Time to switch funds? Research shows almost £47bn of investors’ cash is languishing in under-performers

6th October 2014

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UK investors need to start voting with their feet as new research shows that there is a massive near-£47bn languishing in under-performing funds.

The study dubbed the Chelsea RedZone, which is compiled by fund broker Chelsea Financial Services, names and shames the worst-performing funds over the last three discrete years.

Altogether there are now 149 funds in the latest RedZone, with total assets of almost £47bn – marking a £10bn jump on just six months ago.

The research has named SF Webb Capital Smaller Companies Growth as the single worst-performing fund over the past three years. Darius McDermott managing director at Chelsea Financial Services, highlights that £10,000 invested in this fund three years ago, would have shrunk to just £4,919.65 today.

He said: “Putting the money in the average fund in the sector would have, in contrast, given you £16,035.48. If you had been fortunate enough to pick the best fund in the sector, R&M UK Equity Smaller Companies, you would be sitting on an investment worth £22,626.58. That’s quite a difference.”

“To be fair, the incumbent manager was on the receiving end of a hospital pass, in the form of a portfolio of stocks that were hard to sell, and performance has got progressively less bad over the past two years, but that will be of little comfort to anyone who invested, and lost, the majority of their money.”

By assets, BlackRock, the world’s largest fund manager, wins hands down with £8.4bn. It is followed by M&G with £7bn and Newton with £3.3bn.

Almost half, at £20.34bn, of this RedZone’s assets are in the UK All Companies sector, which is also home to the largest number of under-performing funds, at 26. Mixed Investments 40-85% shares is next with £5.05bn and 14 funds, followed by Flexible Investments with £812m spread across 12 funds.

The full list of funds in the RedZone can be found at: www.chelseafs.co.uk/redzone

 

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