Death Row active fund managers”
- Readers offer: Spot the Dog can be download for free at www.bestinvest.co.uk/dogs
Those tempted to invest in a Stocks & Shares ISA 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 Bestinvest before committing their hard-earned cash. 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.
The latest edition of Spot the Dog, published this week, has identified 53 unit trust/OEIC funds from a number of IMA equity sectors, down from the 59 Bestinvest highlighted six months ago. However soaring stock markets and the unwelcome appearance of three massive and widely held funds from leading manager M&G have seen the level of dog assets swell from £13.3 billion in July 2013 to a mighty £22.32 billion in this latest report. Each of these funds met the strict criteria applied by 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.
US market confirmed again as “Death Row” for fund managers
As in our last report, the large IMA Global Sector holds the largest number of dogs (15 funds), representing 13% of the universe. However the sector with the highest proportion of mutts is once again the IMA North America sector, where a staggering 22% of funds are wearing dog tags, slightly up from 21% in July 2013. This confirms the reputation of the US equity market as a “death row” for active fund managers.
On a more positive note, only 5% of UK All Companies funds are rated dogs, and each of the UK Equity Income, UK Smaller Companies and European sectors only have a single fund.
Groups in the Dog House: spotlight falls on respected manager M&G
Groups with large fund ranges and sizeable assets under management are inherently more likely to feature in Spot the Dog but no group has more than 3 funds in the latest edition, compared to 5 last time. M&G, F&C and Scottish Widows Investment Partnership (SWIP) each have three funds. In the previous edition M&G had no funds.
Leading the pack of underperformers when ranked by level of assets in this edition is M&G, the group which launched the UK’s first unit trust, with £11.9bn in the kennel. This is down to three flagship funds entering the tables, which together account for 53% of all dog fund assets; M&G Global Basics, M&G Recovery and M&G American funds. Tom Dobell’s huge £7bn M&G Recovery Fund has proved to be the biggest mutt in M&Gs litter. The fund has had a traumatic 18 months, underperforming its peer group by almost 20% as it was hit by a perfect storm of negative contributions from stock and sector positioning.
However, while most large fund groups have a howler lurking somewhere in their fund ranges, sizeable fund groups that currently have no funds in Spot the Dog include Invesco Perpetual, Threadneedle, Jupiter, Henderson, First State, BlackRock, Artemis and Standard Life.
Jason Hollands, Managing Director at Bestinvest, commented: “It’s not enough to simply leave your investments to chance, investors must remain vigilant of the funds they hold. Spot the Dog is designed to weed out the worst of the worst; yet there are plenty of other underperformers which narrowly missed our strict criteria for inclusion.
“Our message is simple: no matter how thoroughly you researched your choices ahead of investing, the fate of funds can change over time as the appearance of three previously popular and once strong performing M&G funds illustrates. If you are going to invest in funds, particularly those which are actively managed, then it is vital to closely monitor your investments or choose a service that will do this for you. All funds and managers go through periods of difficult performance during their careers, so we are not saying investors should automatically switch out of these funds. However, if you hold any dogs, you certainly need to explore further whether you should continue to give it more time to recover or whether it may be better to move elsewhere.
“With the replacement of commission-based advice at the start of last year with fee based advice, many investors have been left in the lurch as some banks have withdrawn from providing advice to all but the very wealthy. Other investors may have voluntarily decided to part-company with their old adviser due to the costs of advice. To help investors who may no longer be getting a regular assessment of their portfolios, Bestinvest has developed a Free Investment Report Service & Tool (FIRST) – Bestinvest.co.uk/first . Using FIRST investors can take control and check whether their portfolio harbours any dogs - without incurring any fees.”
Readers offer: From Saturday 25 January 2014 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.
- ENDS -
Spot the Dog is on Twitter! Follow him @Spot_theDog
About first – the Free Investment Report Service & Tool:
Bestinvest’s Free Investment Report Service & Tool (FIRST) provides investors with analysis on their investments to show how much Risk the portfolio is exposed to (based on its volatility), how well balanced the Asset Allocation is (against our models), and our view on the Quality of each fund held.
FIRST is easy to use and free-of-charge. Users can either self-enter their portfolios online or send Bestinvest details of their holdings and a report will be prepared for them. Almost 12,000 underlying investments can be covered by FIRST, including unit trusts, OEICs, investment trusts, shares, ETFs and unit-linked pensions funds.
For more information on FIRST, please visit: Bestinvest.co.uk/first
The value of investments, and the income derived from them, can go down as well as up and you can get back less than you originally invested. Past performance is not necessarily an indication of future performance. Prevailing tax rates and relief are dependent on your individual circumstances and are subject to change.
We aim to provide investors with information to help them make their own investment decisions although this should not be construed as advice or an investment recommendation. If you are unsure about the suitability of an investment or if you need advice on your specific requirements, we strongly suggest that you consider professional financial advice.
Founded in 1986, Bestinvest has grown to become a leading private client investment adviser, looking after £5 billion of assets. We offer a range of investment services from the Online Investment Service for self-directed investors to Investment Advisory and Investment Management services for clients who do not have the time or inclination to manage their own investments.
All of our services are underpinned by rigorous research aimed at identifying those fund managers we believe will deliver long-term superior performance. We also have a team of expert financial planners with nationwide coverage to help clients with their pensions, retirement or Inheritance Tax
planning. At Bestinvest, we pride ourselves on offering the highest levels of professionalism and expertise with transparent, competitive prices. We are pleased that our greatest source of new business is from personal referrals from existing clients.
Bestinvest has won numerous awards including UK Wealth Manager of the Year 2013, Best Wealth Manager for Investments 2013, Best Stockbroker for Customer Service 2012 and 2011 Self Select ISA Provider of the Year as voted by readers of the Investors Chronicle and the Financial Times.
Bestinvest’s Select service was recently ranked as the highest-scoring investment platform when judged on cost, service, range of features and breadth of investment choice by specialist consultancy The Platforum.
Headquartered in Mayfair, London, Bestinvest employs more than 200 staff and has an extensive network of regional offices. For further information, please visit: www.bestinvest.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.