3rd August 2015
UK investors collectively have £17.6bn languishing in under-performing funds, with M&G the biggest culprit, according to a new report.
The latest “Spot the Dog” report from wealth manager Tilney Bestinvest names and shames the funds which that have underperformed for three consecutive years on the trot and by more than 10% over three years.
Despite the hefty amount invested in underperforming funds, the level of assets in dog funds is down from £23bn in the group’s last report, published six months ago, while the number of serial underperforming funds has decreased to 37, from 60 funds six months ago
The largest number of dog funds are to be found in the Global and Global Equity Income sectors, with 13 funds representing 10% of the combined universe
M&G continues to dominate the dog-house by assets under management, at £7.3bn, or 41% in total, due to the underperformance of its Recovery and Global Basics funds, which are respectively £4.8bn and £2.5bn in size.
The report noted: “The biggest dog in the UK equities world by some distance is the M&G Recovery fund. It was one of the top performers in its sector just a few years ago, but its descent from pedigree to mutt was swift. We removed the fund from our top-rated funds in 2013, when its decline seemed irreversible, and other investors now seem to have lost faith as well. The fund has shrunk from a Great Dane-sized £8bn at its peak to a more Labrador-like £4.5bn now. Numbers in recent months suggest M&G Recovery might finally be recovering, and not before time.”
Fund giant Aberdeen manages eight ‘dog’ funds, down one from nine funds six months ago – including funds managed by its Asian equities team.
Companies with funds named – and indeed shamed – included among others BNY Mellon, Legg Mason, Blackrock and F&C.